the Asian market defence budget

TAIPEI — As U.S. and European defense budgets experience nervous breakdowns, the Asian market for new naval and coast guard ships to protect fisheries, commerce and littoral claims sees no slowdown.
 No more evidence is needed than the International Maritime Defence Exhibition (2013 IMDEX Asia) in May in Singapore. According to Jimmy Lau, managing director of Experia Events, this year’s expedition space for IMDEX is already 80 percent booked.

 “We will be welcoming new exhibitors, including Fincantieri, Luerssen, Scania, Schiebel and Westport Shipyard, alongside returning top companies, such as DCNS, Lockheed Martin and ST Engineering,” he said. This year’s IMDEX also will see an increased presence of shipbuilders providing offshore patrol vessels (OPVs) and smaller patrol vessels, “which are looking to tap growing demand for such vessels as navies in the region look to modernizing their fleet,” Lau said.

 OPVs are in big demand in the Asia-Pacific region. According to a 20-year forecast by the U.S.-based naval analysis firm AMI International, “Global Naval Investment: The ‘Hi-Lo’ Mix,” the Asia-Pacific OPV market is expected to generate 55 vessels through 2030, making it the second-most potent OPV market after NATO, at 72.

 Singapore, Malaysia and Indonesia face challenges patrolling and safeguarding the sea lanes of communication through the Singapore and Malacca straits, which are vulnerable chokepoints. There also have been demands for patrol vessels among countries disputing rich fishing grounds and potentially lucrative petroleum reserves in the South China Sea. 

The Philippines is frustrated over Chinese maritime incursions and counterclaims by Beijing over the Scarborough Shoal, which is within the exclusive economic zone of the Philippines. The Philippine Navy has begun the Capability Upgrade Program of its Strategic Sail Plan 2020. Since 2009, the Philippine Navy also has acquired multipurpose attack craft and a landing craft utility vessel.  In 2011 and 2012, the U.S. provided two ex-U.S. Coast Guard vessels, both Hamilton-class high-endurance cutters, to the Philippine Navy. A third Hamilton-class vessel is under discussion.  In 2012, Japan announced plans to provide the Philippines with 10 100-meter patrol vessels for its Coast Guard.

 Japan has been making moves to defend its southern island chain, including the announcement that the Ministry of Defense plans as early as 2015 to purchase and deploy an as-yet-unstated number of Global Hawk UAVs and monitor the nation’s far-flung Senkaku islets.  The pending deployment of the UAVs, leaked to local media in December, follows an increasingly rancorous dispute over the islands, situated in the East China Sea between Okinawa and Taiwan, which have seen repeated incursions of Chinese ships into areas around the islands.  The move to deploy U.S.-made UAVs comes on top of robust plans to increase the MoD’s abilities to deter aggression and, most recently, projected not-too-distant capacity to even retake the Senkakus if invaded.

 From this April, the MoD will fund programs that will significantly boost Japan’s capabilities to defend its southern island. These include improved maritime surveillance and forward deploying a new coastal surveillance radar and coast observation unit on Yonaguni island, adjacent to Taiwan.

“I think we’re seeing the coalescence of nearly two decades of steadily increasing mistrust of China by the Japanese people. That’s been borne out by the reaction to the crises around the Senkaku/Diaoyu islands,” said James Manicom, Research Fellow at Centre for International Governance Innovation, a Canadian think tank.  The Japanese Ground Self-Defense Force (GSDF) marines also have been training with U.S. counterparts to enhance amphibious warfare capability.

“The GSDF has been training with the marines for eight years now. ... I believe that Japan now has 80 percent of the capabilities of what it takes to field an amphibious landing force,” said Paul Giarra, president, Global Strategies & Transformation, a Washington-based defense consultancy.  And the new Japanese government under the conservative Liberal Democratic Party, which came to power Dec. 26, is expected to further boost defense spending.  AMI said procurements of new naval vessels and upgrades of older ones continue to grow for both large and small vessels. The Asia-Pacific is still buying and building more “littoral optimal” ships and submarine hulls in the 3,000-ton-and-below range for ships, and the 1,500- to 2,000-ton range for submarines, said Bob Nugent, vice president of AMI’s advisory services. “To boil it down — I don’t see it so much as ‘either/or’ [littoral or blue water] when it comes to new-build ship investment decisions for an increasing number of Asia-Pacific navies,” he said.

 For example, among 2,000- to 4,000-ton multipurpose combatants, including SIGMAs for Indonesia, Singapore’s Formidable-class frigates and Malaysia’s second-generation patrol vessels, are “emerging as the optimal flex design to cover the broadest mission set … capable of covering littoral ops and distant deployments,” Nugent said.  Lau said the Asia-Pacific region recently surpassed Europe as the world’s second-largest naval market after the U.S., with projected spending of more than $201 billion in the next two decades on about 1,055 ships. “Southeast Asia in particular is set to spend more than $25 billion on new naval ships through 2031, with patrol vessels, frigates and amphibious ships forming the core of future new naval projects in the region,” Lau said.

 Lau said that in line with industry trends, one of the new highlights of IMDEX Asia will be demonstrations of unmanned aerial systems (UASs), which have been gaining ground rapidly in the industry. Singapore’s ST Engineering has been producing a variety of UASs, including the Fantail and Skyblade family, and has been developing surface unmanned vessels. These will primarily be used for coastal waterway, harbor and hazardous missions.

 Submarine Spending

 Navies in the Asia-Pacific region will “acquire more submarines and spend more on them over the next two decades than any other region in the world except the United States,” Nugent said. 

“The Asia-Pacific region remains the largest regional submarine market in the world by hull numbers, and second-largest [after the U.S.] in planned investment,” he said. “With 282 new submarines to be built worldwide through 2031, the Asia-Pacific region is expected to acquire over 40 percent of that total, and expend over 27 percent of all new submarine funding worldwide over the same period.” Six countries in the Asia-Pacific make up almost 90 percent of future new-construction submarine acquisitions projected over the next two decades. According to AMI, the Asia-Pacific countries spending the most on submarines, in order, are India, South Korea, Taiwan, Japan, Australia and China.  Among some Asian countries, including Singapore and Vietnam, submarines are primarily used to protect exclusive economic zones and conduct surveillance in the littorals. China is expected to first use its subs to patrol disputed islands in the South China Sea before conducting longer-range blue-water missions. 

 On China, AMI bases its estimated acquisition cost on 16 new-build submarines forecast to join the fleet in the next five years.

 The AMI forecast report predicts that the Asian and Australian market will produce 116 submarines between now and 2032. The report also concludes that the regional market for both naval and coast guard acquisitions will result in 128 amphibious vessels, 12 corvettes, two cruisers, 235 fast attack craft, 82 OPVs and 255 patrol craft.

from AMI Jan 2013