Bilateral programs
Vietnam
| Country program estimate Estimated other ODA Estimated total ODA |
$60.4 million $16.9 million $77.3 million |
Vietnam’s economy continues to grow at impressive rates, with strong domestic consumption and investment and good export performance. This growth, combined with the government’s reforms to date and increasing social expenditures, is reducing poverty levels, with less than 30 per cent of the population now classified as poor by international measures. However, poverty reduction has recently been slowing, and inequality is rising as disadvantaged groups such as rural women and ethnic minorities are less able to reap the benefits of growth.
The impacts on poverty of Vietnam’s proposed accession to the WTO remain unclear, as much depends on implementation of further reforms so that capital is used more effectively and employment opportunities are maximised. The Vietnamese Government is increasingly willing to acknowledge and address the threat that corruption poses to both economic performance and social harmony.
Australia’s aid program with Vietnam, according to the agreed country strategy, will continue to support Vietnam’s international economic integration and private sector development, and to reduce vulnerability and improve living standards for the rural poor in the Mekong Delta and Central Coast regions. Rural water supply and sanitation continues as a focus, along with natural disaster mitigation.
Work will continue on sharpening the focus of the scholarships scheme (150 offered in 2005–06) to achieve enhanced strategic impact in key Vietnamese institutions concerned with economic management and rural development. Australia will also continue to support Vietnam in developing an effective national system for monitoring and evaluating aid, helping Vietnam and its donors to increase aid efficiency and effectiveness while supporting the broader agenda of donor harmonisation.
Philippines
| Country program estimate Estimated other ODA Estimated total ODA |
$55.5 million $8.2 million $63.7 million |
In 2004, the Australian and Philippine governments commenced implementation of a new Philippines development cooperation strategy. The strategy has three objectives: reduce impediments to broad-based growth through improved economic governance; strengthen security and stability through counter-terrorism capacity building and support for Mindanao peace processes; and raise the living standards of the rural poor in the south of the country, particularly through improving educational opportunities.
Strengthening counter-terrorism and peace building capacity in the Philippines is a priority. In accordance with the government’s 2004 election commitment, Australia will double the current $5 million counter-terrorism package over five years (2004 through 2009). A major new program of targeted interventions will be implemented in support of peacebuilding, conflict prevention and economic development in Mindanao. This will include continued support for the United Nations Multi–Donor Program that responds to the 1996 peace accord with the Moro National Liberation Front. Australia has also indicated in‑principle willingness to contribute to a new Mindanao Trust Fund that will become operational once peace is achieved with the Moro Islamic Liberation Front.
A new Partnership for Economic Governance Reforms will be fully operational in 2005–06. This program will support reforms in priority areas such as public financial management. Australia will work with the Philippines to develop a new program of assistance to improve financial and resource management and service delivery at the local government level, supporting the Philippine Government’s decentralisation process.
In the education sector, the successful Basic Education Assistance for Mindanao program will continue, and a new basic education program will commence in the Visayas in 2005–06. Australia will also expand its engagement in vocational and technical education, provide significant support for UNICEF’s Sixth Country Program for Children (2005–09) and explore options for further assistance for Islamic education in Mindanao.
China
| Country program estimate Estimated other ODA Estimated total ODA |
$38.0 million $8.2 million $46.2 million |
Despite rapid economic growth and impressive reductions in poverty, more than 200 million people in China still live below the World Bank’s $1 a day poverty line.3 Recently, poverty reduction has slowed and inequality has risen, especially between rural and urban areas, and coastal and inland provinces. This inequality, together with macroeconomic instability stemming from incomplete legal and financial reforms, rising unemployment, lack of basic health services, and mounting environmental pressures, threatens the sustainability of China’s future development. The Chinese Government recognises these challenges and has initiated a policy of ‘balanced development’, whereby future economic growth will not be pursued at all costs, but with due attention to the side-effects of growth.
The Australia–China relationship is one of the most economically, politically and culturally important relationships to Australia. China is now also a significant regional and global player — its economic growth underpins much of the economy of East Asia, and China is playing an increasingly important role in regional dialogue and cooperation.
In mid-2005, the Chinese and Australian governments expect to approve a new strategy for China–Australia development cooperation. In line with directions agreed in 2004 that the overall level of ODA would decline over time, this new strategy will focus on three areas: governance, health (with a focus on communicable diseases) and environment (with a focus on water management). The China Australia Governance Program, which commenced implementation in September 2004, will provide assistance in the areas of fiscal reform and other economic governance issues (including trade-related reforms and social security reform). New approaches in health and environment will be developed during 2005–06. All three areas will support Australia’s broader national interest objectives in China and facilitate the building of broader linkages between Australian and Chinese government agencies.
Cambodia
| Country program estimate Estimated other ODA Estimated total ODA |
$25.0 million $17.7 million $42.7 million |
Cambodia has made considerable progress following many years of devastating conflict. However, it remains one of the poorest countries in East Asia, with social indicators amongst the worst in the world. Corruption and poor governance are major constraints to development.
