Philippines may become region’s ‘defense industry hub’

Philippines President Rodrigo Duterte brandishes an AK-47 assault rifle as Russian minister of defense Sergei Shoigu applauds. Russia is weighing up a possible partnership to manufacture AK-47 rifles in the Philippines. (Reuters)
Updated 20 September 2018
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Philippines may become region’s ‘defense industry hub’

  • Israel wants to manufacture UAVs in the Philippines
  • Russia and South Korea looking for arms and defense manufacturing facilities

MANILA: The Philippines may become the region’s defense industry hub after several countries expressed an interest in basing their arms and defense manufacturing facilities in the country.

Among the facilities are firearms and force protection plants, as well as ones for aviation maintenance, repair and overhaul.

Department of National Defense (DND) spokesperson, Arsenio Andolong, cited at least three countries — Israel, Russia and South Korea — as among those with a keen interest to undertake such projects.

However no agreement has been signed yet and proposals are still in the exploratory stage, Andolong said.

There are plans, however, to create a zone processing defense material at the 370-hectare Government Arsenal (GA) in Limay, Bataan. It will be called the Government Arsenal Defense Industrial Economic Zone (GADIEZ), which will accommodate foreign defense firms that want to establish their manufacturing plants in the Philippines.

With Israel, negotiations have been ongoing. “It all began when we purchased our latest acquisitions from them, the force protection equipment during the time of (then Defense Secretary Voltaire) Gazmin,” Andolong said.

“They became more aggressive when we started doing market research for the many things that we wanted. In one of our meetings the plan to put up an export processing zone for war materiel was discussed and that’s when they expressed interest,” he said.

But Israel now changed its focus; they now want to enter into partnership with Philippine Aerospace Development Corporation.

An agreement has yet to be signed however between the Philippine government and an Israeli firm for its entry through aircraft repair.

“I think eventually it will lead to setting up a UAV manufacturing facility,” a highly placed source said.

Russia, meanwhile, is more likely to have a firearms factory in Bataan province, in central Lozun region.

That is despite the ceremonial signing of a Letter of Intent (LoI) of Silver Shadow Advanced Security Systems (SASS) and Rayo Illuminar Corporation (RIC) to “explore opportunities in the manufacturing and refurbishment of small arms and ammunition,” during Duterte’s recent visit to Israel. The project is estimated to be worth $50 million.

Russia, according to Andolong, has been sending representatives to the country to discuss their offer for a joint production facility to produce Russian assault rifles, or AK47s.

“The Russians verbally communicated that they would like to go into a partnership with the GA to manufacture AK47 rifles in the Philippines. But at this time it’s still a verbal proposal. The Department of Budget and Management (DBM) has required them to submit a feasibility study.”

A proposal by a South Korean firm that also wanted to set up a firearms factory in the Philippines was put on hold after they gave terms and conditions that were not acceptable — such as “there will be capitalization from the government.”

“So everything is still fluid but Russia is in the running because they are offering many nice goodies,” the DND spokesperson said. “Like the submarines, for example; they said if the Philippines can’t afford to purchase then they can give a soft loan to finance it. And they also mentioned about packages they can use to start up the business.”

Andolong said that the reason that these countries chose the Philippines to set up their facilities was mainly because “they want to create a hub here in the Southeast since they don’t have a presence here yet.”

“It may also be “because of our location. Aside from that we are I think the first Southeast Asian country who offered this,” he said.

“The Philippines is close to many potential markets of Russia and Israel, because these two countries, their main exports really are armaments and they have no footprint in this region,” he said.


Japan PM’s big election win could mean more beef with Beijing

Updated 3 sec ago
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Japan PM’s big election win could mean more beef with Beijing

TOKYO: Japanese Prime Minister Sanae Takaichi’s thumping election win has blunted domestic opposition to her hawkish security agenda, encouraging plans to press ahead with a defense expansion that China has condemned as a return ​to militarism. As the scale of her government’s historic victory became clear on Sunday — capturing 352 of the 465 seats in the lower house — Takaichi said she would “work flat out to deliver” an agenda that includes building a military strong enough to deter Chinese threats to its islands, including those close to Taiwan. In November, Takaichi touched off a diplomatic storm with Beijing by suggesting Japan could respond militarily to any Chinese attack on the democratically governed island if it also threatened Japanese territory.

STANDING UP TO CHINA
“I expect to see Japan very forward-leaning on defense policy, such as her statements on a Taiwan contingency,” said Kevin Maher, a former US diplomat now with NMV Consulting in Washington. “One impact could be that President Xi Jinping comes to ‌understand her strong ‌stance,” he added.
China
responded furiously
to Takaichi’s Taiwan comment, promising to “resolutely prevent the resurgence of ‌Japanese ⁠militarism” ​if Tokyo continued ‌on its “wrong path.” Beijing also imposed a series of economic countermeasures including a boycott on travel to Japan and export restrictions on items such as rare earths it says Tokyo could use in military equipment.
Shingo Yamagami, a senior fellow at the Sasakawa Peace Foundation and a former Japanese ambassador to Australia, said the “hidden agenda” of the Sunday election was China.
“In light of belligerent actions and waves of economic coercion, should Japan acquiesce or stand tall?” he wrote on X. “The Japanese people clearly chose the latter.”
Taiwan’s de facto ambassador to Japan, Lee Yi-yang, was among the first foreign dignitaries to congratulate Takaichi, writing on Facebook that her victory showed ⁠Japan was not intimidated by China’s “threats and pressure.”
China’s foreign ministry on Monday again
urged Takaichi
to withdraw her remarks on Taiwan and said its policy toward Japan would not ‌be changed by one election.
“We urge Japan’s ruling authorities to take ‍seriously, rather than ignore, the concerns of the international community, and ‍to pursue the path of peaceful development instead of repeating the mistakes of militarism,” foreign ministry spokesman Lin Jian said.

SECURITY ‍STRATEGY Takaichi, a fan of Britain’s former leader Margaret Thatcher, is already accelerating defense spending to bring it to a record 2 percent of gross domestic product by the end of March. She has also pledged to ease restrictions on arms exports and allow Japan to pursue joint defense equipment projects with other countries.
Her administration plans to formulate a new national security strategy, likely by year end, that would further accelerate ​military spending.
That could lift defense outlays to around 3 percent of GDP, an LDP lawmaker told Reuters ahead of Sunday’s election, speaking on condition of anonymity because of the sensitivity surrounding such a move.
The potential ⁠increase would follow pressure from US President Donald Trump on Washington’s allies to raise defense spending.
Drawing lessons from nearly four years of war in Ukraine, Japan wants to build up munitions stockpiles and buy new equipment, including drones, to prepare for any prolonged conflict against a more powerful adversary, analysts say. The scale of Takaichi’s security ambitions could, however, be constrained by tax cuts and economic stimulus measures that would strain public finances, said Jeffrey Hornung, an expert on Japanese security policy at the RAND Corporation.
“Maybe you’ll see an effort to spend more, but because of her plans to spend on consumer measures, they may not choose to push much further,” he said.
The landslide victory could also bring a long-taboo security goal into view, one that would not burden public finances.
With more than a two-thirds majority in the lower house, she could table an amendment to Japan’s pacifist constitution to formally recognize the Self-Defense Forces as a military. Any such change would still require a two-thirds majority in the upper house — which she does ‌not currently control — and approval in a national referendum.
“It’s not a slam dunk,” Hornung said, “but probably the best chance for any prime minister.”