BMI View: Defence spending remains a top priority for the Singaporean government which is executing a prudent military procurement agenda with a long-term outlook that will transcend the Singapore Armed Forces (SAF) into a third generation fighting force. In the future, we expect to see sustained levels of weapons imports from American and European arms manufacturers, as well as continued support for domestic defence company, ST Engineering. The key downside risk Singapore's defence expenditure stems from a GDP downturn, but we forecast positive and stable economic growth through to 2018.
BMI forecasts Singaporean defence expenditure to reach USD11.6bn in 2015 as the Ministry of Defence upholds its commitment to steady and sustained spending policy, which is focused on hi-tech weaponry. This bodes well for domestic and international security and defence firms, which will see Singapore to maintain its position as a top five global arms importer. Singapore is investing in submarines, unmanned aerial vehicles (UAVs), and new fighter jets. The city-state is tipped as one of the leading customers for the Lockheed Martin F-35 fighter programme, however fresh reports indicating further F-15 acquisitions have raised question marks over Singapore's commitment.
Other important acquisitions made in the past 12 months include orders for two Type-218SG submarines, two Sikorsky S-70B Naval Helicopters, Joint Direct Attack Munitions (JDAM) kits, SPYDER and ASTER-30 Surface-to-Air Missile Systems. This array of systems are expected to improve synergy between air, sea, and land forces, and strengthen defensive and offensive capabilities as SAF operates a pre-emptive defence policy - similar to that of Israel. There have also been further investments in personnel training, including a new live-firing training facility, designed to enhance urban warfare and close-quarters combat capabilities. ST Electronics has taken delivery of a Cyber Security Simulator, which will enhance cyber security which will mitigate against the rising threat of asymmetrical warfare.
These investments will ensure Singapore retains its technological edge over neighbouring defence forces, at a time when continued tensions within the regional security climate are spurring increased militarisation of the Southeast Asia. As an ASEAN member, Singapore maintains good diplomatic relations with neighbouring states. Historic sovereignty disputes with Malaysia and Indonesia have largely subsided, and the national defence forces now cooperate to enhance regional security. Multilateral security organisations such as the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP), provide platforms for international cooperation and dialogue, therefore reducing the chance of interstate conflict and terrorism. Meanwhile, ReCAAP is taking on increased significance after the US became the latest member to join the group in September, as piracy rates Southeast Asia spiked through 2014.
SAF has also been actively engaged in international military exercises, which enhance military capability, especially given the lack of real combat experience which may be considered a key weakness for SAF. The Republic of Singapore Air Force (RSAF) joined Australian and US forces in Australia's Northern Territory for trilateral combat exercises in Q314. The Republic of Singapore (RSN) and naval forces from Brunei, Malaysia, Indonesia, the Philippines, and Thailand, concluded the 'Southeast Asia Co-operation and Training' ('SEACAT') exercise in August.
Key BMI Forecasts
BMI forecasts defence expenditure in USD terms to increase by 8% y-o-y to USD11.6bn in 2015, before increasing 7.6% y-o-y to USD12.5bn in 2016.
BMI forecasts defence expenditure as a percentage of GDP to remain relatively stable at 3.3 - 3.4% of GDP until at least the end of the current forecasting period in 2023.
BMI expects real GDP growth to remain relatively stable at between 3% and 3.5%, at least until the end of the current forecasting period in 2023. In 2015 real GDP growth should be 3.2%.
SAF has developed a new live firing centre which will enhance urban warfare capabilities.
Singapore's 'expected' acquisition of the fifth-generation F-35 Joint Strike Fighter is in question after the RSAF reportedly ordered a further 16 F-15 fighters.
Developments in the cyber security space through 2014 will raise Singapore's resilience to asymmetric warfare tactics.
The number and sophistication of piracy attacks in the Malacca Straits and the South China Sea increased through 2014.
The Singapore Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.
BMI's Singapore Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Singaporean defence and security industry.
- Benchmark BMI's independent defence and security industry forecasts on Singapore to test other views - a key input for successful budgetary and strategic business planning in the Singaporean defence and security market.
- Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
Global and Regional Political Outlooks
A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.
Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.
BMI Industry Forecast Scenario
Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
- Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
- Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
- Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).
Political Risk Assessment
Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.
Security Risk Analysis
BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.
Armed Forces Spending/ Expenditure
The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.
The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
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