Revisiting armaments production in Southeast Asia: new dreams, same challenges.

• Author: Bitzinger, Richard A.

Armaments production in Southeast Asia has always been long on ambition and short on reality. Going back to the 1960s, several states in the region have attempted to manufacture their own arms, but not much ever came of these efforts. Indonesia, for example, invested considerable resources into establishing strategic enterprises covering aerospace, shipbuilding and land systems, but they produced little in the way of useful military products, and they failed to become self-sustaining ventures. Vietnam and the Philippines have constructed naval vessels, Thailand has assembled light trainer jets and Malaysia has attempted to leverage its few niche capabilities in defence and aerospace manufacturing to become a player in the global supply chain. However, except for Singapore--whose indigenous defence industry has benefitted from relatively high levels of defence spending--Southeast Asia has produced few success stories when it comes to arms manufacturing.

After more than a decade of neglect and decay, however, there are indicators that Southeast Asia's defence sectors may be rebounding. There is a newfound ambition and effort underway in several states in the region to revitalize and rebuild their ailing defence industries, or attempt to create new centres of armaments production. Vietnam and Thailand are considering efforts to expand indigenous arms manufacturing, and the Philippines is exploring new military roles for its shipbuilding industry. Indeed, as regional defence spending grows and, subsequently, regional arms acquisitions also increase, Southeast Asia may be on the cusp of a rebirth in armaments production.

However, before becoming too sanguine about the future of the region's defence industrial capacities, it is important to keep in mind the extremely high barriers to advanced armaments production that still exist. Desire and determination are insufficient substitutes for arduous effort, technology, and, above all, money, when it comes to arms manufacturing. Significant challenges--many of them of long standing--still come in the way of regional states becoming successful arms producers, as will be illustrated by the recent experiences of the three leading weapons-producing states in Southeast Asia--Indonesia, Malaysia and Singapore--and their recent experiences and efforts to renew or expand local arms industries.

Why Do Nations Produce Armaments?

As with other nations, Southeast Asian countries have many reasons for producing armaments. (1) Often, the most critical rationale is security of supply. In general, countries desire a reliable source of arms with which to defend themselves, and that secure source is usually a domestic one. Consequently, if they are capable of doing so, achieving some degree of self-reliance in arms procurement can be a key strategic goal. This requirement is particularly felt when a nation has no allies or patron-state providing an external security guarantee. In the case of Southeast Asia, for example, the withdrawal of British forces in 1971, as well as the promulgation of the Nixon Doctrine (which asserted that US allies were largely in charge of their own security), resulted in a heightened sense of strategic isolation and insecurity, and therefore provided regional states with a powerful new incentive for arming themselves--and with domestically produced weapons, if possible. (2)

Parallel to this aspiration for self-reliant defence is the fear that depending too heavily on imported weaponry risks exposing a country to arms embargoes, cut-offs and other types of supplier restraint, thus weakening a nation's military capabilities and undermining its national security. Foreign dependencies for armaments can also leave the buyer-state exposed to attempts by the supplier to withhold arms deliveries in order to coerce the former into making concessions on issues both national (such as human rights) or international (such as combating terrorism and drug trafficking or opposing a common regional threat). The United States, for example, in the late 1990s embargoed weapons sales to Indonesia in response to human rights violations in occupied East Timor. For a long time, too, it was US policy not to introduce particular weapons, such as advanced air-to-air missiles, into the region, unless other comparable weapons systems had already been exported there. (3) Therefore, reducing one's reliance on foreign sources of arms can be a crucial military objective, while also strengthening national political independence.

Another strategic rationale driving defence industrialization, especially among developing nations, is the more intangible aspirations of national pride and prestige. Possessing an independent defence industrial capability feeds directly into many states' concepts of national power--not only by creating military power but also by demonstrating its industrial and technological prowess, and thereby confirming its status as a nation to be reckoned with.

