Boston, MA -- (SBWIRE) -- 04/20/2016 -- With President-elect Tsai Ing-wen's independence-leaning administration taking office in May 2016, relations with mainland China have cooled. In comparison to China's People's Liberation Army, Taiwan's military is small in size, and lacks technologically advanced equipment. Compounded by our view that the US is increasingly unlikely to come to Taiwan's aid in the event of military conflict with the mainland, domestic demand for modern equipment is significant and rising, particularly for products such as advanced multi-role combat aircraft, submarines and air defence systems. Taiwan's armed forces are being restructured and professionalised, which eventually will mean that a greater share of the defence budget can be directed towards R&D and new procurement, rather than personnel costs. The domestic defence sector boasts design and development capabilities in a range of segments, however, more technologically advanced military equipment still needs to be imported from the US. Apart from the US, most countries avoid defence exports to, and industry collaboration with Taiwan, in fear of the potential loss of Chinese goodwill . Exports are similarly affected by the island's ambiguous sovereignty status.

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Latest Updates

In January 2016, Taiwan's independence-leaning opposition leader Tsai Ing-wen won presidential elections, with her Democratic Progressive Party in majority in the legislature for the first time in party history - ousting the ruling Kuomintang (KMT). Tsai has stated that she will maintain the 'status quo' in regards to the 1992 'One China' consensus.

In December 2015, in a move that was met with condemnation by Beijing, the Obama administration formally authorised a potential USD1.83bn arms sale package for Taiwan. The package will include: AAV-7 amphibious assault vehicles, Perry-class frigates, air defence systems, TOW 2B missiles, ITAS launchers, Javelin antitank missiles and communication systems. The principal contractors of these items are Lockheed Martin and Raytheon.

Taiwan held its biennial Taipei Aerospace & Defense Technology Exhibition (TADTE) from August 13 to 16 2015. At the exhibition, a range of new and still-in-development technologies and systems were exhibited by domestic players, namely: a Medium Altitude Long Endurance (MALE) UAV, the ship-based short-range Sea Oryx Missile System for air defence and a coastal defence turret-mounted rocket system all by the National Chung-Shan Institute of Science and Technology (NCSIST) as well as a surveillance UAV by privately-owned GEOSAT Aerospace & Technology Inc.

In mid-2015, the Ministry of National Defense submitted a USD89.32mn budget request to the legislature to begin implementation of the island's indigenous submarine development programme with a four-year design phase. The initial phase is aimed to begin in H216, with the end-goal of building four 1,200-1,300 tonne diesel-electric submarines to replace obsolete submersible vessels.

Defence Industry Risk Reward Index

Taiwan places second-to-last regionally in our Defence Industry Risk Reward Index, above only North Korea. Demand for military equipment is significant, government support for defence sector development is strengthening, and ties to the US are strong, facilitating military imports. However, other countries are deterred from defence trade and industry collaboration with Taiwan, fearing a negative reaction from Beijing amid cooling cross-Strait relations. This severely hampers Taiwan's defence sector's ability to export products and develop its technological capabilities.

The Taiwan 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'sTaiwan Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Taiwanese defence and security industry.

Key Benefits
Benchmark BMI's independent defence and security industry forecasts on Taiwan to test other views - a key input for successful budgetary and strategic business planning in the Taiwanese defence and security market.
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Coverage

Global and Regional Political Outlooks

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