By Richard Moore, Strategic Adviser, Development Intelligence Lab

Much greater economic engagement with Southeast Asia requires seriously hard work.  We've not had the stamina to follow through on the initial Keating government project from thirty years ago, nor heeded earlier wake-up calls, such as Ken Henry's, 2012, 'Australia in the Asian Century'. 

This time the task is more important, more urgent and more difficult.

It's not that we've done nothing, especially in the trade and development space.  More than 20 years ago we assisted Mekong countries with WTO accession and hardwired sub-regional connectivity.  We routinely include technical assistance to allow countries to take advantage of the economic agreements we make, improving market access for Australian products.  And improving the enabling environment for private sector growth - including judicial and financial reform, economic policy capacity building and vocational skills development - has been a recurring Australian priority in many countries.   

Important as all this is, it's just not going to get us there.

Invested: Australia's Southeast Asia Economic Strategy to 2040 recognises the need for a decades-long, whole of society effort.  Government must lead that effort - it must convene, coordinate and catalyse.  This requires political leadership to articulate the vision and push it forward relentlessly, but also clarity about roles, responsibilities and resources. 

What's the role of the development program?  It could be to grease the wheels.  A bit of money here and there.  Some deal-sweeteners for investors.  Some subsidies for exporters.  Some tilting the playing field our way.  Those approaches would not only be short-term, transactional and potentially distorting, they would also carry a very high opportunity-cost by forgoing much higher-yield interventions. 

Like what?  Firstly, the creation of a whole of government team (also drawing in private sector and civil society expertise) to allow Australia to become deeply expert on the economic development issues and challenges of the region.  That would better inform policy making and program design; allow us to more quickly and expertly conduct diagnostics; enter into well-informed real-time discussions with country governments; and more strongly influence multilateral and bilateral partners.  It's also essential if we're to buck previous economic orthodoxy to avoid picking winners.  The times require such a shift, especially when it comes to technological standards and open, but secure communications and payments systems. 

Indonesia, Vietnam, and the Philippines should be the focus of a targeted strategy

Capability is already stretched very thin, so it’s unrealistic to think we can match much bigger nations and global institutions across the board.  We need to be very focused.  Where?  Indonesia, Vietnam and the Philippines contain the vast majority of Southeast Asia’s poor, alongside fast-growing middle classes.  They have a growing international voice which will shape the future regional order. They are where our interests are most substantially engaged and where we must put our intellectual effort and our business acumen.  To work on what? 

Its frequently said the ASEAN region is too diverse to take regionally focused approaches.  Yes and no.  It’s hugely diverse, but some of the most important challenges are common - including the need for rapidly scaled-up, clean energy and ways of dealing with cascading middle-income country problems. 

Globally, very few countries have made the transition from middle income to high income status.  Most get stuck because it's so much harder, technically and politically, to move up the value chain.  Working with Indonesia, the Philippines and Vietnam to resolve middle income trap issues should be the number one job of the development program to help accelerate the growth that will continue to cut poverty; grow markets for our produce; and strengthen the ability of countries to assert their interests. 

As former foreign minister Julie Bishop concluded half a decade ago, we should get out of service provision in Southeast Asia.  We should not be 'delivering aid'.  In fact, we should not be delivering any cargo, but rather working as equals with countries to resolve their biggest problems, not least because if we succeed we'll get the economic returns we want - and if we fail, we'll have a less stable, vulnerable region of angry people, ruing lost opportunities.    

To this end, our development model needs to change from prescriptive, risk averse and bureaucratically managed projects to exploratory, entrepreneurial, and risk-managed relationships. 

But this doesn't mean just bankrolling business or doing what the loudest lobby wants.  If our systems, approaches and regulations are the best-fit for a country - brilliant.  A full-court press will yield both immediate and long-term, mutual benefits.  But international development is full of examples of countries pushing sub-optimal choices on nations that hold back growth and ultimately damage supplier reputations. Australia has to play the long game.

New tools and policies will do development without aid  

To do so we need that a greatly enhanced knowledge-base to identify the key impediments to growth that can be realistically addressed and ways and means to experiment country by country to achieve the necessary policy changes.  We need rapidly to evolve new tools and instruments to do development without aid.  It still requires substantial resources - on both sides - but also new processes and relaxed rules. 

There are programs such as the Coalitions for Change program in the Philippines already doing this and small-scale experiments have occurred in Thailand and Malaysia.  We're also trying new things with innovative, leveraged, infrastructure financing (Partnerships for Infrastructure, P4I); making markets work better (Market Development Facility, MDF) and in directly trying to link up the Australian private sector with local counterparts, capital markets and communities (Cambodia Australia Partnership for Resilient Economic Development, CAPRED).   

For these to have maximum impact their results need to be taken to scale.  Ultimately it is systems change that matters.  A bit more money, a few more projects won't do it, either for national development, or for Australia achieving wider and deeper economic integration.  But pilot programs can be pathfinders, if we're smart enough to be learning their lessons in real time and working closely with country partners to implement them more broadly. 

We need multi-lingual, development entrepreneurs who understand government and the private sector; foreign policy and development policy; and what's negotiable and what's not.  Those people exist, but understandably are in short supply.  Imagine if we set out to grow that cohort, to drive relationship-based, structured and focused collaboration on shared interests?  Now there's an idea.  

Richard Moore is Strategic Adviser at Development Intelligence Lab. 

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