Southeast Asian Naval Modernization and Hedging Strategies

For over a decade, Southeast Asia’s largest maritime countries—Indonesia, Malaysia, the Philippines, and Vietnam—have engaged in extensive naval modernization programs. Though they have done so with varying levels of intensity, they all have been driven to modernize their navies by changes in their strategic environment, the biggest of which have been the growth of China’s economic and military power and its aggressive assertion of its South China Sea sovereignty claims. Ultimately, those changes are also what have led the four countries to hedge, to one degree or another, the risks associated with China’s rise.

Vietnam was the first to move towards a hedging strategy in the late 2000s.¹ The Philippines followed soon after. And while the Philippines did slide backwards towards accommodation with China when Rodrigo Duterte became president, it would eventually tack back to hedging during the second half of his tenure.² In the mid-2010s, Indonesia began to hedge too, while striving to maintain its nominal neutrality at the same time.³ And by the end of that decade, Malaysia started to adopt a similar approach during Mahathir Mohammad’s brief second stint as prime minister.⁴ But perhaps most interesting has been how well each country’s hedging behavior has been reflected in the pace of its naval modernization.

Certainly, at the turn of the new millennium, naval modernization was a low priority for most Southeast Asian governments (with the possible exception of Singapore’s). Given the lingering impact of the 1997 Asian Financial Crisis and the lack of a clear maritime danger, that was none too surprising. Modern warships are costly to acquire and maintain at a state of high readiness. Hence, even as China became more assertive in the South China Sea during the 2000s, most Southeast Asian leaders resisted calls to modernize their navies. Instead, they hoped to persuade Beijing to adopt ASEAN’s principle of consensus and shelve its contentious South China Sea sovereignty claims.

In the early 2000s, their strategy seemed to work. China’s signature on ASEAN’s “Declaration on the Conduct of Parties in the South China Sea” (code of conduct) and diplomatic slogans of heping jueqi(peaceful rise) and hexie shijie (harmonious world) buoyed Southeast Asian hopes. But, by the late 2000s, Beijing had dropped those slogans and begun to build artificial islands and military installations on Chinese-controlled features in the Paracel and Spratly Islands.  Those features, like Fiery Cross Reef, Mischief Reef, Subi Reef, and Woody Island, would eventually come to host not only airfields and radar stations, but also surface-to-air and surface-to-surface missile sites. There was little that Southeast Asian countries could do to restrain China. Nor could they do much to stem its increased harassment of their fishing and energy exploration activities in the region over the following decade.⁵

Southeast Asian countries’ lack of attention to their navies—and their external defense forces more generally—had given China the opportunity to assert its sovereignty claims in the region without concern of real opposition. Hence, as each Southeast Asian country started to shift its approach to China and hedge its rise, each also came to realize the need to modernize its naval forces.

Best-Laid Modernization Plans

Nevertheless, most Southeast Asian countries have expressed a desire to do the “minimum” required for their respective modernization programs. Indonesia and the Philippines explicitly used the word when discussing their strategic aims. The former hopes to create a “Minimum Essential Force” and the latter to ensure “minimum credible deterrence.”⁶ Implicitly, Malaysia has also embraced the idea of “minimum” in its 15-to-5 Transformation Program, which is as much a rationalization as a modernization of its naval forces.⁷ Of Southeast Asia’s largest maritime countries, only Vietnam has avoided any hint of the word. Rather, Vietnam’s 2019 Defense White Paper emphasized the need for its navy to “unceasingly [improve its] professional skills; the military art; modes of warfare; weapons and technical equipment and support.”⁸

Of course, the word “minimum” is politically expedient. For domestic audiences, it conveys that military modernization programs will not derail spending on economic development or social welfare. And for foreign audiences, it signals that they are not a precursor to aggressive action. But as a guide for naval modernization, the word is not very useful, if only because combat power is relative. There is no assurance that what was defined as the “minimum” needed for a modernization program at its start would remain so by its end, especially if in the interim a potential adversary became stronger, as China did during the 2010s.

