BMI's Executive Summary

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Singapore, as an island state, faces maritime security threats such as piracy, and as such has developed its security forces to deal with evolving security challenges. Singapore also faces more traditional challenges such as maintaining good relations with neighbouring states, with significant efforts made to strengthen bilateral diplomatic relations with Indonesia. However, despite recent efforts, most notably the Defence Cooperation Agreement (DCA) between Singapore and Indonesia, there have been some setbacks. The DCA would formally recognise defence ties between the countries, ensure increased defence industry collaboration and increase access to training facilities. However, disagreements between the two countries make it unlikely that any agreement will be reached over the DCA in the near future.

The Singaporean defence budget remains one of the highest in the Asia Pacific region, and it has been steadily increasing in recent years. The government announced budget increases of 5.3% to SGD10.58bn in 2007. The majority of the budget will be spent on operating equipment (96.7%) and the remaining 3.3% will be spent on development of personnel and defence equipment. Operating equipment received a 5.5% increase in spending, with the majority on the Armed Forces (SGD10.17bn). The security and external relations budget represents one third of Singapore's total expenditure, and includes expenditure for the Ministry of Foreign Affairs, Ministry of Home Affairs and the Ministry for Defence (MINDEF). Typically the Singaporean government has kept defence expenditure at 4.5-5% of the budget, but the 2007 expenditure has tipped it over 5%. Singapore's defence expenditure in recent years has been targeted towards enhancing its operational capacity, with a view to maintaining a superior capability over neighbouring states' capabilities. This is certainly true of Singapore's air strike and air combat capabilities, where it operates a highly-capable fleet of F-5E/Fs and Block 52/52+ F16 C/Ds.

Singapore enjoys a robust defence industry which has experienced consistent growth. The industry is set to expand, both in the Asia Pacific and US market. In Q406, Vision Technologies Kinetics (VTK), a subsidiary of ST Engineering, agreed to acquire 80% of the US-based MAK Technologies for US$20mn, a firm which specialises in producing simulation equipment for training purposes. Singapore's arms trade remains robust, but the area demonstrating the most export promise was its advance military training programmes. The last model released in Q406 by the DSTA and ST Electronics was the Advanced Combat May System (ACMS), which enables soldiers to train with information transmitted in real time supported by a command-and-control information system (CCIS).

Contents

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Chapter 1 - Executive Summary

Security

Military Expenditure

Arms Trade

Chapter 2 - SWOT Analysis

Singapore Security SWOT

Singapore Defence Industry SWOT

Singapore Economic SWOT

Singapore Political SWOT

Singapore Business Environment SWOT

Chapter 3 - Political Overview

Domestic and External Political Outlook

Chapter 4 - Security Risk Analysis

BMI’s Security Ratings

Table: Singapore Regional Ratings

State Terrorism Vulnerability Index

Regional Security: South East Asia and Pacific Q406

Overview

Inter-State Conflicts

Internal Conflicts

Singapore Terrorism Risk Rating

Singapore Conflict Risk Rating

Singapore Physical Safety Risk Rating

Chapter 5 - Security Overview

Internal Security Situation

Table: Regional Insurgent Groups

External Security Situation

Table: Actual And Attempted Piracy Attacks

Chapter 6 - Defence Industry

Armed Forces

Table: Singapore Regional Armed Forces

International Deployments

Weapons Of Mass Destruction

Chapter 7 - Market Structure

Industry Trends & Developments

Arms Trade Overview

Procurement Trends & Developments

Chapter 8 - Industry Forecast Scenario

Army Enlargements

Government Expenditure On Defence Industry

Table: Singapore Defence Sector – Historical Data & Forecasts

Chapter 9 - Macroeconomic Forecast

Optimism Over Growth

Table: Singapore – Economic Activity

Chapter 10 - Company Profiles

ST Aero

ST Kinetics

ST Electronics

ST Marine

Chapter 11 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Defence Industry

Sources

Competitive Landscape for Asia Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's Asian Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: