 |
||||
 |
||||
 |
||||
|
|
||||
|
||||
|
||||
|
||||
|
|
||||
|
|||||||||
|
East Asian defence market |
|||||||||
|
Damon Bristow, Head of the Asia Programme at the Royal United Services Institute for Defence Studies, assesses the situation in east Asia |
|||||||||
| A gentle but consistent economic recovery has been underway in east Asia since the start of 1999. Memories of the recent economic and financial crisis are slowly fading and a new sense of optimism has returned. This is good news for east Asia’s armed forces, the majority of whom saw their defence and procurement budgets at best frozen, and at worst slashed, as a consequence of the crisis. Indeed, there is concrete evidence to suggest that even those worst hit by the crisis are now in the process of re-assessing their defence procurement requirements and, where necessary, buying some new kit as well.
The turn-around in east Asia’s economic fortunes has come more quickly and been more sustained than many had predicted, or indeed hoped for. Stockmarkets and currencies have recovered across the region. The same is true for rates of economic growth. South Korea’s gross domestic product (GDP), for example, is set to grow by seven per cent and Thailand’s GDP that contracted by 9.1 per cent in 1998, should grow by 1.5 per cent. It’s much the same story in Malaysia: the country’s GDP contracted by 7.5 per cent in 1998, but is expected to have expanded by three per cent in 1999. The outlook also is pretty healthy in Singapore; the city-state’s economy is expected to have been the fastest-growing in south-east Asia in 1999. A recovery of sorts is also underway in the Philippines. Japan’s effort to pull itself out of recession by spending large dollops of public money, combined with a growing realisation that it must reform the nuts and bolts of its economy, also looks set to pay dividends. Analysts are cautiously predicting that the country has edged itself out of recession over the past twelve months. The only country that has not recovered significantly has been Indonesia.
Planned spending increase As the economic recovery has gathered speed, the downward trend in defence and procurement budgets has largely been halted or slowed across east Asia. The greatest revival of interest has been in South Korea. According to the Ministry of National Defence (MND), although spending dropped for the third year running in 1999, the country plans to spend $69.3bn between now and 2004. This year the defence budget will be increased to $12.3bn, up from $11.6bn in 1999, of which $6.3bn will go on procurement. Much of this money will be spent on reviving those projects that were stalled in 1997/98. There is nevertheless believed to be some money available for new kit. Thailand is also starting to shop around again. At the start of last year, for example, it was widely predicted that the defence and procurement budget would remain at 1998/1999 levels in the fiscal year 2000-2001. By last summer, however, it had become apparent that the figure for 2000-2001 – believed to be $2.56bn – would in fact be slightly higher than the year before, of which 40 per cent is expected to go on procurement. The country also has started exploring the purchase of some replacement equipment. By way of example, in mid August 1999 Thai prime minister, Chuan Leepkai, announced Thailand would buy 25 secondhand Alpha jets from Germany for $83m. The Royal Thai Air Force, for its part, is considering purchasing 18 used F-16s from the United States. (Almost two years ago it had to hand back its top of the range F-18s because it could not pay for them). Beijing, meanwhile, has offered Bangkok a loan of $200m and a grant of $3m to purchase weapons at discount prices. In the Philippines, meanwhile, President Estrada promised that one third of the cost of the $250-million modernisation programme delayed in 1997 was released during 1999. He also promised that the rest would be forthcoming during this year. The air force is likely to benefit most from the money – according to reports it has already received 10 billion pesos, most of which is likely to be spent on purchasing 12 multi-role fighters to replace its ageing Northrop F-5s. The shortlist is thought to be: the Lockheed Martin F-16, and Boeing F-18, the Saab-BAe Grippen, the Russian-made Mig-19, the Israeli K-fir, and the Dassault Mirage 2000. There is also a possibility that the air force will acquire up to 40 F-5Es from Taiwan that are about to be retired. Interest in defence procurement also is believed to be rising in Malaysia although no official defence spending figures for last year have yet been released. Singapore meanwhile, whose defence budget was $4.2bn in 1999, is now the largest spender in south-east Asia, although its budget is marginally less than last year, jumping ahead of Indonesia. China’s procurement plans have continued at a pace as have Taiwan’s. Beijing’s official budget has been set at around $12.6bn for 1999-2000, although the actual figure may in fact be as much as three times higher. In addition, China is believed to be close to signing a deal with Russia for the purchase of 72 SU-30 fighters. China is also known to be investing heavily in its missile and information warfare programmes and introduced a number of home-grown platforms such as the Dong Feng-31 ICBM, the Flying Leopard fighter and an air-to-air refuelling tanker at its 50th anniversary celebrations on 1 October last year. Taiwan, for its part, spent $10.9bn on defence in 1999 up from $8.3bn in 1998. Deliveries of secondhand US-made Knox class and new French Lafayette frigates are ongoing. The island is also interested in being part of the region-wide TMD system being proposed by the United States. It has ordered three Aegis class destroyers from Washington. Japan’s mid-term defence plans Interest in defence is also rising in Japan. The amount that the country spent on defence decreased between 1996-1997 and 1998-1999. However, in the wake of a string of provocations by North Korea it is widely expected that Tokyo will boost spending during this year. Under the terms of Japan’s 1 April 2001 mid-term defence plan, moreover, it is expected that Japan will place greater emphasis on taking part in international activities under United Nations sponsorship; improving its preparedness to deal with aggression; and further enhancing US/Japan security co-operation. In procurement terms, the country is expected to build one 13,600-ton replenishment ship to help support US operations and two new destroyers and to upgrade its 200 Mitsubishi/Boeing F-15/DJ fighters. Tokyo also has recently agreed to join the US-sponsored theatre missile defence (TMD) research project. So long as the recent region-wide recovery continues, a growing number of purchases can be expected throughout the rest of this year and into 2001. © |
|||||||||
|
|||||||||
|
"As memories of the crisis fade and optimism returns, east Asia’s armed forces are re-assessing their defence procurement requirements" |
|||||||||
|
|||||||||
