[ANALYSIS] Philippine defense spending 2019: What’s in the data?

Ava Patricia C. Avila

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[ANALYSIS] Philippine defense spending 2019: What’s in the data?
'The Philippines has enjoyed strong economic growth in recent years, but a sharp slowdown as a result of the COVID-19 pandemic could upend planned defense spending'

The following piece was first published on the Strategic and Warfare Studies Initiative’s site

Defense experts have long recognized the need for the Philippines to modernize its military capability. While the Department of National Defense (DND) budget has seen consistent growth since 2010, the defense and security sector within the Philippines remains one of the least resourced in Southeast Asia due to decades of neglect and endemic corruption.

The latest figures released in April by the Stockholm International Peace Research Institute (SIPRI) showed that the collective military spending in Southeast Asia (SIPRI groups East Timor with the 10 ASEAN member states) increased by 4.2% in 2019, totaling US$40.5 billion. Eight of the 11 states (excluding Laos, Myanmar, and Vietnam, for which data is not made public) increased their military spending between 2010 and 2019. Nearly two-thirds of the US$40 billion is concentrated amongst the 3 largest spenders with Singapore (28%), Indonesia (19%), and Thailand (18%) substantially outspending neighboring states.

For some ASEAN states, increases in military spending within the decade are partly to fund the expansion of capabilities in response to Chinese claims and coercive actions in the South China Sea.

Source: SIPRI Military Expenditure Database https://www.sipri.org/databases/milex

In 2019, the Philippines’ defense expenditure was US$3.5 billion, a 22% increase from 2018. The relatively substantial increase coincided with a growing Philippine economy, which averaged 5.9% growth in 2019 — the slowest in 8 years due to the delayed passage of the public budget in the first half of the year and the reduced expenditure that followed.

The increase in defense spending was also partially driven by the Duterte administration’s greater emphasis on internal threats such as insurgency, criminality, illegal drugs, and terrorism. Within the budget, more than half (US$1.8 billion) was allocated to the Philippine Army (PA), US$548 million went to the Philippine Navy (PN), US$485 million to the Philippine Air Force (PAF), and US$721 million to the Armed Forces of the Philippines (AFP) General Headquarters (of which US$492 million was allotted for modernization efforts). The rest of the budget were allocated to other agencies the DND administers, including the Office of Civil Defense, the National Defense College, Arsenal, and the Veterans Memorial Medical Center.

Some wins

The Revised AFP Modernization Program signed in 2012 by former President Aquino is divided into 3 phases, with each implemented in a period of 5 years: Horizon 1 (FY2013-17), Horizon 2 (FY2018-22), and Horizon 3 (FY2023-28). The first horizon involved the acquisition of military hardware mainly for internal security operations, and some air and naval acquisitions intended for external defense such as combat utility helicopters, 3 cutters, several assault crafts, and strategic sealift vessels.

Recent developments in the second phase of the AFP Modernization Program suggests continued efforts under President Duterte for the AFP to shift defense acquisitions strategy from internal security to territorial defense. In early 2019, the Air Force has acquired an Air Defense Radar System and an FA-50PH flight simulator; and 6 A-29B Super Tucano aircrafts are expected to be delivered. With a projected yearly allocation of P300 billion (about US$5.9 billion) over a period of 5 years, the AFP seeks to purchase more heavy-lift helicopters, multirole fighters, and maritime patrol aircraft for the Air Force; two corvettes, and multirole offshore patrol vessels for the Navy. (READ: Lorenzana defends buying attack helicopters: It’s to fight NPA)

While the Duterte administration has concentrated resources to the Army and internal threats, the Philippines has also advanced its security relationship with Malaysia and Indonesia under the Trilateral Cooperative Arrangement on Immediate Measures to Address Security Issues in the Maritime Areas of Common Concern in the Sulu and Celebes Seas. The security cooperation has contributed to the 9% decrease in terrorist activity during 2018, according to the 2019 Global Terrorism Index report. Despite this reduction, the Philippines remained the only ASEAN nation in the report, which ranked among the top 10 countries most impacted by terrorism.

Streamlining the force: A strategic concern

According to SIPRI, the Philippines spent 1% of GDP on its armed forces, slightly below the ASEAN average of 1.73% in 2019. Even with the myriad of internal and external security challenges the country is facing, 62.2% ($2.3 billion) of the budget were allotted to personnel costs. Of this, $1.1 billion was allocated for pensions of retired AFP servicemen and this is projected to increase by 24% in 2020. While the issue is not unique to the Philippines, this reality poses sustainability concerns to the DND’s overall strategy. As a consequence, Defense Secretary Lorenzana has pushed for the refiling of the military pension reform bill  that recommends setting the compulsory retirement age of servicemen to 60, instead of the current 56. In February 2020, President Duterte certified the bill as urgent.

On the horizon

The Philippines has enjoyed strong economic growth in recent years, but a sharp slowdown as a result of the COVID-19 pandemic could upend planned defense spending. According to Secretary Lorenzana, military modernization projects with contracts and those already provided with funds will continue, but other longer term projects are likely to be postponed. This might not be a bad thing as it may provide the government — through the leadership in the DND and AFP — a window of opportunity to scrutinize resource allocation and further ensure a more balanced portfolio of investments in defense capabilities. – Rappler.com

Ava Patricia Avila is Strategic Fellow at Verve Research, an independent research collectively focused on the relationship between militaries and societies in Southeast Asia. She holds a PhD in Defense and Security from Cranfield University, UK. She is based in Washington, DC.

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