Industrial Concerns Shaping Asia-Pacific Arms Market.

• Author: Harper, Jon

Efforts by countries in the Asia-Pacific to boost their indigenous industrial bases will have major implications for international defense contractors, according to analysts.

The region remains the world's largest arms export market. Nations there accounted for 42 percent of global arms imports from 2013 to 2017, according to the Stockholm International Peace Research Institute, which tracks military spending trends.

Of the 10 largest importers in that timeframe, half were in Asia including India, China, Australia, Pakistan and Indonesia. Russia accounted for 34 percent of arms exports to the region, the United States for 27 percent and China for about 10 percent, according to SIPRI.

Concerns about China and North Korea are driving much of the spending on military capabilities. However, the threat environment is not the only factor influencing weapons buys, analysts noted.

"There's also another regional thread here that points toward indigenization," said Steve Ganyard, an international military market analyst and principal at Avascent.

Governments attempting to significantly boost their domestic defense industries include Japan, South Korea, Taiwan, Vietnam, Australia, Indonesia and India, Ganyard noted in a podcast earlier this year.

Nations in the region are looking to create defense items that can be exported and find new markets, he said. "Very few of those countries are going to be able to threaten the major global primes at this point, but there's significant political impetus behind indigenization efforts... [and] that's going to bring a lot more players and a lot more competition to the marketplace within the next five to 10 years."

Japan and South Korea already have large defense industries. Their arms imports decreased by 50 and 19 percent, respectively, in the 2013 to 2017 timeframe relative to the previous five-year period. However, both nations remain partly dependent on foreign suppliers, a SIPRI fact sheet noted.

As tensions persist in the region, they have turned to the United States for several types of advanced weapons including combat aircraft such as the F-35 joint strike fighter.

In April, the South Korean government announced a plan to purchase 10 anti-submarine warfare helicopters from foreign sources.

Japan and South Korea have also ordered advanced air-and-missile defense systems from the United States. In January, the State Department approved the proposed sale of Raytheon's Standard Missile-3 Block IIA missile interceptors to Japan at an estimated cost of $133 million. The island nation also plans to buy two Aegis Ashore sites at an estimated cost of...