Throttling Ahead-Driven by Territorial Disputes and the Need to Modernize Ageing Fleets, many Southeast Asian Nations Have Increased Defense Spending

By Jay Menon

Issue 78

Military modernization seems to have hit its stride in Southeast Asia. The rise of China and the simmering tension centered on territorial disputes for resource-rich islands in the South and East China Sea, coupled with the need to modernize and replace ageing fleets, have been driving Southeast Asian countries towards increased defense spending. Just how concerned Southeast Asian countries have become about the changes in the region’s geopolitical landscape has been reflected in the scope and speed of their military modernization efforts, particularly of their naval and air forces. Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam are now among the top defense spenders globally. 

That said, while defense spending for the region is growing, the scale and pace varies significantly from country to country. Indonesia, for instance, has more than doubled its spending in the past five years, whereas Cambodia and Laos are expanding their budgets more slowly. Warships, maritime patrol aircraft, radar systems and combat planes, along with submarines and naval defense systems, are high on procurement lists.  Barring certain categories in Singapore, most of the air forces in the region are plagued by ageing fleets that were mostly acquired during the 1970s and 1980s. 

Countries in the region have recognized the urgency, and significant investments are expected through the next couple of years.  Here is a rundown of the air force in some of the leading Southeast Asian countries and their military aircraft programs. 


Malaysia’s air force is almost in dire straits. Though its fleet includes a good proportion of fourth-generation combat aircraft, many of them, particularly its MiG-29N fighters, are no longer operational. The air force believes that it needs a minimum of six full-strength combat squadrons to properly cover both halves of Malaysia, rather than the four of varying strength that it has. Reports emanating from the country’s Ministry of Defense indicate that the government has put on hold a deal, valued at US$2 billion, to replace its existing combat aircraft with Dassault Aviation’s new Rafale fighters from France. Malaysia had announced in March this year that it was considering purchase of up to 18 of these fighters to replace its ageing Russian MiG-29s – of which almost half are already grounded.                                                                                                      

During the mid-1990s, Malaysia procured 16 MiG-29N fighters from Russia and eight F/A-18D fighters from the United States, but maintaining separate logistics systems for the two types of aircraft has reduced operational readiness and the ability to deploy either one away from its home base for long. That makes it tough for the air force to support naval units in the South China Sea. Malaysia’s purchase of 18 Su-30MKM fighters does little to solve these underlying problems.

Malaysian officials insist that the military modernization is imminent in the light of China’s actions in the South China Sea, but budgetary pressures have restrained the pace of acquisitions. The country, with MYR8 billion (US$1.8 billion), recently purchased four Airbus A400M military transport aircraft to expand their old Lockheed Martin C-130H-30/KC-130 Hercules fleet. 


The Royal Thai Air Force (RTAF) is all set to upgrade its F-5 fighter aircraft as the latest in a series of steps that Thailand is taking to modernize its ageing military equipment. Thailand, like several other Southeast Asian militaries, has struggled to maintain and modernize its defense equipment. The F-5 fighter aircraft for the RTAF, which have been in service since the 1970s, have not been immune from this, and faces several challenges including those on the budgetary side. That is the motivation behind the government’s decision to delay retiring and to continue to upgrade its F-5s, even as it acquired some new aircraft, though to a much lesser degree than was initially expected. 

The first phase, approved by the government in 2014, had been for the upgrade of 10 units under the name of Super Tigris, costing around 2.05 billion baht (US$61.57 million). On August 1, the RTAF announced that the cabinet had approved a further and full upgrade of four F-5s for 3.2 billion baht (US$90.69 million).

It also announced some details about the upgrade program, by adding another 2,400 flight hours to the airframe, which would add about 15 years to its total service life. These include, among other things, new communications and avionics equipment, the installation of a Link-T tactical datalinks, and the addition of the Rafael Litening III targeting pod and Skyshield electronic jamming pods, Python-4 and I Derby beyond-visual-range air-to-air missiles, and Elbit’s DASH helmet-mounted display system. Though the multimode radar system was not disclosed, some have said this is likely to be the Elta Systems’ ELM-2032 radar.

