The defense budget in the Philippines is valued at $3.8 billion in 2020. The market is expected to grow at a CAGR of over 7% during the forecast period 2021-2026. As a percentage of GDP, the country’s defense expenditure is expected to average 1% over the forecast period, compared to the 0.9% recorded during the historic period. During the historic period, the Philippine government allocated an average of 18.2% of its defense budget to acquisition expenditure, which includes both the purchase of new equipment and upgrade programs for existing equipment. The rest of the budget was allocated to operating expenditure and other expenditures, which include salaries, planning, administration, and training expenditure. On a cumulative basis, the Philippines allocated $3 billion to acquisition expenditure during the historic period, which is anticipated to grow significantly over the forecast period.
Overview of the defense market in the Philippines
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Military doctrine, modernization goals, and the Philippines’s national defense strategy
The Philippines’ comprehensive security doctrine is focused on the acquisition of a wide range of security assets, to establish diplomatic and geographic advantages. The Philippines is also aiming to develop robust military capabilities through its ambitious Horizon I, II, and III programs to ensure tranquility, peace, and stability. The Philippines has previously struggled to modernize and maintain its defense equipment, hence it is now stringently following a three-phased 15-year modernization plan which will end in 2028. It has acquired equipment under the Armed Forces of the Philippines (AFP) modernization program, including Gulfstream G280 Command and Control Aircraft, Sikorsky S-70i Black Hawks, and multirole fighters.
How has COVID-19 affected the Philippines’ defense spending?
The Philippines’ defense expenditure grew significantly between 2017-2021. The spurt in growth is primarily attributed to the sudden acceleration in defense acquisition spending in 2021, which is valued at more than $700 million. This is an annual Y-o-Y growth of 27.8% over the previous year (2020) when the Philippines’ acquisition budget was valued at $581 million, an annual contraction of 0.2% over 2019. This decline in growth rate is primarily attributed to the onset of the COVID-19 pandemic compelling the country to cut its development expenditure. The country’s defense budget is anticipated to increase from 2022-to 2026, reflecting a robust CAGR of more than 7%. The Philippines’ acquisition budget is also anticipated to grow in 2026.
What are the segment classifications in the defense market in the Philippines?
As one of the growing markets in Asia, the Philippines offers a decent market for defense suppliers. Sectors such as naval vessels and surface combatants, military fixed wing, and military rotorcraft rank among the leading sectors in the Philippine defense market. Between 2021 and 2026, naval vessels and surface combatants is expected to rank as the leading sector in the Philippine defense market, while military fixed wing is set to rank as the second-largest segment.
Defense market in the Philippines, by segment
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What are the import and export market dynamics in the defense market in the Philippines?
The Philippines’ defense imports peaked in 2020 when the country imported $348 million worth of defense equipment, including naval vessels, transport aircraft, missiles, sensors, armored vehicles, artillery and naval weapons from South Korea, Indonesia, Israel, and the US. The Philippines imports arms to acquire advanced weaponry to compensate for the relatively small size of its armed forces. Although South Korea has traditionally been the Philippines’ primary defense export partner, the country is attempting to diversify its supplier base through increased imports from the US, Israel, Germany, and the UK. Over the forecast period, imports of defense equipment are expected to grow as the country plans to increase its defense expenditure and spend more on equipment.
Who are the major market players in the defense market in Philippine?
Major market players in the defense market in Philippine include Elbit Systems, Lockheed Martin Corp, and Hyundai Heavy Industries.
Defense market in the Philippines, by key players
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Market report scope
|Market size (Year – 2020)||$3.8 billion|
|Growth Rate||CAGR of >7% from 2021 to 2026|
|Segmentation||Naval vessels and surface combatants, Military fixed wing, Military rotorcraft, and others|
|Key players||Elbit Systems, Lockheed Martin Corp, and Hyundai Heavy Industries|
This report provides a comprehensive analysis of the defense market in the Philippines and contains an in-depth analysis of the following:
- Philippines’s defense budget: Detailed analysis of Philippines’s FY2021 defense budget broken down into market size and market share. This is coupled with an examination of key current and future acquisitions.
- Regulation: The procurement policy and process is explained. This is coupled with an analysis of Philippines’s military doctrine and strategy to provide a comprehensive overview of Philippines military regulation.
- Security environment: Political alliances and perceived security threats to the Philippines are examined; which will help to explain trends in spending and modernization.
- Import and export dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the Philippines defense industry.
Reasons to Buy
- Determine prospective investment areas based on a detailed trend analysis of the Philippines defense market over the next five years.
- Gain an in-depth understanding of the underlying factors driving demand for different defense and internal security segments in the Kuwaiti market and identify the opportunities offered.
- Strengthen your understanding of the market in terms of demand drivers, market trends, and the latest technological developments, among others
- Identify the major threats that are driving the Philippines defense market providing a clear picture about future opportunities that can be tapped, resulting in revenue expansion
- Channel resources by focusing on the ongoing programs that are being undertaken by the Philippines government.
- Make correct business decisions based on in-depth analysis of the competitive landscape consisting of detailed profiles of the top defense equipment providers in the country. The company profiles also include information about the key products, alliances, recent contract awarded, and financial analysis, wherever available
Lockheed Martin Corp
Hyndai Heavy Industries
Table of Contents
Table of Contents
Defense Budget Assessment
Defense Market Size Historical And Forecast
Drivers Of Defense Expenditure
Analysis Of Defense Budget Allocation
Key Market Slide Trends and Insights
Military Doctrine And Security Environment
Military Doctrine And Strategy
Primary Threat Perception
Political And Strategic Alliances
Geopolitical Social And Economic Scenario
Market Entry Strategy And Regulations
Procurement Policy And Process
Major M&A, Financing and Partnerships
Market Attractiveness And Emerging Opportunities
Market Attractiveness, 2021-2026
Top Defense Segments By Value
Import And Export Market Dynamics
Import Market Dynamics
Export Market Dynamics
Defense Platform Acquisitions
Defense Platform Acquisitions By Value
Offshore Patrol Vessel (OPV)
Fast Attack Interdiction Boats
Kaplan/Harimau MT Modern Medium Weight Tank (MMWT)
Defense Companies Operating In Philippines
Main Defense Companies
About This Report
Frequently Asked Questions
The defense budget in the Philippines is valued at $21.6 billion in 2020.
Defense expenditure of the Philippines is expected to register a CAGR of more than 7% during the forecast period 2021-2026
In 2020, the defense budget of the country as a percentage of GDP is 1.0%.
Corvette is the largest sector in the defense market in the Philippines.
Leading companies in the defense market in the Philippines include Elbit Systems, Lockheed Martin Corp, and Hyundai Heavy Industries.