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[email protected] Should Southeast Asian States
Raise Defence Spending?
Carlyle A. Thayer
June 20, 2025

We are preparing a report on defence spending in Southeast Asia, as part of a deeper

look into comments made by US Defense Secretary Pete Hegseth during this year's
Shangri-La Dialogue.
The report will look at current defence budgets among Southeast Asian countries,
whether there is a need to hike up spending to 5% of GDP as suggested by Secretary
Hegseth and whether it's feasible to do so.
Q1. Secretary Hegseth cited the example of NATO nations when urging Asian countries
to raise defence budgets of 5% of GDP. Zooming in on Southeast Asia, is this a
reasonable proposition to countries in the region? How does the geopolitical
environment in Southeast Asia compare with that of Europe?
ANSWER: In 2023, NATO revised its 2014 guideline on defence spending from 2.0
percent of GDP by 2024 to “at least 2.0 per cent of GDP.” In 2024, the average defence
spending of all NATO members was 2.2 per cent of GDP but only eighteen members
spent “at least 2.0 per cent of GDP on defence.”
Since the election of Donald Trump, pressure has been put on NATO members to
increase defence spending. As noted by Secretary of Defense Pete Hegseth at the
Shangri-La Dialogue, “NATO members are pledging to spend 5% of their GDP on
defence, even Germany. It does not make sense for countries in Europe to do that
while key allies in Asia spend less on defence in the face of even more formidable
threat, not to mention North Korea.”
Hegseth’s 5 percent figure is “pie in the sky” as far as Southeast Asia is concerned
because there is no military alliance structure comparable to NATO and there are no
inter-state armed conflicts. The Association of Southeast Asian Nations (ASEAN) is not
a military alliance and its recently adopted Political-Security Community Blueprint is
silent on the question of what per centage of each member’s GDP should be spent on
defence.
U.S. defence officials, from Elbridge Colby in the Pentagon, to Secretary Hegesth have
used figures ranging from 3 percent, 3.5 percent, to five per cent of GDP without
elaboration. It is unclear what time frame is covered and what specific capabilities U.S.
allies and partners should acquire.
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Trump’s tariffs and his trade war with China undermine global and regional economic
growth that is necessary if defence expenditures are to be increased.
Q2. Secretary Hegseth described the threat from China as real and "imminent". But
do Southeast Asian countries view China in the same manner?
ANSWER: Southeast Asia’s eleven states vary widely in their security assessments of
China’s military rise and the challenge this poses for their national security. The most
recent The State of Southeast Asia poll conducted in early 2025 by the Institute of
Southeast Asian Studies (ISEAS) in Singapore revealed that 51.6 per cent of
respondents identified Chinese aggressive actions in the South China Sea as their
main geopolitical concern. Further, 48.2 per cent of respondents were concerned
about China’s encroachment into the Exclusive Economic Zones and continental
shelves of littoral states, and 44.3 percent expressed concern over an accidental
conflict between China and an ASEAN member state.
The ISEAS survey also revealed that if forced to pick sides between China and the
United States, 52.3 per cent of respondents would choose the United States. This
marks a shift from 2024, when 50.5 per cent of respondents chose China and 2025,
when 47.7% chose China.
Finally, rather than alignment, 53.2 per cent of respondents favoured enhancing
ASEAN’s unity and resilience as the main strategy to mitigate pressures from China
and the U.S. to take sides.
Q3. Is there a need to increase defence budgets to 5% of GDP? How much of a priority
is defence spending among Southeast Asian countries? Or are bread-and-butter issues
of more importance?
ANSWER: Over the last decade defence spending has risen steadily in six Southeast
Asian states in response to China-United States rivalry in the Indo-Pacific – Indonesia,
Malaysia, Philippines, Singapore, Thailand and Vietnam. Three Southeast Asian
countries ranked among the top forty countries in the world with the highest military
expenditure in 2024 – Singapore (ranked twenty-fifth), Indonesia (ranked twenty-
seventh) and the Philippines (ranked fortieth).
Defence budgets as a percentage of total government expenditure averaged 7.9 per
cent among the eleven countries of Southeast Asia. Seven countries fell below the
average: Cambodia (7.7%), Philippines (5.0%), Thailand (4.9%), Malaysia (4.1%),
Indonesia (3.9), Timor-Leste (3.2%) and Laos (0.8%). Four countries were spent above
the average: Myanmar (20.7%), Singapore (18%), Brunei (10.2%), and Vietnam (8.8%).
In summary, Southeast Asia is divided about the threat posed by China’s military rise
and the strategic challenge of China-U.S. rivalry. For mainland states, civil war in
Myanmar, Thai-Cambodia border tensions, and non-traditional security challenges,
such as cross border criminal activity are more important security concerns.
For maritime states, they have prioritized the modernization of their conventional
armed forces to address perceived threats to their security by China’s military rise.
Singapore will acquire F-35 combat aircraft, Indonesia is procuring Scorpène-class
submarines and multirole fighters from France and the U.S., the Philippines has
purchased Brahmos cruise missiles and South Korean naval combatants, while
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Malaysia is acquiring naval strike missiles from Norway. Vietnam has purchased jet
trainers and ScanEagle drones from the United States.
Southeast Asian states could undermine their own security if they shifted excessive
resources to military spending at the same time as the global and regional economy
retracted and supply chains were disrupted by the Trump-initiated tariff/trade war.
A more prudent course of action would be incremental increases in defence
expenditure to modernize their armed forces to keep pace with technological
change.
Q4. Is it feasible to increase the defence budget as such? Given the fact that despite
being the biggest military spender last year, the U.S. defence budget was at 3.4% of
its GDP - still under the 5% Secretary Hegseth has pushed for.