In addition to the F-5s, Thailand also currently operates Saab JAS-39 C/D Gripens as well as Lockheed Martin F-16A/B Fighting Falcons. Among the priorities for the RTAF are the purchase of additional Saab Gripens, along with other transport aircraft and helicopters. 

Cockpit renovation include new mission computer, two MFCD display, DVDR system, new HUD and UFCP, new ECS, as well as jamming-resistant AN/ARC-164 HAVE QUICK II radio. Link-T tactical datalink will be installed on F-5 Super Tigris to enable the network-centric operation of the aircraft that will be under the RTAF’s C2 system.


In Indonesia, the existing aircraft fleet is said to be ageing and insufficiently equipped for anti-submarine, airborne early warning and maritime patrol capabilities. As such, the country is making efforts to expand the existing aircraft fleet by ordering 24 F-16C/D fighter aircrafts from the U.S. with an investment of around US$750 million. In January 2014, Indonesia also signed a deal worth over £100 million (US$150 million) with British Thales Raytheon Systems (TRS) for the supply of ForceSHIELD Short-Range Air Defense System. In addition, Indonesia and Russia have agreed towards procuring 11 Russian-made Su-35S ‘Flanker-E’ multirole fighter jets for the Indonesia Air Force (TNI-AU). Indonesian Defense Minister Ryamizard Ryacudu says, “The Sukhoi purchase has been finalized and will be signed this November.” 

The Indonesian military has entered the second phase of its 2014-2019 military modernization plan that includes major upgrades to its fleet of fighter aircraft in August. Among other things, Indonesia is slated to purchase 10 more F-16A/Bs fighter jets in addition to the 14 currently in service purchased from the United States under a US$750 million Excess Defense Articles (EDA) contract. Indonesia will also contribute 20 per cent of development cost for the Korea Aerospace Industries (KAI) KFX next-generation stealth fighter jet. Indonesia said it would trade palm oil, coffee and other commodities for the Russian fighter jets. 

Indonesia already operates 16 Sukhoi jets. The Southeast Asian nation made its first purchase in 2003 while it was subject to a U.S. embargo on arms sales due to the military’s human rights abuses. 

Indonesian Air Force will also upgrade its fleet of F-16 Falcon fighter jets stationed at Roesmin Nurjadi air force base with improved avionic systems at the Iswahjudi Air Force Base, East Java. The F-16 A/B Block 15 OCU fighter aircraft, which are on duty at the Roesmin Nurjadi AFB, are planned to be replaced with F-16 C/D Block 52ID that are available at the Iswahjudi Base since last year. The replacement process for US-made aircraft will take place in several stages until April 2018. “The aircraft’s avionic systems will be improved or upgraded at Iswahjudi,” Information Dept Head of Air Force, Rear Air Marshall Jemy Trisonjaya, was quoted as saying by official news agency Antara.

According to Trisonjaya the plan aims to replace 16 Fighting Falcon aircraft to strengthen the Roesmin Nurjadin Base’s capabilities, while the existing A/B-type aircraft will be upgraded at the Iswahjudi Base. Indonesian Air Force operates two variants of F-16. They are General Dynamics F-16 A/B Block 15 OCU that procured under Project Peace Bima Sena I and F-16 C/D Block 52ID which were an upgraded version from F-16 Block 32 specially for Indonesia. Indonesia is also a partner in the Korean Aerospace Industry KF-X fighter jet program, which Lockheed is helping to develop.


