LIST OF ABBREVIATIONSAbbreviation Original ADB Asian Development Bank ASEAN Association of South East Asian Nations CPIA Country’s Policy and Institutional Assessment DAC Development Ass
RESEARCH RESULT AND DISCUSSION
Five principal ODA donors to Southeast Asia in 2008-2018
From 2008 to 2018, Japan was the largest provider of Official Development Assistance (ODA) to Southeast Asian countries, peaking in 2013 with over $2.5 billion, five times the amount from the previous year, primarily in the form of loans Australia ranked as the second-largest donor, briefly surpassing Japan in 2008, 2011, 2012, 2014, and 2015, but subsequently experienced a decline in ODA investment The United States was the largest ODA source in 2017, only to be overtaken by Germany in 2018, which saw a significant increase in its ODA contributions, tripling compared to the previous year, even as most other countries reduced their investments South Korea provided the lowest amount of ODA during this period.
Southeast Asia in the top 5, but in general, this amount of capital has grown steadily year by year and is gradually catching up with Australia.
Southeast Asia, as a strategically significant region, is a focal point for Official Development Assistance (ODA) from five key countries, reflecting their political and foreign policy objectives The United States, leveraging ODA since the Marshall Plan, aims to safeguard its economic and political interests while countering China's influence, as outlined in its "Indo-Pacific Vision." Japan, a close ally, seeks to bolster its presence in Southeast Asia through the "Free and Open Indo-Pacific Strategy," which prioritizes the security of vital maritime routes Australia's "Pacific Step Up" policy similarly addresses the region's importance, while Germany's 2020 policy acknowledges the growing significance of the Indo-Pacific Additionally, South Korea's "New Southern Policy" aims to enhance its influence in Southeast Asia, balancing international relations and expanding trade Overall, ODA serves as a crucial instrument for these nations to achieve their economic and political aspirations in the region.
1.2.2 HDI of Southeast Asian countries status
1.2.2.1 HDI Index in Southeast Asia by years
Table 1.1 HDI Index in Southeast Asia from 2000 to 2021
Cambodia (Asia/Pacific) 0.425 0.475 0.510 0.534 0.555 0.574 591 0593 Indonesia (Asia/Pacific) 0.595 0.621 0.639 0.657 0.678 0,695 0.710 0.705 Lao (Asia/Pacific) 0.470 0.493 0.511 0.543 0.572 0.599 0.607 0.607 Malaysia (Asia/Pacific) 0.721 0.732 0.736 0.762 0.780 0.797 807 0.803 Myanmar (Asia/Pacific) 0.410 0440 0.470 0.501 0.531 0.562 590 0.585 Philippines (Asia/Pacific) 0.633 0.650 0.659 0.667 0.685 0.698 /10 0.699 Thailand (Asia/Pacific) 0.653 0.687 0.712 0.730 0.746 0.781 0.795 0.800 Vietnam (Asia/Pacific) 0.588 0.617 0.641 0.658 0.672 0.684 697 0.703
Between 2000 and 2021, eight Southeast Asian countries demonstrated significant progress in human development, as indicated by the growth in the Human Development Index (HDI) Notably, Thailand experienced the highest increase in HDI, rising by 0.147 Myanmar's HDI also improved from 0.410 in 2000 to 0.585 in 2021 Importantly, the number of countries classified in the Low human development group decreased from three in 2000 to none by 2021 Cambodia, Lao PDR, and Myanmar advanced to the Medium human development group, while Vietnam and Indonesia progressed from Medium to High human development Additionally, Thailand and Malaysia elevated their status from High to Very high human development.
1.2.2.2 HDI Index in Southeast Asia by countries
In 2021, Southeast Asia achieved an average Human Development Index (HDI) of 0.726, categorizing the region within the High Human Development group Nevertheless, the eight ODA recipient countries examined in this study exhibit varying levels of HDI, as detailed in the accompanying table.
Table 1.2: HDI of 8 Southeast Asian in 2021
According to the data, Malaysia and Thailand are the sole recipients of Official Development Assistance (ODA) within the Very High Human Development category, with Malaysia achieving the highest Human Development Index (HDI) score of 0.803, closely followed by Thailand at 0.800.