ANSWER: The eleven states of Southeast Asia can be grouped into three categories
based on geo-political factors.
The first category comprises members of the Five Power Defence Arrangements
(FPDA), the only active military arrangement in Southeast Asia. Its members include
Malaysia, Singapore, Australia, United Kingdom and New Zealand. The FPDA is
responsible for the defence of peninsula Malaysia-Singapore. In 2024, Singapore spent
2.8 percent of GDP on defence, while Malaysia spent 1 per cent.
The second category comprises mainland states with the per cent of GDP spent on
defence in brackets: Myanmar (6.8), Cambodian (1.5%), Thailand (1.1%) and Laos
(0.2%). Myanmar is beset with an internal conflict, while Cambodia views Thailand as
a threat to its sovereignty.
The third category comprises the maritime states (including the littoral states
bordering the South China Sea) with the per cent of GDP spent on defence in brackets:
Brunei (3.6%), Timor-Leste (2.7%), Vietnam (1.8%), Philippines (1.3%) and Indonesian
(0.8%).
The Philippines and Thailand are also U.S. treaty allies. The Philippines has a Mutual
Defence Treaty with the United States, while Thai-U.S. defence relations are based on
an exchange of letters between U.S. Secretary of State Dean Rusk and Thailand’s
Foreign Minister Thanat Khoman in 1962 that the U.S. would support Thailand if it
were attacked.
With the exception of the Philippines, it is difficult to see Indonesia, Malaysia,
Singapore or Vietnam joining forces with the United States in a conflict involving
China’s use of force against Taiwan.
Q5. In Singapore's case, defence spending has stayed within the range of 3% of
GDP over the past decade. What are the pros and cons involved, should the country
decide to up its defence expenditure?
ANSWER: Singapore’s GDP growth has slowed and is likely to be under five per cent in
the near term. Any sharp increase in defence expenditure would be at the expense of
social services and other public goods. The current economic climate is uncertain due
to Trump’s tariff/trade war and the prospects for war in the Middle East.
Singapore is not a formal U.S. treaty ally but is considered a solid U.S. security partner.
If Singapore raised defence expenditure to 5 percent to meet Hegseth’s target, and
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became more interoperable with the United States, it would raise the possibility of
“entrapment” if an armed conflict broke out between China and the United States.
Singapore interests lie mitigating the vulnerability of its small size rather than
expeditionary warfare.
Q6. What are the considerations - political, economic, social - taken into account when
deciding on a defence budget?
ANSWER: There are three baskets of factors to be taken into account when drawing
up a nation’s defence budget.
The first basket contains a three-part strategic assessment (1) threats to national
sovereignty, who are the likely adversaries, what are their capabilities and intensions?
(2) national security objectives, and (3) military doctrine and capabilities such as force
structure, weapon systems and personnel.
The second basket contains three economic factors: (1) economic growth forecasts,
(2) budget constraints (education, health, infrastructure), and (3) personnel costs,
salaries, training and procurement.
The third backet contains an assessment of the security environment including the
capabilities and intentions of countries in the region, defence expenditures of regional
states, and the state of alliances and security partnerships.
In summary, a fixed percentage of GDP is not the appropriate metric to determine a
nation’s force structure, required capabilities, weapons and technology.
Q7. How would the public perceive an increase in the defence budget? Would they
welcome it or could there be concerns that an increase in spending for defence means
a decrease in funds allocated for other critical sectors such as healthcare,
infrastructure?
ANSWER: There will always be a tension in allocating state resources for defence
versus education, health and infrastructure. It is up to government leaders – the prime
minister, defence minister and other relevant ministers – to clearly articulate to the
public the security challenges and threats that the nation faces and how increased
defence expenditure will mitigate these challenges and threats. The public is generally
receptive to transparency on national security issues.
Q8. How would defence spending in Southeast Asia evolve over the next decade?
What would be the defence priorities of countries in this region?
ANSWER: The Trump Administration has identified the Indo-Pacific as its priority area
of concern and China’s military rise and aggressiveness as the main threat to U.S.
national interests. A common term used by Secretary Hegseth to describe China is
”pacing challenge.” The future trajectory of military rivalry between China and the
United States will focus on disruptive technologies, Artificial Intelligence, quantum
computing, drones and UAVS etc.
China has consistently increased defence spending every year for the last three
decades, “the longest unbroken streak recorded for any country in the SIPRI Military
Expenditure Database.” Chinese defence spending increased by 59 per cent over the
decade 2015-2024. Currently, China has 328 principal naval combatants (amphibious
ships, frigates, destroyers, submarines, aircraft carriers) compared to the 289 principal
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combatants in the U.S. Navy. These metrics, however, do not capture the quality of
these systems or the operational experience of military commanders.
In summary, the Indo-Pacific will witness increased defence expenditure by the major
powers and the introduction of newer more precise and destructive weapons systems.
This will put pressures on Southeast Asia’s military forces, particularly Singapore, the
Philippines, Indonesia, Malaysia and Vietnam, to increase their defence budgets to be
prepared to defend themselves if conflict breaks out.

Suggested citation: Carlyle A. Thayer, “Should Southeast Asian States Raise Defence
Spending?” Thayer Consultancy Background Brief, June 20, 2025. All background briefs
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Thayer Consultancy provides political analysis of current regional security issues and
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