Singapore Defence & Security Report Q1 2008

Singapore, as an island state, faces maritime security threats such as piracy, and as such has developed its security forces to deal with evolving security challenges. Singapore also faces more traditional challenges such as maintaining good relations with neighbouring states, with significant efforts made to strengthen bilateral diplomatic relations with Indonesia. However, despite recent efforts, most notably the Defence Cooperation Agreement (DCA) between Singapore and Indonesia, there have been some setbacks. The DCA would formally recognise defence ties between the countries, ensure increased defence industry collaboration and increase access to training facilities. However, disagreements between the two countries make it unlikely that any agreement will be reached over the DCA in the near future.

The Singaporean defence budget remains one of the highest in the Asia Pacific region, and it has been steadily increasing in recent years. The government announced budget increases of 5.3% to SGD10.58bn in 2007. The majority of the budget will be spent on operating equipment (96.7%) and the remaining 3.3% will be spent on development of personnel and defence equipment. Operating equipment received a 5.5% increase in spending, with the majority on the Armed Forces (SGD10.17bn). The security and external relations budget represents one third of Singapore's total expenditure, and includes expenditure for the Ministry of Foreign Affairs, Ministry of Home Affairs and the Ministry for Defence (MINDEF).

Typically the Singaporean government has kept defence expenditure at 4.5-5% of the budget, but the 2007 expenditure has tipped it over 5%. Singapore's defence expenditure in recent years has been targeted towards enhancing its operational capacity, with a view to maintaining a superior capability over neighbouring states' capabilities. This is certainly true of Singapore's air strike and air combat capabilities, where it operates a highly-capable fleet of F-5E/Fs and Block 52/52+ F16 C/Ds.

Singapore enjoys a robust defence industry which has experienced consistent growth. The industry is set to expand, both in the Asia Pacific and US market. In Q406, Vision Technologies Kinetics (VTK), a subsidiary of ST Engineering, agreed to acquire 80% of the US-based MAK Technologies for US$20mn, a firm which specialises in producing simulation equipment for training purposes. Singapore's arms trade remains robust, but the area demonstrating the most export promise was its advance military training programmes. The last model released in Q406 by the DSTA and ST Electronics was the Advanced Combat May System (ACMS), which enables soldiers to train with information transmitted in real time supported by a command-and-control information system (CCIS).