What has been clearer about Southeast Asia’s naval modernization programs is their embrace of contemporary thinking about naval warfare. Much of that thinking revolves around how to take advantage of (and defend against) the vulnerability of warships to modern guided missiles and the growing prevalence and sophistication of sensor technologies. Hence, all four of Southeast Asia’s largest maritime countries have prioritized the acquisition of warships that can not only launch long-range guided missiles, but also avoid easy detection.

Such capabilities have become especially important in the South China Sea, where China has deployed an array of ever more persistent intelligence, surveillance, and reconnaissance (ISR) sensors. These include terrestrial sensors, like high-frequency direction-finding and radar stations in the Paracel and Spratly Islands and on offshore platforms at sea.⁹ They also include airborne sensors aboard China’s newest KJ-500 early warning aircraft and BZK-005 and WZ-7 (“Soar Dragon”) long-endurance reconnaissance unmanned aerial vehicles.¹⁰ And they are present in space aboard China’s growing constellation of ISR satellites.¹¹

That is why diesel-electric attack submarines have become must-haves for Southeast Asian navies. Modern submarines are not only stealthy, but also more lethal with the advent of underwater-launched anti-ship missiles. Unfortunately for the region’s navies, the high cost of submarines has limited their purchase by individual navies to the single digits. And so, to supplement their small submarine forces, Southeast Asian navies have turned to frigates, corvettes, and fast attack craft (FAC) armed with guided anti-ship missiles, as is evident from their rising fleet tonnages. Though corvettes and FACs have shorter endurance and do not perform as well in high sea states as frigates, their smaller radar signatures make them more difficult to spot and their lower costs enables navies to acquire far more of them. Many are anticipated to populate the future fleets of Southeast Asia.

Even so, all of Southeast Asia’s naval modernization programs have faced their share of hurdles.  The one most often encountered is money. After all, modern warships are expensive. In 2009, Vietnam’s purchase of six Project 636.3 (Kilo-class) diesel-electric attack submarines cost the equivalent of nearly half its defense budget for that year.¹² Similarly, Indonesia expects that it will have to borrow heavily to meet its naval modernization goals over the 2020s.¹³ Another common hurdle is the competition from other government priorities. While the “guns versus butter” tradeoff has always existed, government responses to unexpected events, like economic recessions, are far more apt to derail even the best-laid modernization plans. The COVID-19 pandemic, for example, diverted resources that set back the naval modernization programs of both Indonesia and the Philippines several years.

A final (and perhaps most avoidable) hurdle is the combination of poor procurement and program management practices. The first sort is sometimes obscured in the dealmaking between governments and companies, but often involves how defense offsets are structured.  (Defense offsets are requirements that governments place on foreign companies as a condition of a sale.)  The ad hoc nature of Indonesia’s defense offsets has long hindered its acquisition of new combat platforms. As a result, the Indonesian navy has often resorted to purchasing older second-hand warships.¹⁴ The second sort is more mundane, but no less problematic. It is be best exemplified by Malaysia’s high-profile Maharaja Lela-class littoral combat ship (LCS) program, which has managed to not only far outstrip its budget, but also fall three years behind schedule.¹⁵

Diversifying Arms Suppliers

Although most Southeast Asian countries have been slow to surmount the hurdles to naval modernization, they have been quicker to shift their acquisitions away from the American, European, and Russian arms manufacturers, which have traditionally dominated the global defense market. Certainly, Southeast Asian militaries value the cutting-edge capabilities of American and European weapons. But they are often pricey.  Russian weapons, on the other hand, have long been considered economical and rugged. But their technological edge has eroded. Hence, many Southeast Asian governments have welcomed competition from arms manufacturers of Asian countries to satisfy their naval requirements.

