Singapore Faces Defense Budget Cutbacks Amid Virus Impact

(Bloomberg) -- Singapore will cut back on military spending for the foreseeable future until the trade-dependent nation sees signs the economy is recovering from the impact of the coronavirus pandemic, according to its defense minister.

While the city-state hasn’t compromised on security operations and pertinent acquisitions and is planning to resume overseas training soon, it is facing budgetary pressures, Minister of Defense Ng Eng Hen told reporters last week ahead of the Singapore Armed Forces (SAF) Day celebrations on July 1.

The Ministry of Defence “and the SAF are taking measures to cut cost where we can without compromising critical operations or reduction in SAF’s medium and long term capabilities,” he said. “We will continue to be prudent in our spending but I think all of us know that we will have to tighten our belts for this year, even the next, even 2022, until the economy fully recovers.”

The virus is expected to have a deep impact on Singapore as the government is now forecasting a full-year economic contraction of up to 7%, which would mark the worst downturn for the country since its independence.

According to Singapore’s budget, the Ministry of Defence was alloted an estimated S$15 billion ($10.7 billion) for 2020, a 3.2% increase from the year before. In a high-profile deal earlier this year, the U.S. State Department approved a possible $2.75 billion sale to Singapore of up to 12 F-35B short take-off and vertical landing aircraft and related equipment. Singapore had already placed an order for four F-35Bs with delivery around 2026, and that order remains “on track,” the minister said.

While other acquisitions also remain on schedule, there have been some delays, particularly an order of Chinook 47Fs and Airbus H225M helicopters that will now be delivered next year.

These are some other excerpts from the minister’s remarks:

• After Singapore’s biggest telecom operators chose Ericsson AB and Nokia Oyj as their main 5G network providers last week, the Ministry of Defence will continue to exercise due diligence that the systems meet its security considerations, he said, adding that the ministry never prescribed specific vendors to the Ministry of Communications and Information during the selection process. “Our interests were to make sure that whichever vendors bid for the contracts would satisfy our security requirements,” he said.
• On reports that China may establish an air defense identification zone (ADIZ) in the South China Sea: “I think it will impact all of us not not only from a military point of view, but civilian views because the ADIZs also apply to civilian traffic,” he said, adding that ADIZs are not an invention attributable to any one country. However “if, when you have an ADIZ obviously you increase the risk of some mishap occurring, and that’s not only militarily let me be clear and also civilian.”
• The minister also said that Asia “cannot avoid” the effects of the enduring rivalry between the U.S. and China. The “geographical intersection of East and West will be acutely impacted for both trade and security,” he said.

©2020 Bloomberg L.P.