OTR: Southeast Asia Defence Trends

Findings from the Lowy Institute’s Asia Power Index and its recent report Southeast Asia’s Evolving Defence Partnerships highlight both the scale of investment in defence and the shifting web of military relationships shaping the region’s security future.

Lowy’s Asia Power Index ranks countries on their ability to generate and sustain military power. While Southeast Asian states remain far below major powers such as the United States, China, and Japan in raw spending, the trajectory in the region shows a clear upward trend.

Defence procurement and research in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam rose by US$2.7 billion between 2022 and 2024. On average, defence expenditure hovers around 1.5 percent of GDP—modest compared with NATO’s two percent benchmark, but significant for developing economies facing competing social demands.

What stands out is not just the level of spending but the drivers behind it. Rising tensions in the South China Sea, uncertainty over Taiwan, and global conflicts with ripple effects in Asia have forced governments to modernise their militaries. Budgets increasingly prioritise high-end capabilities such as submarines, drones, and cyber-warfare systems, reflecting recognition that traditional platforms alone cannot meet future threats.

The Strategic Calculus: Balancing Great Powers

Southeast Asia sits at the crossroads of US–China competition. For regional states, defence spending is only part of the response; the other is cultivating a wide range of security partners.

The Lowy Institute’s partnership index ranks the United States as the region’s most important defence partner, followed by Australia and Japan.

kChina, despite its growing military might and active diplomacy, ranks only eighth in terms of formal defence ties. This imbalance underscores how most Southeast Asian states continue to view Washington and its allies as critical for balancing Beijing, even as they engage China economically.

One enduring multilateral mechanism is the Five Power Defence Arrangements (FPDA), linking Australia, Malaysia, New Zealand, Singapore, and the UK. Established in 1971, the FPDA continues to conduct regular joint exercises and has expanded into newer areas such as counter-terrorism, cyber-defence, and humanitarian assistance. Its longevity shows the value of long-term institutionalised defence cooperation.

At the bilateral level, Singapore’s defence relationship with the United States exemplifies how regional states hedge. Joint exercises, training access, and cooperation on new domains like unmanned systems highlight how smaller states leverage partnerships to build capacity without overcommitting politically.

Cambodian-Chinese joint facilities at Ream Naval Base. Photo: Asia Maritime Transparency Initiative

Lowy’s report also pays special attention to Cambodia, where China’s upgrade of Ream Naval Base has sparked concern. The development is seen as a potential foothold for Beijing to extend surveillance and naval presence into the Gulf of Thailand and beyond.

While some analysts downplay the base’s strategic utility, Lowy warns that punitive reactions from the United States or Australia—such as sanctions or diplomatic isolation—could push Phnom Penh deeper into China’s orbit. Instead, the institute suggests constructive engagement: offering combined military exercises, officer training, and education exchanges that would give Cambodia alternatives and prevent overreliance on Beijing.

This case reflects a broader regional dilemma: how to respond to China’s growing presence without forcing smaller states into binary choices that limit their strategic autonomy.

Another theme in Lowy’s analysis is the role of emerging technologies in shaping defence cooperation. As cyber threats, disinformation, and unmanned systems proliferate, partnerships are evolving beyond conventional naval or air force drills.

Countries like Singapore and Malaysia are seeking cooperation in cyber-security, artificial intelligence, and biotechnology-related defence. Multilateral exercises increasingly include non-traditional scenarios—such as pandemic response or space security—demonstrating how Southeast Asia’s security concerns are no longer confined to territorial disputes alone.

A Region Hedging for Stability

Despite rising budgets, Southeast Asia’s defence spending remains cautious compared with the intensity of external pressures. For many governments, raising defence allocations above 2 percent of GDP remains politically sensitive. The Philippines’ modernisation program, for instance, competes with urgent domestic needs such as infrastructure and poverty alleviation. Vietnam continues to focus on asymmetric capabilities like coastal defences rather than matching China’s naval buildup ship-for-ship.

Yet the strategic diversification of partnerships is unmistakable. Defence dialogues with Japan, India, and South Korea are gaining traction, while Australia is stepping up its presence through capacity-building programs and maritime cooperation. Even European players such as France and the UK are re-emerging in Southeast Asia, often through arms sales and participation in regional exercises.

This hedging strategy—modest spending combined with multiple partnerships—reflects a regional desire for resilience rather than confrontation. Governments are preparing for a more contested strategic environment but remain reluctant to align too closely with any single power.

Based on Lowy's report, Southeast Asia is not arming for war but rather investing in insurance against uncertainty. Defence spending is rising in absolute terms, though carefully balanced against economic realities. Partnerships are proliferating, extending beyond traditional alliances into new domains such as cyber-security and emerging technology.

The overall picture is one of pragmatism: states seek to avoid direct confrontation, preserve autonomy, and maintain access to multiple security providers. Yet, as China expands its presence and US–China rivalry deepens, the pressure to choose sides will grow. How Southeast Asia manages this balancing act—through both budgets and partnerships—will determine the region’s ability to maintain stability in the years ahead.

Banner: Singapore Army/Facebook

-Asia Media Centre