As it happened, several Asian countries have aspired to become arms exporters. But until recently, few have succeeded in exporting entire combat platforms or systems, like warships or missiles. Even Japan, a country whose arms manufacturers have a long history of producing advanced weapons, has struggled. Japanese laws restricting arms exports after 1976 created an insular defense industry that has been hamstrung by high costs and an excessively complex export-control process.¹⁶ So, even after Tokyo relaxed its export restrictions in 2014, Japanese arms manufacturers have continued to struggle. For a time, China fared somewhat better.  During the 2010s, Malaysia chose a Chinese shipbuilder to construct its first batch of Keris-class littoral mission ships (LMS); and Indonesia partnered with a Chinese aerospace firm to produce C-705 anti-ship missiles under license. But since then, both countries have backed away from their military relationships with China.¹⁷

By contrast, South Korea has been a notable success. Its arms manufacturers—having filled the gap in the market for advanced, but affordable combat platforms and systems—were well positioned to satisfy Southeast Asian requirements for everything from frigates to fighter jets. Indeed, without South Korean shipbuilders, Southeast Asia’s cash-strapped naval modernization programs would not have fared as well as they have so far. And in the process South Korea’s defense industry has become a top arms supplier to all four of Southeast Asia’s largest maritime countries.

Naval Modernization

Vietnam

Despite fighting a war against China in 1979 and skirmishing with it along their border and at sea over the next decade, Vietnam, like other Southeast Asian countries, took an optimistic view of China in the 1990s. Hanoi looked past its row with Beijing over an offshore oil exploration block in the South China Sea in 1993 and agreed to demarcate a small part of their maritime boundary in the Gulf of Tonkin in late 1999. Sensing no immediate danger, Vietnam seemed content with a gradual recapitalization of its navy. Over the 1990s, it added only one relatively modern BPS 500-class corvette, armed with eight Kh-35 Uran (SS-N-25) anti-ship missiles, and four already-dated Project 1241.RE (Tarantul-class) corvettes to its largely outmoded fleet of two Yugo-class midget submarines, five Petya-class frigates, and 18 FACs.

But after witnessing China’s military build-up accelerate and assertiveness in the South China Sea grow in the 2000s, Vietnam pivoted sharply. It would become the first Southeast Asian country to abandon its accommodative posture and adopt a hedging one towards China. While Vietnam continued its broader engagement with its northern neighbor, Hanoi quickly set about firming up its existing security relationship with Russia and creating new ones with other external powers, like India, Japan, and the United States. And, rather than continue to seek incrementally better warships, Vietnam embarked on a far more ambitious naval modernization program.

The centerpiece of that program was an agreement, signed by Vietnam’s then-Prime Minister Nguyen Tan Dung, to buy six new Kilo-class submarines from Russia. The deal, worth $2.1 billion, provided the Vietnamese navy with submarines that are reputedly quieter and equipped with better sonar than those of the same class that Russia sold to China a decade earlier. At a stroke, Vietnam acquired Southeast Asia’s most powerful undersea fleet. Equally importantly, Hanoi also bought about $1.1 billion-worth of associated armaments (including 3M-54 Klub [SS-N-27] anti-ship missiles and 3M-14 [SS-N-30A] land-attack missiles), base infrastructure, and training and simulation facilities.¹⁸ Hanoi’s huge outlays demonstrated the lengths it was willing to go to protect its maritime claims. Delivered between 2014 and 2017, the six submarines now operate as Submarine Brigade 189 and are based at Cam Ranh Bay.

As costly as its submarine purchase was, Vietnam did not shy away from acquiring other new-build warships. It even negotiated with a Dutch shipbuilder to buy four SIGMA 9814 guided-missile corvettes. And though that deal ultimately fell through, it showed Vietnam’s continued interest in high-end naval combat platforms. By the mid-2010s, Vietnam eventually ordered four Project 11661E (Gepard-class) frigates, each armed with eight Kh-35 missiles and eight 9M337 Sosna-R (SA-24) surface-to-air missiles, and ten Project 1241.8 (Tarantul V-class) corvettes, each armed with 16 Kh-35 missiles. Vietnam also received two former South Korean navy Pohang-class corvettes in 2015 and 2017. And since then, Hanoi has reportedly fitted one with domestically produced anti-ship missiles, and the other with 9K38 Igla (SA-N-10) surface-to-air missiles.¹⁹

