Market Trends of Southeast Asia Defense Industry
Navy Segment Will Showcase Remarkable Growth During the Forecast Period
- The Navy segment is projected to show significant growth in the market during the forecast period. Following a sustained period of growth, many Southeast Asian countries are building up military capabilities for better protection of their assets, especially the shipping lanes, ports, and maritime boundaries critical to exports and supply chains. They also seek to defend their territorial integrity in a fast-changing security landscape.
- Southeast Asia’s integration with the Chinese economy is intense. Its defense engagement with China is constrained by China’s assertiveness in the South China Sea. This conflicts with Southeastern countries, notably Vietnam and the Philippines.
- The development and security of all Southeast Asian states depend on their unhindered access to seas, and the countries consider maritime security a priority. Naval forces of the region must tackle numerous threats, such as terrorism, smuggling, and human and drug trafficking. Another factor increasing the demand for naval procurement is the age of equipment in service. For instance, in March 2023, ST Engineering announced that its subsidiary ST Engineering Marine won a contract for the detailed design and construction of six Multi-Role Combat Vessels (MRCVs) for the Republic of Singapore Navy (RSN). Also, in July 2021, the Royal Thai Navy reproposed a plan to procure two additional submarines from China for THB 22.5 billion (USD 685 million).
- Due to many possible challenges, Southeast Asian fleets are developing and maintaining various capabilities for peacetime and potential conflict scenarios. This is expected to drive the navy segment in the forecasted years.
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Singapore Dominates the Market During the Forecast Period
- Singapore held the highest shares in the market and continued its domination during the forecast period. The growth is due to increasing spending on the defense sector and rising procurement of advanced weapons to enhance defense capabilities. Singapore’s 2023 defense budget is USD 13.4 billion; the 2023 budget is a 5.6% increase from the 2022 defense budget. The budget for the Singapore Armed Force (SAF) increased by approximately USD 509 million compared to 2022.
- Threats posed by terrorist organizations, the acquisition of military equipment, overseas training of armed forces, and participation in international peace-building missions and disaster relief operations have mainly driven the country's defense spending. For instance, in March 2023, the Singapore Army picked Colt’s Infantry Automatic Rifles 6940 (IAR 6940) as the new section automatic weapon (SAW). Colt’s Infantry Automatic Rifles will replace in-service ST Engineering’s 5.56 mm Ultimax 100 Mk2 light machine gun (LMG). Colt’s 6940 rifle is lighter, has a shorter barrel, and has a higher fire rate than competing Heckler & Koch's M27 5.56 mm IAR rifle. ST Engineering’s 5.56 mm Ultimax 100 Mk2 light machine gun (LMG) was in service for approximately 40 years.
- Furthermore, some of the leading defense companies in Singapore are Singapore Technologies Engineering Ltd, ST Engineering Land Systems Ltd, SIA Engineering Co Ltd, Starburst Holdings Limited, Advanced Material Engineering Pte Ltd, and Airbus Helicopters Southeast Asia Private Limited, among others, who are actively contributing to indigenous defense development. Thus, growing spending on the defense sector and rising investment in research and development boost market growth across the country.
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