ASEAN Defence Procurement

Asia Pacific Market Insights Frost & Sullivan

Issue 52

ASEAN countries are increasing their Defence 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 Defence 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 Defence procurement spending till 2020. Figure 1 shows Defence budgets from 2012 to 2020 by 5 key countries in the ASEAN region.

As of 2012, Singapore and Indonesia collectively contributed close to 57% of the total ASEAN Defence spending. Defence 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 Defence spending will increase at 17% CAGR during the period. By 2020, Indonesia will contribute close to 40% (US$24.62 billion) of ASEAN Defence spending followed by Singapore and Thailand having 23% and 17% of Defence spending respectively.