While new missile-armed warships clearly strengthened the Vietnamese navy, its leaders also appreciated the need for well-trained crews to maximize their combat effectiveness. That was particularly true for the navy’s most important additions: its six Kilo-class submarines. Thus, the navy hiked its pay for submarine crews to attract and retain the best sailors. It also hired Russian advisors to oversee their training. And, leveraging Hanoi’s security relationship with New Delhi, the Vietnamese navy enlisted the assistance of its Indian counterpart, which also operates Kilo-class submarines, to hone its submarine crews’ tactical skills. Indeed, the Indian and Vietnamese navies have held joint exercises every year since 2018, with the last iteration taking place in September 2021. Similarly, Vietnam deepened its naval ties with Japan by signing a new defense equipment agreement with it the same month.²⁰

Vietnam’s naval modernization even warranted special attention at the Vietnamese Communist Party’s 12th National Party Congress in 2016. At the time, maritime issues were surely on the minds of many Vietnamese leaders, considering China’s deployment of the Hai Yang Shi You 981 (or HYSY 981) offshore drilling rig and a flotilla of more than 100 vessels into Vietnam’s exclusive economic zone 18 months earlier. Hence, it came as no surprise that Vietnam’s state-run media spotlighted the remarks of Rear Admiral Dinh Gia That at the Congress. As the Vietnamese navy’s top political commissar, he exhorted his service to “master new and modern weapons.”²¹ As part of its effort to do so, in 2020, the navy launched a five-year plan to enhance the combat capabilities of its purchases by making them more interoperable.²²

Philippines

Like Vietnam, the Philippines has a vast maritime domain to protect. To do so, Manila once maintained a navy that included two frigates, ten corvettes, and a dozen offshore patrol vessels (OPV) as late as the 1980s. But between then and the 2010s, Manila largely neglected its naval forces and depended on its mutual defense treaty with the United States for external defense. Unfortunately for Manila, its ejection of American forces from their Philippine air and naval bases and its periodic squabbles with Washington over the Visiting Forces Agreement (VFA), which governs the presence of American forces in the Philippines, sapped much of the mutual defense treaty’s deterrent power and emboldened China to pressure Philippine claims in the South China Sea.

In the early 2000s, Philippine President Gloria Macapagal-Arroyo tried reframing her country’s security dilemma. By setting aside Manila’s sovereignty disputes with Beijing and encouraging Chinese investments in the Philippines, she hoped to link Chinese interests with Philippine security. Unfortunately for the Philippines, her strategy failed to restrain Beijing, a reality that came at a particularly inopportune time. In 2002, the Philippines began to pipe gas from its Malampaya natural gas field in the South China Sea to power plants that would eventually generate half of the electricity for its most populous island of Luzon. Such a growing dependence suggested the need for more security. Instead, Arroyo allowed her country’s offshore combat capability to decline to near non-existence in the mid-2000s.

Concerned about their service’s parlous state, Philippine navy leaders in the late 2000s began to draft what would become known as the navy’s “Strategic Sail Plan 2020.” The plan laid out how it would create a modern fleet capable of “minimum credible deterrence.”²³ Then, in 2012, the navy revealed what that fleet’s force structure would look like. Its “desired force mix” included three attack submarines, six anti-air frigates, 12 anti-submarine corvettes, 18 OPVs, and as many as 42 small patrol boats.²⁴ However, at the time of its publication, the navy’s “desired force mix” seemed more aspirational than practical, given its tiny modernization budget.