The High Human Development group includes Indonesia and Vietnam, with Indonesia holding the title of the largest economy in Southeast Asia However, social unrest has impacted its Human Development Index (HDI), which stands at 0.705 Close behind is Vietnam, with an HDI of 0.703.
Almost half of Southeast Asian countries are classified as having medium human development This category includes the Philippines with a score of 0.699, Laos at 0.607, Cambodia with 0.593, and Myanmar with 0.585.
1.2.2.3 HDI Dimensions Index in Southeast Asia
Health is measured by life expectancy, with the average in Southeast Asia being 71.8 years Chart 1.4 illustrates the life expectancy at age eight across eight Southeast Asian countries.
Life expectancy at birth 8 Southeast Asia countries in 2021
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According to Chart 3.5, government expenditure in Southeast Asia had climbed year after year and had shown significant signals of increasing since
Between 2000 and 2021, government spending in Southeast Asia increased sevenfold, significantly enhancing the region's Human Development Index (HDI) through investments in public infrastructure, which positively impacted well-being and social benefits (Ha, 2021) In 2021, Vietnam led Southeast Asia in infrastructure spending, allocating 5.7% of its GDP, which laid the groundwork for its HDI to rise from Medium Human Development in 2000 to High Human Development in 2021 This expenditure also supported projects aimed at improving health and education, further contributing to the country's development.
Government spending on health and education significantly influences Human Development Index (HDI), as highlighted in Chapter 2 The World Bank (2021) data reveals that Indonesia leads Southeast Asia with a total government expenditure of $108 billion; however, it allocates only 3.6% of its GDP to health and 2.8% to education This spending is notably lower compared to Malaysia, Vietnam, and Thailand, indicating that the Indonesian government prioritizes other areas over health and education Consequently, despite being the largest economy in Southeast Asia, Indonesia's government spending has a positive yet insignificant impact on its HDI, resulting in lower human development rankings compared to Malaysia and Thailand, and preventing it from reaching the "very high" human development category.
The world is currently facing significant uncertainties, particularly as it navigates the post-COVID-19 era amid the ongoing Russia-Ukraine war, which poses serious threats to global economic recovery This conflict has intensified inflation, driven up energy prices, and jeopardized food security in Southeast Asia, leading to adverse effects on people's lives and increasing the risk of a decline in the Human Development Index (HDI) in the region Moreover, as Southeast Asian nations achieve greater development, Official Development Assistance (ODA) is becoming less favorable, with stricter conditions, shorter loan terms, and higher interest rates (Ngan, 2019) Despite these challenges, Thailand and Malaysia have shown resilience by improving human development, highlighting their strengthened internal capabilities despite decreasing ODA.
Indonesia, the largest recipient of Official Development Assistance (ODA), is increasingly reliant on this funding, prompting the government to seek solutions to the declining ODA incentives This concern is also relevant for other nations in the region Therefore, Southeast Asian governments must implement strategies to enhance the quality of life for their citizens and improve the Human Development Index, particularly in today's challenging environment.
To enhance Southeast Asia's Human Development Index (HDI), it is crucial to improve the efficiency of Official Development Assistance (ODA) utilization Research indicates that ODA has not positively impacted HDI in the region, highlighting ineffective usage by Southeast Asian governments amid ongoing corruption and policy issues Therefore, addressing ODA-related corruption requires governments to strengthen legislative frameworks.
A clear and transparent framework for the administration and utilization of Official Development Assistance (ODA) is essential to ensure efficient and fair expenditure, directing funds to the right projects and people while minimizing corruption risks The role of the public and media is crucial in detecting and preventing corrupt practices It is vital to synchronize all policies related to ODA receipt and usage, while governments must remain responsive to global developments Sudden policy changes can lead to confusion for local management and foreign investors, as seen in Myanmar Southeast Asian nations should actively work towards reducing their dependence on ODA by prioritizing "quality over quantity" in project selection, ensuring ODA is allocated to high-impact initiatives Stringent approval standards for ODA are necessary, and all decisions should be rigorously examined Additionally, diversifying and expanding sources of capital, particularly through domestic mobilization, will further decrease reliance on ODA.
