2012

ASEAN Defense Procurement

Asia Pacific Market Insights

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ASEAN Defense Procurement

ASEAN countries are increasing their defense spending in-line with their economic growth. This market
insight focuses on procurement trends by armed forces in five key ASEAN countries, namely; Malaysia,
Singapore, Indonesia, Thailand and Philippines. With increasing economic development and geopolitical instability in the region, certain countries have been engaging in procurement programs to better
equip their forces. Increasing military modernization programs undertaken by developing countries is
one of the main trends driving defense spending in the region. Acquisition of UAVs, armored vehicles,
ships and aircrafts by many nations will continue to be the focus of procurement within the region and is
expected to contribute to a majority of defense procurement spending till 2020. Figure 1 shows defense
budgets from 2012 to 2020 by 5 key countries in the ASEAN region.
70

12%

60

10%

50

8%
Philippines

40
6%
30

Malaysia
Indonesia

4%

20

Thailand
Singapore
Growth

2020

2019

2018

2017

2016

0%
2015

0
2014

2%

2013

10
2012

Defense Spending ($ billions)

Figure 1: Defense Spending by ASEAN countries (2012 - 2020)

Source: Frost & Sullivan

As of 2012, Singapore and Indonesia

collectively contributed close to 57% of the
total ASEAN defense spending. Defense
spending for the five ASEAN countries is
expected to reach US$61.6 billion by 2020
from US$29.3 billion in 2012, growing at a
CAGR of 9.8% during the forecast period.
Much of this spending is expected to be
driven by Indonesia, whose defense
spending will increase at 17% CAGR during
the period.
By 2020, Indonesia will
contribute close to 40% (US$24.62 billion)
of ASEAN defense spending followed by
Singapore and Thailand having 23% and
17% of defense spending respectively.

Details on procurement programs being entered into by some countries are as follows:
Indonesia: Indonesia has a defense budget of US$7.01 billion in 2012 of which procurement
spending is expected to be 34%. The country is currently in plans to obtain over 100 Leopard 2A6 Main
Battle Tanks for the army, replace 2 of its Cakra class submarines for the navy and acquire 8 Embraer
EMB 314 Super Tucano aircraft from Brazil among some its major procurement plans. Indonesias
defense spending is expected to reach US$24.62 billion by 2020.
Singapore: The country has a defense budget of US$9.73 billion in 2012 of which procurement
spending is expected to be 10%. The country is planning to acquire light armored vehicles such as
the Bionix Armored Fighting Vehicle (AFV) and the M113 Armored Personnel Carrier for their army,
stealth frigates and landing platform dock ships for their navy and technologically advanced aircraft
and ordnance such as UAVs, aerial re-fuelling tankers, strategic airlifters, precision-guided air-to-air
munitions, and other stealth aircraft for their air force. Singapores defense spending is expected to
reach US$13.94 billion by 2020.

Malaysia: Defense spending in the Malaysian armed forces is expected to be driven by the
procurement of 257 8x8 wheeled APC vehicles for the army between 2012 to 2018, multi-purpose
support ships for the navy, and replacement of MiG-29 aircraft by about 18 MRCA aircraft along with
other helicopter purchases for the air force.
With increasing defense budgets regionally and defense modernization programs being undertaken by
surrounding Asian countries such China and South Korea, ASEAN countries are acknowledging the need
to increase their defense capabilities to strengthen their security in the regional conflicts taking place. Overall,
the ASEAN region is poised for high growth in defense spending and military procurements from 2012 to
2020. With the increasing technological advancement and economic developments in the region as well as
the rising need to replace obsolete technology, defense spending in the ASEAN region is expected to grow
steadily throughout the decade.

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