By Zachary Abuza
The Stockholm International Peace Research Institute (SIPRI) recently released their 2014 database, which shows robust growth in defense spending throughout Southeast Asia. Though the SIPRI data only goes through 2014, when at least two countries have already announced 2016 defense budgets, it shows important regional trends.
The region has seen steady growth in military expenditure between 2010 and 2014. There were net increases for all countries, averaging 37.6 percent. Southeast Asian countries spent $38.2 billion on defense in 2014.
There were large disparities in military spending between 2013 and 2014. Brunei surged 28.2 percent, followed by Cambodia at 14.4 percent and Vietnam at 14.1 percent. Four countries, led by Indonesia, actually saw declines in their military budgets in U.S. dollar terms, though this has to do with currency exchange rates. In local currencies, only Indonesia saw a decline, and the average increase was 9.5 percent, more than double the figure in current U.S. dollars, 4.1 percent.
All countries saw strong increases in military spending between 2010 and 2014. Vietnam led with a 59.1 percent increase, followed by Cambodia, 56.2 percent, and Indonesia, 50.6 percent. The average increase between 2010 and 2014 was 37.6 percent in U.S. dollars and 44 percent in local currencies. It was the less developed states that were above the regional average, as they tried to play catch up.
Singapore accounted for over a quarter of ASEAN’s defense spending in 2014, or as much as Vietnam, the Philippines, and Myanmar combined.
The average military expenditure as a percentage of gross domestic product (GDP) was 2.2 percent in ASEAN in 2014, though it ranged from 0.8 percent (Indonesia) to 4.3 percent (Myanmar). Military expenditure as a percentage of GDP remains fairly stable; only Brunei and Myanmar have seen dramatic shifts between 2010 and 2014.
Singapore at 18.3 percent led the region with military expenditure as a percent of all government spending in 2014. The average was 8.8 percent. Unlike GDP, defense spending as a percent of government spending fluctuates year to year.
There is wide disparity in per capita military expenditure, from Cambodia, $18.10, to Singapore, $1,789. The average for the region is $392, but is only $60 without small and wealthy Singapore and Brunei.
After a sharp fall due to the Asian financial crisis in 1997, Indonesia has seen the largest increase in military expenditure in the region. Between 2001 and 2014, defense spending increased from under $1 billion to over $7 billion, a 664 percent increase, and a 784 percent increase in rupiah. The sharpest rise occurred after President Susilo Bambang Yudhoyono came into office in October 2004. Between 2005 and 2013, defense spending rose 290 percent, before falling slightly in 2014. Between 2013 and 2014, military spending fell by 16 percent in current U.S. dollars, but only 4.8 percent in rupiah.
In 2014, Indonesia accounted for 18 percent of all of ASEAN defense spending. Military spending accounted for 4.1 percent of total government spending in 2014, less than half of the regional average of 8.8 percent. Indonesian defense spending as a percentage of GDP was the lowest in the region at 0.8 percent, well below the average of 2.2. percent. Per capita defense spending in Indonesia is $27.80, the second lowest in the region after Cambodia. In April 2015, the Indonesian parliament announced a plan to increase military expenditure to $15 billion by 2020, twice the 2015 level; expenditure would increase from 0.8 percent to 1.5 percent of GDP.
Thai military expenditures grew modestly before the September 2006 coup. Since then, they have soared, despite any meaningful threats to Thai territorial integrity. The military rewarded itself with a 44.3 percent increase following the 2006 coup. Between 2008-2014, democratically elected governments tried to fend off another coup by overseeing a 28.3 percent increase to the military budget. Between 2006 and 2014 coups, military expenditures increased nearly fourfold. Thailand has the third highest military budget in the region, at $5.73 billion, or 15 percent of ASEAN’s total. Spending in 2014, fell by 2.9 percent in current U.S. dollars, though it increased by 4.9 percent in baht. There was a 15.5 percent increase in defense spending between 2010 and 2014.
Surprisingly, Thai military expenditure was only 1.5 percent of GDP in 2015, below the regional average of 2.2 percent. Likewise it was only 6.6 percent of government spending below the regional average of 8.8 percent. Spending increased sharply in 2015 following the coup. In April 2015, the military government proposed a 2016 defense budget of $6.3 billion, seven percent above the 2015 level; It would comprise eight percent of total state expenditures and 1.5 percent of GDP. Thailand continues to lag in per capita spending, at $85.30, below the regional average of $392. Despite the increase in funding, Thailand is plagued with corruption and inefficiency in its procurement systems.
Malaysia has seen a steady but modest increase in military spending between 2010-2014, 27.6 percent, below the regional average of 37.7 percent. Malaysia has the fourth largest defense expenditure in the region, representing 13 percent of the ASEAN total in 2014. Defense spending fell by 1.6 percent between 2013 and 2014 in U.S. dollar terms, but increased 5.5 percent in ringgit. Defense represented a modest 5.4 percent of government spending and only 1.5 percent of GDP, well below the regional average of 2.2 percent in 2014. Per capita defense spending is $163 in Malaysia, third in ASEAN. Per capita spending increased 23 percent between 2010 and 2011, but has been flat since then.
Vietnam has seen the steadiest increase in military expenditure in the region. In the decade between 2005 and 2014, its military spending increased by 314 percent. In that time it has developed the most lethal power projection capabilities in Southeast Asia, including one of the largest navies, with advanced Kilo-class submarines, and the most sophisticated missile force in the region. Vietnam’s $5.73 billion defense budget in 2014 was the fifth largest and 11 percent of the ASEAN total. Defense expenditure rose 14.1 percent in US$ and 15.4 percent in dong, between 2013 and 2014. Between 2010 and 2014, Vietnamese military spending increased 59.1 percent in U.S. dollars and 81 percent in dong. Vietnamese defense spending in 2014 was 2.2 percent of GDP, the ASEAN average. As a share of total government spending, 8.3 percent, it was just under the regional average of 8.8 percent. Per capita spending in Vietnam is still low, only $46.
The Philippine government is starting to make long needed investments in its military. Defense spending was $3.3 billion in 2014, or 9 percent of ASEAN’s total. In current U.S. dollars, this was a 2.5 percent decline from 2013, but actually a two percent increase in pesos. Between 2010 and 2014, Philippine defense spending increased, 35 percent, near the regional average of 37.6 percent. Military expenditure in 2014, represented 1.1 percent of GDP — half of the ASEAN average –, and six percent of government spending, below the regional average of 8.8 percent. In terms of per capita spending, the Philippines, at $32.90, was the third lowest in ASEAN in 2014. The government of President Benigno Aquino is implementing a $1.8 billion modernization program, but it comes after years of neglect. Vietnam has a far more robust military than the Philippines, despite similar budgets.
Dr. Zachary Abuza is principal of Southeast Asia Analytics, and writes on Southeast Asian politics and security issues. Follow him on twitter @ZachAbuza.
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