By John O'Callaghan
SINGAPORE, Oct 8 (Reuters) - Indonesia is buying submarinesfrom South Korea and coastal radar systems from China and theUnited States. Vietnam is getting submarines and combat jetsfrom Russia, while Singapore - the world's fifth-largest weaponsimporter - is adding to its sophisticated arsenal.
Wary of China and flush with economic success, SoutheastAsia is ramping up spending on military hardware to protect theshipping lanes, ports and maritime boundaries that are vital tothe flow of exports and energy.
Territorial disputes in the South China Sea, fuelled by thepromise of rich oil and gas deposits, have prompted Vietnam,Malaysia, the Philippines and Brunei to try to offset China'sgrowing naval power.
Even for those away from that fray, maritime security hasbeen a major focus for Indonesia, Thailand and Singapore.
"Economic development is pushing them to spend money ondefence to protect their investments, sea lanes and exclusiveeconomic zones," said James Hardy, Asia Pacific editor of IHSJane's Defence Weekly. "The biggest trend is in coastal andmaritime surveillance and patrol."
As Southeast Asia's economies boomed, defence spending grew42 percent in real terms from 2002 to 2011, data from theStockholm International Peace Research Institute (SIPRI) shows.
High on the list are warships, patrol boats, radar systemsand combat planes, along with submarines and anti-ship missilesthat are particularly effective in denying access to sea lanes.
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"Submarines are a big thing," said Tim Huxley, executivedirector for Asia at the International Institute for StrategicStudies. "They can do immense damage without being seen, withoutbeing anticipated, and they can do that anywhere in the region."
For decades, much of Southeast Asia spent little on weaponsother than guns and small tanks. Most threats were internal andthe umbrella of U.S. protection was deemed enough to ward offany potential aggression from overseas.
With China's growing muscle and more funds available, theshopping lists are getting more sophisticated. Most countries inthe region are littoral, so the emphasis is on sea and air-baseddefence.
Malaysia has two Scorpene submarines and Vietnam is buyingsix Kilo-class submarines from Russia. Thailand also plans tobuy submarines and its Gripen warplanes from Sweden's Saab AB
will eventually be fitted with Saab's RBS-15Fanti-ship missiles, IISS says.
Singapore has invested in F-15SG combat jets from Boeing Co
in the United States and two Archer-class submarines fromSweden to supplement the four Challenger submarines and powerfulsurface navy and air force it already has.
Indonesia, a vast nation of islands with key sea lanes and54,700 km (34,000 miles) of coastline, has two submarines nowand ordered three new ones from South Korea. It is also workingwith Chinese firms on manufacturing C-705 and C-802 anti-shipmissiles after test-firing a Russian-built Yakhont anti-shipmissile in 2011.
While it is not an arms race, analysts say, the build-up isbeing driven by events in the South China Sea, long-standingsquabbles between neighbours and a desire to modernise whilegovernments have the money.
Piracy, illegal fishing, smuggling, terrorism and disasterrelief also play their parts, along with keeping the influentialmilitary happy in places such as Thailand and Indonesia.
There is a "general sense of strategic uncertainty in theregion" given China's rise and doubts about the U.S. ability tosustain a military presence in Asia, said Ian Storey, a seniorfellow at the Institute of Southeast Asian Studies.
"Southeast Asian countries will never be able to matchChina's defence modernisation," he said, citing Vietnam's pushfor a deterrent. "If the Chinese did attack the Vietnamese, atleast the Vietnamese could inflict some serious damage."
SIPRI says Indonesia, Vietnam, Cambodia and Thailand tookthe lead in boosting their defence budgets by between 66 and 82percent from 2002 to 2011.
But the region's biggest spender with the best-equippedmilitary is Singapore, a tiny island that is home to the world'ssecond-busiest container port, a global financial centre and amajor hub for oil, gas and petrochemicals.
The wealthy city-state, along with Malaysia and Indonesia,sits on the Strait of Malacca that links the Pacific and Indianoceans. A teeming shipping route, the strait is also a narrow"choke point" with huge strategic implications for the energy,raw materials and finished goods flowing east and west.
At $9.66 billion, Singapore's 2011 defence budget dwarfedThailand's $5.52 billion, Indonesia's $5.42 billion, Malaysia's$4.54 billion and Vietnam's $2.66 billion, IISS says.
The situation is far less intense than in North Asia whereChina, Japan, the United States, Russia and the two Koreas areinvolved. But Southeast Asia seems to be following the trend ofpursuing military systems that can be used offensively.
"It's an indefinite process," said Huxley at IISS."Governments are likely to go on devoting resources - that areincreasing in real terms - to defence and militarymodernisation."
Official data on the amount and purpose of the spending isoften opaque - how much goes to boots, bullets and salaries andhow much to advanced hardware that can project power?
The defence spending figures also may not tell the fullstory. Countries such as Vietnam and Indonesia have used creditarrangements or the sale of energy exploration rights in thepast to fund arms imports that did not appear in the defencebudget, analysts say.
"Vietnam has stopped reporting defence and security budgetsas part of its budget reporting, leaving a suspicious gapbetween total budgeted expenditure and the sum of the reportedspending areas," said Samuel Perlo-Freeman, director of SIPRI'sMilitary Expenditure and Arms Production Programme.
BUYING AND BUILDING
With defence budgets in many Western nations under pressure,Asia is attractive for makers of weapons, communications gearand surveillance systems. Lockheed Martin and Boeing'sdefence division both expect the Asia-Pacific region tocontribute about 40 percent of international revenues.
"The maritime environment in the Pacific has everybody'sattention," Jeff Kohler, a vice president at Boeing Defence,said at the Singapore Airshow in February.
Vietnam got 97 percent of its major weapons - includingfrigates, combat planes and Bastion coastal missile systems -from Russia in 2007-11 but is looking to diversify by talking tothe Netherlands and the United States, SIPRI says.
The Philippines, which relies on the United States for 90percent of its weapons, plans $1.8 billion in upgrades over fiveyears as it sees a growing threat from China over the SouthChina Sea squabble.
The focus is on the country's naval and air forces thatanalyst Sam Bateman sees as "rather deficient".
"The particular requirement of the Philippines is airsurveillance," said Bateman, principal research fellow at theAustralian National Centre for Ocean Resources and Security.
Anti-submarine capabilities are a priority, a Philippinedefence department planner told Reuters.
Thailand, whose military has staged 18 successful orattempted coups since 1932, has built a patrol vessel designedby Britain's BAE Systems . It plans to modernise onefrigate and, within five years, buy the first of two new ones.
"We are not saying these will replace submarines but we arehoping that they can be equally valuable to Thailand," defenceministry spokesman Thanathip Sawangsaeng told Reuters.
Singapore buys mostly from the United States, France andGermany but also has its own defence industry, centred on STEngineering . The state-owned group supplies theSingapore Armed Forces and has many customers abroad.
"Most countries are either interested in or activelypursuing their own domestic arms industry," said Storey.
"It's cheaper than buying from overseas, long-term they'relooking at developing their own export markets and, certainlythis is true for Indonesia, it insulates them from sanctionsfrom countries like the United States."
(Additional reporting by Neil Chatterjee in JAKARTA, RosemarieFrancisco and Manny Mogato in MANILA and Martin Petty and AmySawitta Lefevre in BANGKOK; Editing by Raju Gopalakrishnan)
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Keywords: DEFENCE SOUTHEASTASIA/