(Bloomberg) – Philippine lenders are preparing to fund military modernization bids for Southeast Asian countries, including purchasing missile systems, fighter jets and submarines, executives said during a defense posture in Manila’s maritime conflict with China.
Defense Secretary Gilberto Teodoro Jr. The Philippines expects $500 million in annual defense funding from Washington to 2029 to improve its military capabilities, but U.S. allies have long wanted to expand their funding sources.
One way is that state agencies like the Ministry of Defense issue bonds backed by the National Government.
Francisco said the military’s upgraded bond agreement reached 200 billion to 300 billion pesos per year ($3.5 billion to $5.3 billion per year).
The Philippines plans to spend up to 2 million pesos over the next decade to modernize the country’s arsenal as the military shifts its focus to territorial defense. Manila announced plans to purchase its own medium-capacity missile system and radar for deterrence as well as submarines, fighter jets and warships.
Teodoro said in an interview earlier this month that it purchased a land-based Typhon missile system – an option for the U.S. to deploy to the Philippines during last year’s military exercise.
The ambitious escalation came as Manila aims to uphold its claims in the South China Sea, and Beijing continues to argue for its broad claims that have been rejected by the 2016 International Court of Justice ruling. Over the past year, Philippine and Chinese ships have repeatedly clashed in disputed waters.
Teodoro, former BDO’s board director, has discussed the plan with the U.S. Bankers Group, and he is awaiting permission from President Ferdinand Marcos Jr. and Treasury Secretary Ralph Recto to facilitate fundraising transactions that may include foreign banks.
“We have told them to work closely with any plan,” said Jose Teodoro “TG” Limcaoco, president of the Philippine Bankers Association. “We have no problem as long as the republic guarantees.”
– Assistance with Cliff Venzon.
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