Singapore has been contemplating the purchase of the Lockheed Martin F-35 jet, a multi-role stealthy warplane that is touted as the world’s most advanced fighter. Singapore intends to acquire four F-35s by around 2022, with the option to purchase another eight more.  The project seems to be delayed, but the country’s Defense Ministry maintains that, “As a small country with no strategic depth, Singapore will always need superior air capabilities to protect its interests and borders...”Our current fleet of fighter aircraft is adequate for our defense needs, and the F-35 is still under evaluation.”  Singapore reportedly has a fleet of 60 Lockheed-Martin F-16s and 40 Boeing F-15SGs. Singapore received 32 F-15E jets from the United States in 2010-14 and in 2014 ordered six A330 tanker aircraft from Spain, according to reports. The country is very secretive regarding its military.

Singapore also had awarded Lockheed Martin a US$914 million contract to upgrade F-16s. The fighter jet upgrades, which are the result of a sole-source acquisition, is taking place at Fort Worth, Texas, and should be finished by June 30, 2023.  The number of aircraft to be upgraded was not immediately known, but the Defense Department told Congress in 2014 that it had approved selling upgrades for 60 of Singapore’s F-16s. According to an Airbus Defense and Space press release, Singapore has chosen to replace its ageing KC-135 R tanker aircraft with six Airbus A330 MRTT aircraft.


Philippines early this year took delivery of all the 12 FA-50s from South Korea for P18 billion, one of two big-ticket items in the country’s modest military modernization program. The Philippines is planning to purchase 24 more combat aircraft, adding to the 12 FA-50 fighter jets it had ordered from South Korea in 2014, the Stockholm International Peace Research Institute (SIPRI) says. It did not specify when or from whom the aircraft would be ordered. The FA-50s were the first order by the Philippines for advanced combat aircraft in decades amid the increasing tensions with China over disputed territories in the South China Sea.

The Philippines has also awarded contracts to replace its ageing UH-1 Huey helicopters with eight Leonardo’s AW-109 utility helicopters.


Vietnam is purchasing 12 Sukhoi SU-30MK2V fighters and related equipment from Russia, to augment its existing fleet of 12 Sukhoi SU-27 and 12 Sukhoi SU-30MKs.  Hanoi is looking at modernizing its air force by replacing more than 100 ageing Russian MiG-21 fighters. Vietnam has ordered about a dozen more Russian Sukhoi Su-30 front-line fighters to supplement a fleet of the older Su-27s and Su-30s.  According to reports, among the aircraft under discussion with Vietnam were Saab’s Gripen E fourth-generation fighter jet as well as the Saab 340 or 2000 twin-engine turboprops fitted with maritime patrol and airborne early warning systems.  The country has also shown keen interest in the Eurofighter Typhoon as well as the F/A-50 light fighter jointly developed by Korea Aerospace Industries (047810.KS) and Lockheed. Lockheed, according to reports, had discussed selling its Sea Hercules, the maritime patrol version of its C-130 transport plane. Russia’s MiG-35 multirole fighter jets may be coming to Vietnam, where the useful life of the country’s third-generation MiG-21 fighter jets is coming to an end, the head of MiG aircraft manufacturer Sergei Korotkov told RIA Novosti recently. The MiG-35 is a new multirole fighter that includes fifth-generation information and sighting systems. According to Korotkov, Southeast Asia is an “interesting region” for the aircraft manufacturer when it comes to prospective sales.

The Way Forward

McKinsey & Company’s report sees defense investment in Southeast Asia continuing to grow in the mid to long term. In detail, the report identifies several market segments that may present potential for further growth. For example, the report sees that the demand for special-mission aircraft may grow in the future. In Southeast Asia, the requirement for protecting coasts and borders from threats, including terrorism, drug smuggling and piracy, is growing. As such, special mission aircraft are able to fulfill operations such as airborne early warning and control, anti-submarine and maritime patrol. They are also versatile and can execute both military and non-military operations. The report also says that the demand for troop transport aircraft may grow in the future as Southeast Asian military may require them to meet growing demand in disaster relief and humanitarian work. Indonesia’s acquisition of the maritime patrol and surveillance version of the CASA/IPTN CN235 is one such example