Tiny Singapore to spend $23 bln on defence by 2015-Jane's

SINGAPORE Thu Dec 8, 2011 2:19pm IST

An MH-60S Sea Hawk helicopter from the littoral combat ship USS Freedom approaches the Singapore Navy stealth multi-mission frigate RSS Supreme during a maritime security exercise in this July 9, 2010 handout photo courtesy of the U.S. Navy. REUTERS/U.S. Navy/Lt. Ed Early/Handout/Files

An MH-60S Sea Hawk helicopter from the littoral combat ship USS Freedom approaches the Singapore Navy stealth multi-mission frigate RSS Supreme during a maritime security exercise in this July 9, 2010 handout photo courtesy of the U.S. Navy.

Credit: Reuters/U.S. Navy/Lt. Ed Early/Handout/Files

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SINGAPORE (Reuters) - Tiny Singapore, with a population of 5.2 million and a land area half the size of Greater London, is likely to spend $23 billion on purchases of patrol aircraft, helicopters and other military equipment by 2015, according to a new report by IHS Jane's.

The Southeast Asian city-state, flanked by Indonesia and Malaysia, sits on one of the busiest sea lanes in the world and lists piracy as one of the main security threats in the region.

IHS Jane's said while ties with China were cordial and underpinned by strong economic and cultural ties, relations with Malaysia and Indonesia, both Muslim majority states, were more complex "due to protracted security dilemmas that stem in the main from concerns about...Islamic extremism".

Nicholas de Larrinaga, emerging markets analyst at IHS Jane's, said many countries elsewhere in the region were accelerating arms spending because of worries over China.

"There is a huge regional race to defend national interests, partly as a result of China's growing influence, but also all heightened by territorial disputes and a push for influence that is fuelling Asia's spending spree," he said.

Singapore's defence budget was seen rising by more than 50 percent between 2010 and 2015 to more than $14 billion, he said.

"During the same time frame, we see defence procurement spending growing by nearly 59 percent to nearly $4 billion and totaling more than $23 billion," he added.

Singapore allocated S$12.08 billion for defence in its budget for the fiscal year beginning April 2011, a rise of 5.4 percent from 2010/11.

IHS Jane's said Singapore was an attractive choice for Western defence firms because of its relative transparency and its commitment to open-market acquisitions.

"It is notable that Singapore remains the only country in Southeast Asia that has not purchased military equipment from Russia or China," the research firm added.

POSSIBLE DEALS

Near-term purchases by the Singapore military include finding replacements for its four Boeing (BA.N) KC-135 aerial tankers and the Eurocopter Super Puma utility helicopters.

IHS Jane's said that while Boeing's KC-46A might appear to be a logical choice to replace the KC-135, international sales will probably not be allowed till 2018, paving the way for Airbus's EAD.PA A330 MRTT in a deal likely to be worth over $1 billion.

The Eurocopter EC725 Cougar and Sikorsky UH-60M helicopters were among the possible replacements for the Super Pumas, in a deal that has an estimated value of at least $650 million. Sikorsky is a part of United Technologies Corp (UTX.N).

IHS Jane's said Singapore's existing French-made AMX-13 light tanks were becoming obsolete, although it seems likely that they will be replaced by an indigenous vehicle that will be made by local defence contractor Singapore Technologies Engineering (STEG.SI).

(Reporting by Kevin Lim; Editing by Matt Driskill, Raju Gopalakrishnan and Ron Popeski)

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