Philippines Allocate the FY2011 Defense Budget Increased by 86%

08 September 2010


Philippine Army with digital jungle uniform (photo : tnairsoft)

Philippines raises spending in reaction to insurgency and Chinese build-up


The Philippines government has proposed a major increase in defence expenditure for Fiscal Year 2011 (FY11) in what is seen as a bid to eliminate domestic insurgency and a reaction to military build-up in China.

Under a government proposal detailed by documents published on 31 August by the Philippines Department of Budget and Management, the FY11 military expenditure will soar 81 per cent to PHP104.5 billion (USD2.3 billion).

According to budgetary papers, the FY11 allocation includes PHP82.3 billion for personal services, which includes military operations, PHP17.1 billion for maintenance and PHP5.1 billion for procurement.

Under the plan, which is expected to be approved by legislators later this year, the Philippine Army will receive PHP33.6 billion, while the Philippine Air Force and Philippine Navy will receive PHP10.1 billion and PHP11.3 billion respectively. The Armed Forces of the Philippines (AFP) headquarters will receive PHP34.7 billion.

The expenditure allocated for procurement is part of the AFP's PHP210 billion (USD4.5 billion) Capability Upgrade Programme (CUP), which was implemented under law in 1995, but has been severely hindered by a lack of finances.

Additional expenditure is likely to be available to the FY11 procurement allocation from budget earmarked to this CUP programme as the Philippines economy, driven by a growth in exports, gradually expands.

Procurement priorities include utility helicopters, naval fast attack craft, armoured personnel carriers, fighter aircraft and a pressing need for C-130 transport aircraft. A requirement for combat/utility helicopters was recently fulfilled by the AFP's USD60 million order of eight PZL Swidnik W-3 Sokol helicopters.

The FY11 allocation takes spending close to 2 per cent of GDP in line with a pre-election pledge made by President Benigno Aquino III, who assumed office on 30 June following elections in May. The plan is coupled by a 'defence review' designed to eliminate corruption and improve efficiencies in defence spending as the government seeks to end the AFP's long-running campaign against several insurgency groups that remain active in the country.

One of the most influential of these groups, the southern-based Moro Islamic Liberation Front, is expected to enter peace talks with the government following the end of Ramadan in late September.

Rozzano Rufino Biazon, who until June was vice-chairman of the House of Representatives subcommittee on national defence, told Jane's that he believed expenditure allocated to capital expenditure should be higher, but that the proposal reflected growing requirements of the AFP as it attempts to stamp out insurgency.

"Although it is a big increase, as we have experienced in the past a large part of the budget is likely to be directed towards personnel: benefits, salaries and retirement ... . But at least we can see that the president is going to give priority to modernising the armed forces and perhaps this is the first step."

Meanwhile, a regional defence expert, Dr Tim Huxley, executive director of the International Institute for Strategic Studies - Asia, told Jane's that the significant increase is also "partially related to what's been happening in the South China Sea".

Referring to a widely speculated build-up of Chinese naval forces in the region and heightened tensions surrounding the ownership of the Spratly Islands, of which both China and the Philippines lay claim, Huxley added: "This is to do with defending the Spratlys against Chinese encroachment like Vietnam is trying to do ... . The Philippines government and armed forces are aware that in terms of external defence the Philippines' capabilities are down to almost nothing."

Huxley also pointed out that the Philippines' focus on defence is being replicated across Southeast Asia. "The Philippines is not alone in reacting to China. China's emphasis is on China's peaceful rise, but countries in the region are increasingly alarmed," he said.

(Jane's)