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As China flexes maritime muscle, South-east Asia builds home-grown defence industry

Published on Aug 12, 2014 7:04 PM

KUALA LUMPUR (REUTERS) - Spurred by tensions with China, South-east Asian nations are building up their own defence industries, channelling fast-growing military budgets to develop local expertise and lower their dependence on big US and European arms suppliers.

While countries such as Indonesia, Thailand and Malaysia won't do away with big-ticket imports from giants like Airbus Group NV or Lockheed Martin Corp, they are increasingly encouraging domestic defence firms to manufacture hardware locally. With regional defence spending seen rising to US$40 billion (S$50 billion) in 2016, 10 per cent higher than last year, some countries are already developing their own exports.

A domestic defence industry is a long-term economic as well as security goal of varying degree for the 10 Asean countries, spending more on modernising ageing equipment partly to retain the region's military balance. The goal has been given urgency by China's moves in recent months to press disputed claims in oil- and gas-rich waters of the South China Sea, security analysts say.

Asean members have stopped short of explicitly citing Beijing as a reason for beefing up military capability. At a meeting in Myanmar last weekend, Asean foreign ministers again appealed for "self-restraint" in the face of heightened tensions, with no mention of China in a formal communique.

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