Submarine production spending across Asia Pacific will increase at a compound annual growth rate (CAGR) of 4.17 percent for the next 10 years to reach $52.5 billion in total by 2026, according to the latest figures has released by IHS Markit.
Currently, there are 145 submarines owned and operated by 12 regional powers including Australia, Bangladesh, India, Indonesia, Japan, Malaysia, Pakistan, Singapore, South Korea, Taiwan and Vietnam, according to Jane’s Fighting Ships latest figures. China’s fleet of 61 submarines represents over two-fifths of Asia’s total, meaning that Beijing’s forecast expenditure on the production of new submarines only needs to achieve a moderate CAGR of 0.67 percent over the next decade to maintain its dominance, reaching a total of $18.9 billion by 2026.
“The security architecture in Asia is affected by numerous factors, creating a complex network of bilateral and multilateral alliances,” said Paul Burton, Jane’s research and analysis director at IHS Markit. “One of the main trends is the evident appetite to develop a submarine capability.
“One main driver is the obvious threat posed by China’s growing naval projection capabilities. However, the expansion of other major actors such as Japan, Australia, the US, Russia and India is forcing smaller countries to counter these efforts with procurement of platforms that could facilitate an asymmetrical strategy,” Burton said.
Southeast Asia
As a sub-region, Southeast Asia’s submarine production expenditure is expected to reach $4.5 billion by 2026. By the middle of the next decade, the region could be home to seven states operating submarines, compared to five today.
“With a spate of orders by Thailand, Indonesia and Vietnam this decade, the acquisition of submarine capabilities by new market entrants signal that major changes are afoot for the regional operational landscape,” Burton said.
South Asia
India and Pakistan’s submarine production levels are forecast to be the highest in Asia Pacific, with a sub-regional CAGR of 7.46 percent over 10 years, reaching a total of $15.8 billion. India has a number of projects in place that will result in a mixed force of nuclear and conventional-powered submarines that can operate in both near and far areas. India’s projected 10- year production spend of $14.5 billion far outstrips Pakistan’s total of $1.2 billion. Both countries have significant CAGRs of 9.77 percent (Pakistan) and 7.33 percent (India).
“India’s ambitious submarine production programme is part of its strategy to ensure that China’s aspiration to achieve regional military supremacy does not go unchecked,” Burton said. “Where one sub-continental power goes, the other will follow. Hence, Pakistan will continue to invest in its underwater capability over the next decade.”
North Asia
North Asia (excluding China) is forecast to reach expenditures of $11.9 billion over the next 10 years at a 0.73 percent CAGR. Influenced by the growing naval power of neighbouring countries, Japan and South Korea — forecasted to spend $5.7 billion and $5.2 billion, respectively — are in a locked race to increase their presence in the region by either expanding the number of submarines deployed or their overall sophistication against China or each other.
“The existence of a cutting-edge submarine capability in the naval inventories of China, Japan and South Korea clearly indicates that local force projection is an expenditure priority for each of them, and is one of many strategic drivers at play,” Burton said.
Faced with a looming existential threat from China, Taiwan is also showing keen interest in submarine procurement, seen as a critical programme for its security and defence industrial base.
Data: 2017-2026 Asia Pacific Submarine Production Forecast (in billions USD 2017)
| Year | Annual Total |
| 2017 | 4.29 |
| 2018 | 4.54 |
| 2019 | 5.11 |
| 2020 | 5.16 |
| 2021 | 4.97 |
| 2022 | 5.11 |
| 2023 | 5.22 |
| 2024 | 5.66 |
| 2025 | 5.98 |
| 2026 | 6.46 |
| TOTAL | 52.5 |
| CAGR | 4.17% |
Note: Investments include China, India, Japan, South Korea, Indonesia, Singapore, Australia, Pakistan, Taiwan, Thailand, Philippines. (Table excludes Bangladesh).
Source: Jane’s by IHS Markit, May 2017
Data: 2017 Total Active Submarines at Sea in Asia Pacific
| Country | Submarines (active) |
| Australia | 6 |
| Bangladesh | 2 |
| China | 61 |
| India | 14 |
| Indonesia | 2 |
| Japan | 20 |
| Malaysia | 2 |
| Pakistan | 8 |
| Singapore | 4 |
| South Korea | 14 |
| Taiwan | 4 |
| Vietnam | 8 |
| TOTAL | 145 |
Source: Jane’s Fighting Ships, 2017
Learn more about submarine procurement trends in the Asia Pacific region at IMDEX in Singapore on 16-18 May 2017 at Booth Number Q27. For information, contact Viana.Ge@ihsmarkit.com.
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