All that changed when Benigno Aquino III, Arroyo’s successor, took office. Determined to counter China’s assertiveness in the South China Sea, he expanded the Philippines’ security relationship with the United States through a new Enhanced Defense Cooperation Agreement (EDCA) and devised a three-phase, fifteen-year military modernization plan for the Philippine armed forces.²⁵ Even better, he secured legislative funding for the plan.²⁶ Jump starting the Philippine navy’s acquisitions, the United States provided enough support through its Foreign Military Sales program for Manila to procure three former U.S. coast guard Hamilton-class cutters between 2011 and 2015.

South Korea helped too. In 2015, it donated a former South Korean navy Pohang-class corvette to the Philippines. And a year later, a South Korean shipbuilder won the contract to build two Jose Rizal-class guided-missile frigates for the Philippine navy. The frigates, patterned after South Korea’s Incheon-class guided-missile frigate, would be not only fitted with dedicated missile launchers, but also designed to accommodate an eight-cell vertical-launch system (VLS) which, if installed, would triple the number of anti-ship missiles aboard each ship. The first Jose Rizal-class frigate entered service in July 2020 and the second in June 2021. Initially, each was armed with four South Korean SSM-700K Haeseong anti-ship missiles and 20 French Mistral surface-to-air missiles in 2022.²⁷

In the meantime, Aquino scored a significant diplomatic victory over China’s “nine-dash line” sovereignty claim at the Permanent Court of Arbitration (PCA) in July 2016. But only months later, the Philippines’ next president, Rodrigo Duterte, changed tack. He put the PCA’s ruling on “the back seat” and aligned himself with Beijing in the hopes of attracting major Chinese investment and tempering Chinese behavior in the South China Sea.²⁸ Neither happened. By 2020, China had made only paltry investments in the Philippines, while Chinese coast guard and maritime militia vessels continued to intimidate Philippine fishermen, especially near disputed features like Scarborough Shoal. And in 2021, China even blocked access for a time to Philippine-claimed Whitsun Reef, which was swarmed by some 200 Chinese vessels in March and another 150 Chinese vessels in October.²⁹

Even Duterte showed signs of frustration. About two years into his presidency, he began to back away from his all-in accommodation of China and took small steps towards hedging.³⁰ Despite threatening to abrogate the EDCA and VFA with the United States, Duterte never did so. Instead, he fully restored the VFA in July 2021. He also prioritized the acquisition of new military hardware for the Philippine navy and air force.³¹ As a result, more of the navy’s “desired force mix” has materialized. Even as the second of its two new frigates was being delivered, the navy ordered six new OPVs in May 2021.³²

The COVID-19 pandemic, however, waylaid other Philippine navy acquisitions. An anticipated order for two new guided-missile corvettes was delayed. Indeed, the navy’s entire corvette acquisition program was pushed from the Philippine military modernization plan’s second phase to its third.³³ The navy’s submarine acquisition program may go the same way. While an order for two or three submarines is still expected during the plan’s second phase, which ends in 2022, none has been placed yet. For the moment, the navy continues to ponder its many submarine options, including France’s Scorpene-class, Germany’s Type 212, Russia’s Kilo-class, South Korea’s Chang Bogo-class, Sweden’s A26, and Turkey’s Type 214 (Reis class) diesel-electric attack submarines.³⁴

Meanwhile, the Philippine navy has moved ahead with other preparations for its future fleet.  In January 2020, Philippine Vice Admiral Robert Empedrad revealed that the navy identified an idle South Korean-owned shipyard in Subic Bay that could serve as a base for its submarines as well as other larger warships and sealift vessels.³⁵ Beyond that, the navy has expanded three of its facilities on Palawan Island, particularly the one at Oyster Bay (an inlet of Ulugan Bay) which sits within easy reach of the South China Sea. Undoubtedly, progress on the Philippines’ naval modernization has been slow, but Chinese pressure continues to push it forward.

