PH mulls private, foreign funding for military modernization

DEFENSE BUILDUP The Philippine military is reportedly acquiring short-range Akash missiles in a $200-million deal with India this year, a set of them shown here in a January 2007 parade in New Delhi, according to a Reuters report. —REUTERS

MANILA, Philippines — The Philippines is looking to expand its funding sources for the military’s modernization program as Armed Forces of the Philippines chief Gen. Romeo Brawner Jr. admitted that the budget of the national government was not enough to fund the country’s defense capability upgrades.

President Marcos may issue an executive order that would allow foreign commercial funding for Armed Forces modernization, Brawner told reporters on the sidelines of a Management Association of the Philippines (MAP) forum in Taguig City on Wednesday.

“So, we are looking into local and foreign financing. That is why we’re getting in touch with the Bankers Association of the Philippines. They said they can fund it,” he said.

“And then we’re looking also at the foreign financing. In fact, we have had some offers already,” Brawner added.

‘Legality’ being studied

He said the military needed funds to achieve the objectives set for Horizon 3, the last stage of the AFP modernization program that is expected to cost about P2 trillion.

Brawner said some offers had been made and the AFP was “studying the legality” of resorting to commercial foreign financing.

“We don’t have a law that enables us to do that. So, we are looking at getting an executive order from the president,” Brawner said.

Defense Secretary Gilberto Teodoro Jr. said last year that existing laws limit external loans for defense acquisition to just $300 million in total.

More missiles

In a speech before the members of the MAP in July last year, Teodoro also sought the help of business leaders in crafting “creative financing solutions” to ease the financial burden on the government of the military’s modernization program.

“We need to find off-budget, nontraditional financing sources for modernization,” Teodoro said.

In his speech to the MAP, Brawner said the Philippines was looking at acquiring more antiship missile systems and submarines to upgrade the military’s defense capability amid growing tensions in the South China Sea.

“It is a dream for us to get at least two submarines,” Brawner said. “We are an archipelago, and so we have to have this type of capability because it is really difficult to defend the entire archipelago without submarines.”

He also said that the military would be “getting more” antiship missile systems this year after the first batch of BrahMos cruise missiles from India arrived in the Philippines in April last year.

India deal seen

India expects to sell short-range missiles to the Philippines this year in a deal worth more than $200 million, according to the Reuters news agency, quoting unidentified Indian sources.

It would be New Delhi’s second major defense export contract with Manila as tension grows with China.

The Akash missile system developed by India’s defense research body has drawn interest from the Philippines, which has told New Delhi it would make an order in the fiscal year that begins in April, three sources said.

All the sources spoke on condition of anonymity as the matter is a sensitive one.

The surface-to-air missile system with a range of up to 25 kilometers was exported to Armenia last year in a $230-million deal, the sources said, adding that the Philippine sale is expected to be bigger than the Armenian deal.

However, they did not reveal the number of missiles and accompanying systems, including radars, involved.

India’s Bharat Dynamics Ltd., the manufacturer of the missiles, was one of the exhibitors at last year’s Asian Defense and Security Exhibition in Manila.

The company and India’s defense ministry did not immediately respond to requests for comment.

After Brahmos

A Philippine defense spokesperson, Arsenio Andolong, declined to comment on the specifics of any deal or on procurement plans but said the country’s Armed Forces had “manifested it requires these capabilities.”

The expected deal would follow India’s $375-million sale of the midrange BrahMos supersonic cruise missile to the Philippines.

“We are getting more of this (BrahMos system) this year and in the coming years,” Brawner told the MAP forum but did not mention the Akash system.

Manila is also expecting the delivery of two more corvette vessels from South Korea this year, he said.

Under the 2025 national budget, the AFP received P35 billion this year for its revised modernization program. The amount is lower by P15 billion than the record-high P50 billion initially proposed by President Marcos to Congress.

Last year, the revised AFP Modernization Program got an allocation of P40 billion.