IN FOCUS: 5% of GDP on Southeast Asia's defence spending – viable or 'pie in the sky'?

The United States is asking Asia to increase defence budgets to 5 per cent of their GDP. Do Southeast Asian countries need to? (Illustration: CNA/Rafa Estrada)

In President Donald Trump’s second term, the United States has called on allies and partners in Europe and Asia to hike defence expenditures to 5 per cent of their gross domestic product (GDP).

Vigorous debate on the merits of such a target has ensued, among top-ranking government officials and faceless social media commenters alike.

Those in favour point to countries embroiled in long-running tensions in their neighbourhood, such as South Korea; and cite Western countries spending close to the 5 per cent figure during the Cold War.

In the opposing camp, some note the US itself spending 3.4 per cent of GDP on defence last year, even if it was the top spender globally in absolute terms.

One particularly well-received online remark stated: “Why should someone tell you how and how much to spend for (your) defence?”

Asia was drawn into the conversation at this year’s Shangri-La Dialogue, when US Defense Secretary Pete Hegseth said Indo-Pacific allies in particular should spend more on their defence needs to deter the likes of China and North Korea.

The Pentagon chief said China was a real and imminent threat seeking to “fundamentally alter the region’s status quo”.

He said it did not make sense for key Asian allies to spend less than European and American countries in the North Atlantic Treaty Organization (NATO), whom he claimed were pledging to spend 5 per cent of their GDP on defence – a figure first floated by Mr Trump in January.

In the president’s first term, he said NATO members should raise their defence spending to 4 per cent of GDP.

The need to match Europe’s pace and level of defence spending was brought up again by the US Defense Department in June.

Last week, NATO agreed to more than double its defence spending benchmark from 2 per cent to 5 per cent of GDP by 2035 – with the exception of some countries like Spain.

The historic decision by the 32-member alliance comes amid a war in their backyard – the deadliest since World War II – prompted by Russia’s invasion of Ukraine in 2022.

But it is a different picture in Asia despite Korean tensions, the China-Taiwan issue, friction between India and Pakistan as well as Thai-Cambodian clashes along a shared border.

And in Southeast Asia, the posture of most countries towards China is markedly different from the US’ assessment of Beijing as a threat, experts say.

BALANCING OR LEANING?

To be sure, Southeast Asian ties with China are not entirely without strain. Most prominently, Vietnam, the Philippines, Brunei and Malaysia have overlapping claims with Beijing in the South China Sea.

Issues over the vital waterway for global trade topped a list of geopolitical concerns in the region according to a study by Singapore’s ISEAS-Yusof Ishak Institute (ISEAS) think-tank.

The Association of Southeast Asian Nations (ASEAN) and China have long been in the process of negotiating a code of conduct to keep peace and security in the South China Sea.

The ISEAS survey, published in April, polled over 2,000 thought leaders across the region. Asked who they would side with if forced to, 52.3 per cent picked the US while 47.7 per cent chose China.

The narrow margin reflects the “delicate balancing act” ASEAN must maintain between the two superpowers, with economic dependence on China and security interests with the US, ISEAS noted in its report.

The think-tank concluded that China remains perceived as the most influential economic and political-strategic power in Southeast Asia, outpacing the US by “significant margins”.

In a Jun 24 piece for American magazine Foreign Affairs, veteran Singapore scholars Khong Yuen Foong and Joseph Chinyong Liow observed that Southeast Asia was “clearly leaning towards” Beijing.

This was based on their assessment of interactions between ASEAN countries and China and the US, though they also added that “alignment patterns are not set in stone”.

REGIONAL CONSIDERATIONS

In 2024, the defence budgets of Southeast Asian countries ranged between 0.78 per cent (Indonesia) and 4.09 per cent (Myanmar) of their respective GDP.

The US is concerned that Southeast Asian states are not contributing sufficiently to deterring or dissuading Beijing from using force to settle political disputes, said Mr Drew Thompson, a senior fellow at the S Rajaratnam School of International Studies (RSIS) at Nanyang Technological University.

Defence spending is one measure of political will to contribute to deterring China, but in the absence of will to confront China’s aggression, the US still seeks capable allies who can independently and competently contribute to maintaining peace and stability regionally, he added.

This would require adequate spending on military procurement as well as training, to build up the capability to jointly address threats beyond individual state borders.

The problem with the US casting China as a threat to be deterred is that few Southeast Asian states see Beijing in purely adversarial terms or consider it a singular factor underlying their defence considerations, ISEAS senior fellows Hoang Thi Ha and William Choong wrote in an analysis.

“Southeast Asian claimant states in the South China Sea – particularly the Philippines and Vietnam – may stand out for a sharper sense of threat arising from Chinese maritime encroachments, yet even they do not define China solely as a threat,” they said.