Indonesia

Unlike the maritime claims of the Philippines and Vietnam, those of Indonesia did not come under significant pressure from China until the mid-2010s. Jakarta had long hoped that Beijing would overlook the fact that its “nine-dash line” ran through Indonesia’s exclusive economic zone in the South China Sea. Indonesian diplomats would sidestep the issue by stressing that “there is no territorial dispute between Indonesia and China.”³⁶ They believed that nominal neutrality in the South China Sea dispute might enable Jakarta to broker a solution to it and, perhaps in the process, settle its own dispute with China. But Indonesia’s leaders could not indefinitely ignore China’s growing presence in its waters or interference in its energy exploration activities near Natuna Island.³⁷ And so, they tried to caution China. In 2014, Indonesian General Moeldoko penned a warning to it in a widely read international newspaper.  He even travelled to Beijing to deliver the message personally. But neither attempt made much of an impact on Chinese behavior.

Hence, Indonesia began hedging too, cozying up to external powers. It has even done so with Australia, a country with which it has had a troubled history.³⁸ Jakarta also downgraded its ties with China, winding down its licensed production of C-705 missiles. And finally, Indonesia sought to improve its ability to defend its “archipelagic sea lanes” by hastening its naval modernization program. First outlined in 2005, the program intended to create a modern “Green Water Navy,” consisting of a “striking force” of 110 ships, a “patrol force” of 66 ships, and a “support force” of 98 ships, by 2024.³⁹ But progress has been slow. As a result, the average age of the warships in the Indonesian navy rose to almost 30 years by 2020. One reason has surely been inadequate resources. But another has been Indonesia’s military procurement practices, which have made new warships harder to buy.

Fortunately for the Indonesian navy, those procurement practices started to change by the mid-2010s.⁴⁰ And late in the decade, the navy placed orders for four new-build frigates: two Dutch SIGMA 10514 (Martadinata-class) and two Danish Iver Huitfeldt-class guided-missile frigates. Their integrated sensors and VLS magazines of medium-range surface-to-air missiles will give the navy its first modern air defense capability. The impetus for change received a further boost after one of the navy’s 40-year-old submarines, the Nanggala, sank in May 2021. A month later, Jakarta announced that it would buy new military hardware worth $125 billion—a sum equal to two-thirds of Indonesia’s annual government budget—over the next quarter century. An order for eight frigates from Italy quickly followed. Six of them will be newly built FREMM guided-missile frigates that will primarily fill anti-submarine and minesweeping roles.  The remaining two are soon-to-be retired Italian navy Maestrale-class guided-missile frigates.

Indonesia’s acquisition of new missile-armed FACs and OPVs has been steadier, if still slow, despite their construction by domestic shipbuilders. Over the 2010s, eight Clurit-class (KCR-40) and four Sampari-class (KCR-60) FACs were completed. All were fitted with C-705 missiles and, in the case of the Sampari-class FACs, a Chinese combat management system. Since then, however, the Indonesian navy has decided to outfit its follow-on Sampari-class FACs and retrofit its existing ones with more powerful MM40 Exocet anti-ship missiles and Western combat management systems. The navy eventually expects to operate as many as 20 Sampari-class FACs. In August 2021, it also cut steel on a new class of 90-meter long OPVs that will be primarily used for anti-submarine warfare, but are also expected to be armed with MM40 Exocet missiles.⁴¹

Like other maritime countries, Indonesia has long appreciated the value of submarines. It was the first in Southeast Asia to operate them, acquiring two Type 209/1300 diesel-electric attack submarines in the 1970s. Today, Indonesia hopes to build a fleet of between eight and 12 submarines.⁴² Four are already in service, including three new Nagapasa-class diesel-electric attack submarines (a variant of South Korea’s Chang Bogo class, which itself is based on Germany’s Type 209/1400). An order for a second trio were initially expected on the heels of the first three boats, but design and manufacturing issues have reputedly led the navy to study other options.⁴³ Despite the delay, the navy is clearly committed to adding more submarines, considering its new requirement for an “interim” submarine and its groundbreaking on a submarine base on Natuna Island in 2021.⁴⁴

