Singapore Defence & Security Report Q2 2014 - New Market Study Published
Fast Market Research recommends "Singapore Defence & Security Report Q2 2014" from Business Monitor International, now available
[UKPRwire, Fri Mar 07 2014] Singapore's year-on-year (y-o-y) growth of 3.7% for 2013, with Q4 growth up 4.4% y-o-y, exceeded expectations. As South East Asia's economic hub, growth is crucial ensuring security and stability in the city-state and ensures that Singapore is able to maintain a stable defence budget. Defence expenditure will account for 3.8% of GDP in 2014, up from 3.7% in 2013. Nonetheless, while BMI predicts sustained economic growth and stability, there are economic risks that, though unikely, could undermine long-term defence spending as well as domestic security and social harmony.
In Q114 some commentators began to speculate about the potential for an economic crash, similar to that in Iceland in 2009, as low interest rates and soaring property prices have been prompting Singaporeans to go into debt to invest in properties they can ill afford. However it is important to clarify that this is a speculative risk. The Singaporean government has already taken decisive steps to cool property demand and prevent excessive leverage. BMI therefore considers it unlikely that an economic crash, with its associated social repercussions, is unlikely. Declining exports also represent a considerable economic risk factor. In nine out of the 12 months in 2013 Singapore's exports declined. With foreign-worker restrictions being enforced, Singapore risks not fully capitalising on an upswing in global demand for various manufactured products expected in 2014. However, while manufacturers may not be able to meet demand, less reliance on foreign workers is likely to have productivity benefits. BMI does not see this risk factor affecting Singapore's security situation or defence policy.
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A generally positive economic outlook coincided with an announcement by the US Pentagon in Q114 that Singapore is ready to invest up to US$3.1bn to modernise its fleet of 60 F-16 fighter jets. According to the US Defense Department the planned sale involves new radar, navigation systems, missiles and other advanced equipment, such as a system that will project a display onto a pilot's helmet visor. In a statement released by the US Defense Security Cooperation Agency, which oversees foreign arms sales, the F-16 upgrades were described as an improvement to both the 'capabilities and reliability' of the Republic of Singapore Air Force (RSAF)'s fleet of F-16s. This deal will no doubt provide substantial business to US firms such as Lockheed Martin.
With Singapore's defence minister, Ng Eng Hen, disclosing in Q413 that Singapore was in 'no particular hurry' to buy new fighter jets, the F-16 upgrades act to further quell the ongoing speculation that Singapore is on the verge of ordering a fleet of F-35 fighter jets. At up to US$3.1bn, the scale of the investment in F-16 upgrades indicates that the government has indefinitely postponed any immediate plans to procure the F-35 fighter jet from Lockheed Martin.
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