This study demonstrates that Foreign Direct Investment (FDI) positively influences Human Development Index (HDI) in Southeast Asia Consequently, governments should sustain efforts to leverage FDI for human development Additionally, focusing on the quality of FDI is crucial to attract large-scale, high-tech investments, particularly in green FDI projects Conversely, it is essential to steer clear of outdated technology projects that could harm the environment.
To improve people's lives, it is essential to enhance the standards for authorized Foreign Direct Investment (FDI) projects, placing a strong emphasis on technological and environmental criteria Furthermore, the commitment to technology transfer should be regarded as a critical factor in evaluating potential FDI projects.
Research indicates that while GDP positively influences the Human Development Index (HDI), its impact is not significant, particularly in Southeast Asia, where economic growth often comes at the expense of environmental and social well-being It is crucial to shift focus from purely economic benefits to include environmental and social responsibilities Strengthening environmental regulations and oversight of production activities is essential to prevent pollution, with robust sanctions in place for violations Additionally, addressing pollution requires clear accountability and remediation measures Promoting sustainable and renewable energy sources can mitigate environmental degradation and resource depletion Furthermore, addressing wealth inequality linked to economic growth will be explored through government spending solutions.
Government spending significantly influences the Human Development Index (HDI) in Southeast Asian countries, highlighting the need to enhance national budget resources To achieve this, both domestic and official development assistance (ODA) resources, particularly tax-based revenues, should be mobilized A robust tax base is crucial for emerging nations aiming for sustainable economic growth (Ha et al., 2021) Additionally, it is essential for governments to allocate spending effectively, prioritizing investments in people-oriented sectors to maximize positive outcomes for society.
62 education, healthcare, technology, and digital infrastructure This is also the foundation for solving remaining problems in society such as inequality.
To maximize the positive impact of remittances on Human Development Index (HDI), it is essential to implement effective policies that attract this capital flow Strategies should include the introduction of appealing investment options, such as "remittance bonds" and specialized investment funds that offer tailored incentives for remittance investors Additionally, enhancing money transfer services to ensure they are cost-effective, secure, and efficient while minimizing bureaucratic hurdles is crucial This approach will promote the use of official channels for remittances and decrease reliance on informal methods Furthermore, encouraging private banks to expand their remittance service offerings will play a vital role in this initiative.
Countries can enhance remittance flows by implementing policies that encourage citizens to seek employment abroad This can be achieved by providing information on labor export programs, offering consulting services, facilitating connections with foreign employers, teaching foreign languages, providing skills training, and supporting workers during their time overseas.
Political instability in Southeast Asia significantly impacts human development, as indicated by the Human Development Index (HDI) However, the adverse effects of such instability can be mitigated by effective government operations, as demonstrated in Malaysia and Thailand Therefore, it is crucial to strengthen government capabilities to ensure consistent functionality and minimize disruptions to the economic and social well-being of citizens In cases of severe political unrest, such as the ongoing situation in Myanmar, collaboration among nations, ASEAN, and international organizations like the United Nations becomes essential.
Southeast Asian governments must address the challenges posed by population growth, which negatively impacts human development Food insecurity, exacerbated by the Russia-Ukraine war, requires urgent solutions, including stabilizing food prices and protecting agricultural resources and supply chains Collaboration among Southeast Asian nations and global partners is essential to tackle this issue effectively Additionally, addressing unemployment necessitates enhancing the skills and qualifications of workers, as many are unskilled By fostering a favorable investment climate to attract foreign direct investment (FDI) and implementing regulations to encourage labor export, governments can create numerous job opportunities for their citizens.
While inflation has not been shown to negatively affect the Human Development Index (HDI) in Southeast Asia, it is crucial for the government to maintain strict control over inflation levels This is particularly important in the current environment, where various factors are creating favorable conditions for inflation to rise, thereby exerting downward pressure on the Consumer Price Index.