China’s Military Buildup Fuels Defense Spending Across Southeast Asia

Indonesian naval vessels

LONDON — China’s interest in growing its military is driving nearby Southeast Asian countries to beef up their own forces with new equipment, said experts.

“China has had more than a decade of double-digit growth,” said Edward Hobbs, director of Hawk Information’s Paris bureau. Hawk is a European aerospace, defense and security analysis firm.

“China has undertaken a massive military buildup with the declared intention of creating a people’s liberation army in measure to the country’s economic and diplomatic stature.”

This expansion of defense capabilities, along with territorial disputes in the South China Sea, are driving many countries to increase their own militaries, he said Sept. 17 at the Defence and Security Equipment International conference. This is especially true for Indonesia, Malaysia, the Philippines, Singapore and Vietnam.

“These five countries represent growing market opportunities for defense suppliers,” he said. “Together the spending totals of these five countries are expected to grow by almost 8 percent annually.”

Vietnam could become a bigger market for U.S. defense contractors, said Poornima Subramaniam, a senior analyst with Hawk. “Vietnam is really going to open up,” she said. “There have been a lot of high level talks with the U.S.”

Most of Vietnam’s weapons are from the Soviet-era, she noted. “They have tended in the past to rely heavily on Russia or buy Russian equipment but since late last year there have been a lot of indicators … of Vietnam looking for new suppliers [and] new markets,” she said. “They also seem to be courting foreign vendors for joint venture projects.”

Hanoi has been engaging in defense diplomacy with the United States, the United Kingdom, South Korea and India, she said.

“The U.S. lifted some of the arms embargoes on Vietnam [last year] making it possible to sell to Vietnam and ever since Vietnam has publicly announced their intentions … to bid for U.S. equipment,” she said. They are looking at purchasing Boeing-built P-8 Poseidon maritime reconnaissance aircraft, she added.
Indonesia will also be a burgeoning market for U.S. defense contractors, she said.

“It is one of the fastest growing markets in Asia if not the rest of the world,” she said. While the Indonesian government has recently said it would be paring back some defense spending there are still opportunities, she noted.

“Within the allocated budget they are going to be prioritizing fighter jets, submarines and looking at buying modern radar systems,” she said.

Malaysia has been committed to modernizing its defense equipment, but its “ambitions are a lot higher than the country’s fiscal appetite,” Subramaniam said.  Many of its procurement programs have been stalled or delayed, she said.

She noted that the country is in need of fighter jets, frigates and corvette warships.

The Philippines has several crucial acquisition programs for frigates, air surveillance radars and a variety of aircraft, she noted.

The island nation has relied heavily on used platforms from countries such as the United States. One of its navy’s lead vessels, the BRP Gregorio del Pilar, is a former United States Coast Guard Hamilton-class cutter.

“They are looking for new equipment, not used,” she said. “They are looking for a lot of different suppliers and cost-effective solutions.”

Singapore is a well-established market and is among one of the world’s largest defense importers, Subramaniam said.

“Their drive for modernization is not solely driven by the need for some of these equipment but it’s mostly to maintain technological advantage in the region,” she said.

The country is interested in the F-35 joint strike fighter and air-independent propulsion submarines. Subramaniam noted that these are largely new markets that still have a learning curve. Contractors must be patient with them and help them navigate the many rules and regulations associated with defense procurement.

“Anyone looking to engage with these markets, patience is key,” she said. “They are learning about procurement processes and obligations from sellers as well.”

Topics: International, Shipbuilding, Surface Ships