Shangri-La Dialogue senior fellow Evan Laksmana also pointed out that in Southeast Asia, threats to security are “a lot more diverse”, from illegal fishing to transnational crime.

Even if there was an increase in the defence spending, it may not be directed towards conventional capability development the way the US would like, said Dr Laksmana, who is also the editor of the Asia-Pacific Regional Security Assessment at the International Institute for Strategic Studies (IISS).

He also cautioned against conflating what the US expects for its allies versus its non-allies.

The US is a strategic partner of ASEAN, but only two in the bloc – the Philippines and Thailand – are treaty allies. It may be more “pressing” for them to have an answer to the US’ questions on defence spending, said Dr Laksmana, who leads IISS’ Southeast Asian security and defence research programme.

After Mr Hegseth’s speech at the Shangri-La Dialogue, visiting senior fellow Zack Cooper at the RSIS think-tank observed in a commentary that American engagement was overly focused on military cooperation, when what Southeast Asian countries really want was economic cooperation.

Moreover, US leaders often view the region through the lens of its own competition with China, rather than recognising Southeast Asian countries as important and valuable in their own right, he added.

GUNS VS BUTTER

Putting aside the need to, just how feasible is the 5 per cent target?

In NATO’s case, it agreed that at least 3.5 per cent should be spent on pure defence, up from the current guideline of 2 per cent.

The remainder would go to security- and defence-related critical infrastructure such as roads, bridges, ports and airfields.

Emeritus professor of politics at the University of New South Wales’ Carl Thayer noted, however, that a key difference was in Southeast Asia having no military alliance structure comparable to NATO.

ASEAN has a Political-Security Community Blueprint which has not indicated what percentage of each member’s GDP should be spent on defence, he added.

The blueprint aims to provide a roadmap for member states to live in peace with one another and the world at large.

Branding the 5 per cent figure “pie in the sky” for Southeast Asia, Prof Thayer said countries in the region could in fact undermine their own security if they shifted excessive resources to military spending.

This, at a time when the global and regional economy has retracted and supply chains have been disrupted by tariffs imposed by the US.

“A more prudent course of action would be incremental increases in defence expenditure to modernise their armed forces to keep pace with technological change,” he added.

Experts said Southeast Asian countries have typically grappled with the classic “guns versus butter” trade-off between allocating money to military or civilian goods.

Tariffs aside, majority of the region is still trying to recover economically from the COVID-19 pandemic, said IISS’ Dr Laksmana, concluding it would not be realistic to expect Southeast Asian states to increase defence spending over the next few years or so, whatever timeframe the US has in mind.

It also should not be forgotten that the region has its own dynamics, he added.

For instance, if Indonesia were to suddenly raise its defence budget by five times, it would spark concern among Singapore, Malaysia and the Philippines.

“The bordering countries will also start to ask questions why my neighbour is suddenly increasing defence spending,” he said.

“(Those) kinds of conversations are very subject to local, historical context and all of the challenges of having neighbours in the region.”

THE SINGAPORE CASE

Both Singapore’s Defence Minister Chan Chun Sing and Foreign Minister Vivian Balakrishnan have described the country’s approach to geopolitical rivalries as not taking sides, but upholding principles such as a global order underpinned by law and sovereignty.

China was the first country outside of Southeast Asia which Prime Minister Lawrence Wong visited, after assuming the role in May last year. During his trip in late June, he met Chinese President Xi Jinping and spoke of the “close and steadfast” partnership between both countries.

With the US, though not a formal treaty ally, experts said Singapore is considered a “solid” security partner.

Defence spending for the country has stayed within the range of 3 per cent of GDP over the past decade.

During its Ministry of Defence’s (MINDEF) Budget debate earlier this year, former defence minister Ng Eng Hen said he expected growth in defence expenditure to “taper down” from the 2026 financial year, and to keep within the 3 per cent range over the next decade.

This is, of course, barring major conflicts or severe economic uncertainty. Given rapid changes in the external environment, if the need arises, Singapore “must be prepared to invest more to further strengthen our capabilities”, Dr Ng told parliament then.

UNSW’s Prof Thayer said that if Singapore were to up its defence spending to meet the US’ target, it would raise the possibility of “entrapment” in the event of any armed conflict between the superpowers.

Singapore’s interests lie in “mitigating the vulnerability of its small size rather than expeditionary warfare”, he added.

Dr Laksmana said: “If there is some artificial benchmark in terms of the growth in defence spending, it will be on Singapore’s own terms, not the US.

“It will be on Singapore’s own calculations and interest.”

CNA has asked MINDEF to comment on the US’ 5 per cent target, and if there are plans to boost defence spending amid the volatile geopolitical landscape.

Source : https://www.channelnewsasia.com/asia/defence-spending-5-cent-gdp-southeast-asia-asean-united-states-focus-5207481