Aspac drives rise in defense spending

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COUNTRIES with rapidly expanding economies such as the Philippines are driving most of the worldwide increase in defense research, development and acquisition, a report conducted by professional services organization Deloitte showed.

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In a report titled “Asia Pacific Defense Outlook 2016: Defense in Four Domains,” the New York-based research agency said the Philippines, along with Cambodia, China, Pakistan and Singapore are considered higher-growth balancers.

On the other hand, Lower-Growth Balancers are Australia, Brunei Darussalam, India, New Zealand and Taiwan.

Balancers are projected to grow their economies at a compound annual rate of 4 to 9 percent, while growing their defense budgets at 1 to 4 percent.

China’s continuing modest defense budget growth will add $18 billion in annual procurement and R&D budget by 2019, representing nearly half the total increase in global defense acquisition budgets in the 2015-2019 period.

Its newly-released military strategy emphasizes a shift from priority on land forces toward open-ocean capabilities, and information dominance.

The Philippine economy has been growing at an average of six percent annually.

The Department of National Defense (DND) has increased its budget by 17.6 percent to P117.7 billion for 2016.

It enjoys the third largest share in the total budget.

Bulk of the budget will be allotted for post-arbitration initiatives in the South China Sea (West Philippine Sea) and modernization plans for the Armed Forces of the Philippines (AFP), among other things.

But priorities may shift once the new administration takes over on June 30, according to the report.

“By the time the United Nations hands down a ruling on the case filed by the Philippines against China regarding disputed territory, we will have a new President. And the new administration has expressed willingness to open bilateral talks with China, so that will definitely influence the country’s defense posture and priorities,” Navarro Amper and Co. Managing Partner and CEO Greg Navarro said.

The same report said key challenges to peace and security in the region are increasingly located at sea as access to sea lanes has become more critical.

“As the Asia-Pacific economies develop their manufacturing and export capabilities, access to sea lanes has become even more critical, which is why you now have several Southeast Asian nations and China vying for a claim to one of the world’s most important shipping routes,” Navarro pointed out.

Accordingly, container shipment volumes increased by over 180 percent between 2001 and 2013.

More than half the world’s total container shipment volume now originates from Asia-Pacific, with 27 percent from China alone.

As a result, Deloitte projects that naval budgets will grow by more than 60 percent above their 2010 levels by 2019 as countries in the region acknowledge their reliance on maritime commerce.

Navarro said cybersecurity should be given priority because the region’s rapid economic development will only push more businesses and government agencies onto the Internet, thus exposing more organizations and individuals to the risk of cyberattacks.

“The country [Philippines] has seen cases of government websites being defaced, local telecom companies being targeted, and somehow a cyber attack on one of Asia’s central banks landed the Philippines in the news when funds that were illegally siphoned off found their way to the Philippines, cleared in a local bank and disappeared in a casino,” he added.

Based on the extent to which each economy relies on Internet-based interaction, Deloitte developed a Cyber Vulnerability Index to identify the Asia Pacific countries that are most vulnerable to cyberattacks.

The region’s “Cyber Five” (highest vulnerability economies) are South Korea, Australia, New Zealand, Japan, and Singapore.

The Philippines landed on the 10th spot in the index, below Thailand and ahead of Cambodia.

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