Philippines races to upgrade military amid China threat - but is it 'too little too late'?

Addressing new army officers in July, President Ferdinand Marcos Jnr struck an optimistic note over the Philippine military's prospects once a multibillion-dollar upgrade gains momentum, as sea disputes with China add urgency to the quest for new jets, frigates and submarines.

"Hopefully, we'll catch up in a year, maybe two, we will already be back to where we were supposed to be at the time before the pandemic," Marcos Jnr said in the July speech.

But his words were grounded by the reality of substantial delays - partly due to the Covid-19 pandemic - and underfunding to modernise the Philippine military, which had until relatively recently been focusing mainly on tackling domestic threats.

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The years of delays, say officials and experts, have left the Philippine Armed Forces' plans well behind schedule as it races to replace hardware that is - in some cases - decades old.

The Philippines has pivoted to external defence as China steps up its claims over contested areas of the South China Sea, with both countries being embroiled in several incidents in the disputed waterway in recent months.

But attempts to modernise have come "way too little, way too late", says Zachary Abuza, a professor of Southeast Asian security at the National War College in Washington. "I think the Philippines really wasn't sufficiently aware of the threat China was posing and how to respond."

Manila cannot hope to match the Chinese ship-for-ship, he pointed out. But until the Philippines bought newer ships a few years ago, its most modern ones had been hand-me-down cutters from the United States that dated back to the Vietnam war and needed to be refurbished, Abuza said.

The armed forces' three-stage upgrading programme - dubbed Horizon 1, 2 and 3 - was introduced in 2012 under former president Benigno Aquino III, and was slated to be rolled out over 15 years.

But as recently as September, defence chief Gilberto Teodoro said the first phase, Horizon 1 - which was meant to have been finished in 2018 - still had "10 per cent" to go, while only roughly half of Horizon 2 projects had been completed. Horizon 3 was supposed to have started this year but is being reviewed in light of the delays to the first two phases.

"That's why we really have to re-strategise it because the paradigms for Horizon 2 may not be valid any more," Teodoro told a Senate panel.

This Week in Asia reached out to the Philippines' Department of National Defence for comment, but did not receive a response in time for publication.

In the meantime, Beijing has grown increasingly assertive in challenging the Philippines' maritime territory, marking its claims through its "nine-dash line" and dismissing a 2016 international arbitration ruling in Manila's favour.

"The major gap in the modernisation has, for the longest time, been the mis-prioritisation of internal security threats over external threats," said security affairs expert Julio Amador, the founder of Philippines-based think tank FACTS Asia.

Following the end of the Cold War, the Philippine military primarily focused on combating the domestic threats of insurgency and terrorism and on disaster relief, with the army being assigned the lion's share of resources.

External defence only moved up the agenda in the latter part of Rodrigo Duterte's administration, according to Amador, after "attempts at garnering benefits with a friendly relationship with China yielded little to no fruit".

The Marcos Jnr administration has emphasised external defence, said Amador, but the military's long-term capabilities, including its ability to operate with other countries, remain crucial issues under the upgrading programme, and the navy and air force must catch up after decades of being sidelined.

In the last few months of Duterte's administration, Manila signed over 100 billion pesos (US$1.78 billion) worth of military acquisitions, including Brahmos anti-ship missiles from India and corvettes from South Korea. But the latter, along with more recent purchases, will only be delivered in the coming years.

Defence spending in the Philippines has traditionally hovered around 1 per cent of gross domestic product, lower than many of its neighbours and around half of what military analysts say would be ideal.

The proposed defence budget for 2024 is 232 billion pesos (US$4.1 billion), a 14 per cent year-on-year rise, with the modernisation project provisionally allotted 50 billion pesos - a sum some officials are pushing to raise.

With a costly shopping list for Horizon 3, including multirole fighter planes, frigates, missile systems and naval defence equipment, it is unclear how far the funds will go.

"The goal is about 20 per cent of overall military spending on acquisitions, but I have no idea how they are going to get there," said Abuza, noting that the defence budget increases had not kept pace with inflation. "I truly think that's a lot of wishful thinking."

The Philippines is looking to acquire its first submarine fleet, with interested bidders including France's Naval Group, South Korea's Hanwha Ocean, and Spanish-owned Navita. The proposed budget is 110 billion pesos, or over 20 per cent of the full five-year budget for Horizon 3.

Manila is also expected to decide on new combat aircraft purchases by the end of this year, choosing between Lockheed Martin F-16s from the US and Gripen aircraft from Sweden. In 2021, then-defence chief Delfin Lorenzana told local media that a US$2.43 billion offer for the F-16s would stretch Manila's budget.

The Philippines can make the most of its limited resources by investing in asymmetric weapons, such as anti-ship missiles, and building commonalities with friendly foreign militaries, said Collin Koh, a Singapore-based maritime security analyst. "When you're working with resource constraints, you can't buy everything," he said.

Countries like the US and Japan have committed to supporting the upgrading efforts, but seeking ways to get more bang for its buck, Manila is also sourcing military equipment from non-traditional suppliers like Indonesia.

The Philippines is also looking to boost its domestic defence sector, with the coastguard recently announcing that it would be acquiring 40 locally-built patrol boats. But most of its equipment is still sourced from abroad, and experts like Amador say the local industry will take time to develop.

Meanwhile, how efficiently the money is spent remains crucial, security experts say.

Describing the modernisation budget as "modest", Joshua Espena, a resident fellow at the International Development and Security Cooperation think tank in Manila, said he was nonetheless sceptical of the idea of "just giving more money".

Future military budgets should target reducing personnel expenses like wages in favour of operations and capital expenditure, he added.

In particular, the military's controversial pension system has been heavily scrutinised for straining national finances. Currently, uniformed personnel do not have to contribute to their pensions, but receive nine times as much as a retiree on social security upon leaving the service.

A bill to introduce reforms is now before the Senate, with finance secretary Benjamin Diokno warning in August that the "unsustainable" military pensions system could risk the country's credit rating.

Ultimately, modernising the military is "an issue that's more complicated than mere equipment challenges alone", Koh said, adding that it would be judicious for Manila to review the military's doctrinal focus and strategy.

"Politicians have a tendency to unwittingly abstract national security interests," said Espena, adding that the military could be more proactive about communicating its needs "while respecting civilian democratic politics".

This article originally appeared on the South China Morning Post (SCMP).

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