Taiwan to launch home-grown submarine plan with initial $130m budget

TAIPEI (REUTERS) - Taiwan has allocated NT$3 billion (S$130 million) over four years, beginning next year, to launch a long-awaited programme for the island to build its own diesel-electric submarines.

The expected allocation is the first for a plan that has been talked about since the early 2000s, when a deal with the United States for eight diesel-electric submarines got bogged down because of technical and political constraints.

The spending was set out in the defence ministry's budget for 2016 and seen by Reuters.

The plan come as other navies in the region expand their submarine fleets in part to create a strategic deterrent against China's growing naval assertiveness in Asian waters.

Taiwan has four aging submarines, including two that date to World War II, although its military is otherwise considered generally modern.

China has about 70 submarines, along with dozens of surface ships and a refurbished aircraft carrier.

China sees self-ruled Taiwan as a renegade province and has never renounced the use of force to take back the island.

Critical to Taiwan's indigenous submarine programme is the transfer from the United States or other Western countries of submarine-manufacturing technology.

Support from US companies or release of export technology controls would need a nod from the US government.

China opposes any form of military technological transfers or weapons sales to Taiwan.

The spending plan, which is allotted through to 2019, covers only the contract design phase of what should be a decades-long programme.

Taiwan's Ship and Ocean Industries R&D Centre (SOIC), a government-backed ship designer and technical consultant, is expected to select a consortium to lead the contract design phase, according to military and industry sources in Taiwan.

Taiwan lacks submarine design skills, the ministry stated in its budget plan.

By carrying out this first phase, Taiwan will be able to deepen its vessel design capabilities, develop its industry and acquire intellectual property, it said.

The defence ministry is planning to spend NT$321.7 billion in 2016, accounting for 16.1 per cent - the biggest share - of the central government's overall expenditures, budget plans show.

The government's 2016 budget was delivered to lawmakers this week and will be reviewed when parliament begins a new session later this month.

The submarine plan has support in parliament which is expected to approve the overall budget.