Indonesia's military rulers, for example, embarked on an ambitious defence industrialization programme in the 1970s based in part on the belief that a strong regime was unsustainable in the absence of a strong domestic arms industry. (4) This "rich nation/strong army" syndrome is not confined to aspiring Great Powers, such as China or India, or to middle powers, such as Indonesia or South Korea. Such "technonationalism"--the idea of consciously and deliberately nurturing indigenous armaments production, usually through government-initiated industrial policy, as a means of achieving self-reliance in arms procurement (5)--can be detected on the part of many smaller arms-producers. As Singh points out, Singapore regarded a robust indigenous defence industry as an important compensation for its small size and vulnerability ("its midget psychosis" to use Singh's term) with regard to its large neighbours. (6)

If strategic concerns are one side of the coin driving self-reliance in arms procurement, economics is generally the other. Armaments production has often been seen as providing many actual or potential economic benefits to the nation as a whole. In the first place, defence industrialization can promote backward linkages spurring the development, expansion, and modernization of other manufacturing sectors in the national economy, such as steel, machine tools, and shipbuilding, as well as building up general skills and know-how. All this industrial development, in turn, provides lead-in support, equipment and personnel for the production of armaments. The construction of warships, for example, can stimulate the establishment of indigenous shipbuilding industries, while production of military vehicles requires steel mills and automotive factories to provide critical parts and components, such as armour plating, chassis, and engines, as well as the skilled labour to assemble these vehicles. (7)

Armaments production can also serve as a "technology locomotive" spurring the growth of new industries and new technologies, particularly in the aerospace, electronics and information technology sectors. (8) Military aerospace programmes, for example, often constitute the basis for civil aircraft production. Defence industrialization can also function as an important import-substitution strategy, and instead of sending capital--and especially government monies --out of a country via arms imports, indigenous arms production can help to create jobs, ameliorate trade imbalances and protect foreign currency reserves. The economic and technological impetus was particularly evident in Indonesia's initial approach to defence industrialization. Beginning with President Soeharto and continuing up to the present day, the arms industry has been seen as an instrument for national development and industrialization. (9) Defence industries were supposed to contribute directly and indirectly to the nation's technological and industrial modernization, both through the creation of new strategic industries manufacturing both military and commercial products, and by raising the country's level of technical expertise, manpower skills and industrial infrastructure. In particular, the establishment of an aircraft-manufacturing company in Indonesia was supposed to boost both the country's military and civil aviation sectors.

Finally, by exporting arms, local defence firms can constitute an important source of foreign currency earnings. Singapore, for example, has become a modest player on the international arms market: it has sold assault rifles to Croatia and Brunei; machine guns to Brunei, Croatia, Indonesia, Peru, the Philippines, Slovenia, Thailand and Zimbabwe; and it has licensed the production of a 40 mm automatic grenade launcher to Indonesia and Italy. (10) In 2008, it scored a major overseas sale with an agreement to supply the Bronco all-terrain tracked infantry carrier to the British army. (11) In perhaps its most controversial move, in the late 1990s Singapore exported an entire turnkey facility to Myanmar for the manufacture of small arms and ammunition. (12) Indonesia, meanwhile, has exported assault rifles (a copy of the Belgian FN FNC) to Cambodia, Nigeria, the United Arab Emirates (UAE) and possibly Mali. (13)

Arms Production in Southeast Asia: The Cases of Indonesia, Malaysia and Singapore

Nearly every large country in Southeast Asia produces some kind of arms. Most of this manufacturing is decidedly minor, however, consisting mostly of small arms (assault rifles, pistols, etc.) and munitions. Thailand, for example, produces ammunition for its armed forces, along with mortars, rocket launchers and 4 x 4 military vehicles. During the 1980s, it assembled German-designed trainer jets from imported kits, and it has constructed several small naval vessels over the years; most recently, the state-run firm Bangkok Dock finished assembly of a British-designed offshore patrol vessel, HTMS Krabi.

Vietnamese defence manufacturing is...