Australia’s strategy for development cooperation with Cambodia has three themes: strengthening the rule of law; increasing the productivity and incomes of the rural poor (particularly in the agriculture sector); and reducing the vulnerability of the poor to natural disasters. Australia will act as a lead donor in the agricultural and rural development sector, and coordinate inputs from the broader donor community. To help fight corruption, Australia will support community demand for better governance through a three-year project with the Cambodian state radio organisation, and work with other donors to reduce opportunities for corruption by improving public financial management and accountability.
Years after the cessation of conflict, land mines still threaten vulnerable populations in Cambodia. Australia will continue to provide funding to the Cambodian Mine Action Centre, through the United Nations Development Programme (UNDP), to clear landmines and reduce mine-related casualties in Cambodia.
East Timor
| Country program estimate Estimated other ODA Estimated total ODA |
$30.0 million $12.0 million $42.0 million |
Since independence in May 2002, East Timor has made considerable progress toward building a stable and sustainable government. Under its National Development Plan 2002–07 and with assistance from the donor community, the East Timorese Government is strengthening its national institutions and administration. However, East Timor remains fragile. It is still one of Asia’s poorest countries, with the UNDP estimating that over 40 per cent of the population live below the poverty line. Rapid population growth, capacity constraints, unemployment, food insecurity and poor infrastructure hamper development. East Timor will enter a new development phase following the establishment of a successor mission to the United Nations Mission of Support in East Timor.
Australia has a major stake in ensuring that East Timor is equipped to meet the challenges it faces in becoming a stable and democratic nation. Together with other donors, Australia will help the East Timorese Government implement its Sector Investment Program, which articulates key development priorities. A new country strategy, currently being finalised, will integrate with these investment programs. It will focus on building the capacity of the East Timorese Government in areas including law and governance, public expenditure management, transparency, and accountability. Australia will also focus on service delivery in rural areas, particularly in water supply and sanitation, stimulating growth, and sustainable livelihoods.
Other East Asian countries
Australia’s development cooperation with Thailand will be phased out to reflect Thailand’s desire to move away from being an ODA recipient. A small amount of technical assistance will continue, to develop institutional linkages between Australian and Thai government departments and agencies, and build capacity to address issues of mutual national interest. Australia will also provide specific technical assistance in coastal rehabilitation to address impacts of the December 2004 Indian Ocean disaster.
Cooperation with Laos will be tightly focused on improving access to education, supporting the growth of a market economy, and reducing the vulnerability of poorer communities to disasters and the impact of unexploded ordnance.
With a lack of progress on democratic reform and the chronic humanitarian situation, Australia’s assistance to Burma will focus on vulnerable populations, particularly ethnic minorities in areas of conflict and refugees on the Thai–Burma border. Assistance will be delivered through local and international NGOs and UN agencies. AusAID’s Humanitarian Assistance Coordinator in Rangoon will strengthen Australia’s capacity to monitor and respond to emerging humanitarian needs.
Australia’s aid program to Mongolia will continue to build the skills base of key government agencies and provide Australian Development Scholarships to develop specialised expertise and qualifications.
Aid harmonisation in Cambodia and Vietnam
Harmonising donor practices and aligning donor-supported activities with recipient country development priorities can yield significant gains in terms of efficiency and developmental effectiveness.
Decades of conflict have left Cambodia with extremely weak institutions and serious human resource constraints. Cambodia remains a very poor country and is heavily dependent on donor assistance. In the absence of effective government leadership, some of the donor assistance provided over the last decade and a half has been poorly targeted or unsustainable.
Since 2002, Australia has organised and chaired regular donor agency meetings to progress aid harmonisation in Cambodia. As an outcome of this effort, in late 2004 the Cambodian Government and donors agreed to establish 17 sectoral and thematic working groups, which will provide a practical framework for joint planning and action. Australia is the lead facilitator for the agriculture and water working group, and participates actively in a number of other groups including those dealing with legal and judicial reform, public financial management reform, landmine action, and private sector development. The Australian-chaired donor meetings have also helped enhance donor policy dialogue with the Cambodian Government on key governance reform issues. This led to agreement between government and donors at the December 2004 meeting of the Cambodia Consultative Group on a set of priority monitoring indicators linked to the reform agenda. Australia and several other donors stressed that future aid allocations would be linked to progress against these indicators, providing additional incentive to the government to maintain reform momentum.
In the last decade Vietnam has experienced a major increase in donor numbers, from four to more than 40. While Vietnam has welcomed this surge in support from the international community, the transaction costs of dealing with increased aid volume and diverse donor procedures are high. The Vietnamese Government is now working closely with the donor community to achieve efficiencies through streamlined and consistent approaches, harmonised procedures, joint donor action, and new ways of delivering aid.
Australia is contributing to this harmonisation process though a number of mechanisms, including support for the Vietnam–Australia Monitoring and Evaluation Strengthening Project. Following an earlier pilot phase, the current activity ($5.4 million over three years) will assist Vietnam to establish an effective national monitoring and evaluation system for aid. This system will allow the Vietnamese Government to check whether aid project timetables are being met, funds disbursed and outputs delivered. The project is piloting this work with six ministries in seven provinces, including the development of harmonised project reporting for use by donors to enable collection of standardised data and improved analysis of ODA performance across different sectors and regions.
3 World Bank, Country Assistance Strategy for China 2003–2005