Later that year, Australia gave Indonesia an additional incentive to modernize its navy, when Canberra revealed its intention to build at least eight nuclear-powered attack submarines as part of its new AUKUS security partnership with the United Kingdom and the United States.⁴⁵ The long endurance of nuclear-powered submarines would allow Australia to stealthily patrol the waters near Indonesia for far longer than it can with its existing Collins-class diesel-electric attack submarines. Given the existing presence of Chinese nuclear-powered submarines (based at Yalong Bay on Hainan Island) to Indonesia’s north, the prospect of Australian ones to its south no doubt complicates Jakarta’s strategic situation. Indonesia has no shortage of reasons to speed up its naval modernization program. The only question is how well Jakarta can keep it on track.

Malaysia

The slowest to respond to China’s maritime encroachments has been Malaysia. Despite Chinese patrol ships anchoring for extended periods off Malaysian-claimed James Shoal and Luconia Shoal, the former only 80 km from Malaysia’s coastline, and its repeated harassment of Malaysian energy exploration activities, Kuala Lumpur has clung to the hope that it can reason with Beijing.  Heavily influenced by Mahathir Mohammad, Malaysia has long preferred to keep its differences with China private and accommodate it in public. Only for a short period in the late 2010s did Malaysia deviate from that approach. Ironically, it was prompted by Mahathir himself, after he returned for a second stint as prime minister. Elected on the back of popular concern over Chinese influence in Malaysia, he cut costly infrastructure projects that were created under the auspices of China’s Belt and Road Initiative.⁴⁶

Given Malaysia’s relatively tepid response to China, it is perhaps unsurprising that its naval modernization program has lagged behind those of its neighbors. Yet its navy is certainly in need of an upgrade. Nearly half of Malaysia’s surface combatants are currently over 30 years old. Worse yet, they had been built by shipbuilders from no fewer than eight countries. The combination of those factors has made Malaysia’s fleet troublesome as well as costly to operate and maintain.

In an attempt to remedy those problems, Malaysian navy leaders developed their 15-to-5 Modernization Plan. Initially laid out in 2007, the plan sought to simplify the navy’s order of battle from 15 ship classes to five. Aimed to be complete by 2030, it envisioned a fleet of four Scorpene-class diesel-electric attack submarines, 12 Maharaja Lela-class LCSs (a variant of France’s Gowind 2500 corvette), 18 Keris-class LMSs, 18 Kedah-class OPVs (a variant of Germany’s MEKO 100 corvette), and three multi-mission support ships. Of those ships, two Scorpene-class submarines and six Kedah-class OPVs had already been acquired by 2020.

By reducing the number of ship classes, the plan sought to streamline the Malaysian navy’s supply chains and slash its operations and maintenance budgets. The navy hoped the plan would enable its fleet to maintain a higher state of readiness and operate with greater flexibility across its bases. Plus, the navy looked forward to using the money saved to fund new-build warship acquisitions. Unfortunately, the plan ran into problems. Construction on the navy’s first six guided-missile LCSs is far behind. Only one of the four ships that have been laid down is over halfway complete, though the budget for all six is largely exhausted. Kuala Lumpur became so frustrated over the situation that it nearly cancelled its contract with the shipbuilder (which, ironically, is owned by Malaysia’s government).⁴⁷

The navy’s acquisition of its Keris-class LMSs fared better. Designed without integrated sensors and missile systems, the ships were far easier to build. Their Chinese shipbuilder delivered all four ships of the first batch by December 2021.⁴⁸ However, cost overruns in its LCS program and cooler relations between China and Malaysia have led the Malaysian navy to reconsider the design and shipbuilder for its second batch of LMSs.⁴⁹ The navy also reassessed the design of its follow-on Kedah-class OPVs, though for more tactical reasons. Apparently more concerned about missile attack, it wants them redesigned with a lower radar signature. And, pursuing its own sort of hedging, the navy wants the OPVs fitted-for-but-not-with anti-ship missiles and torpedoes to trim short-term costs, but keep open the option to install them later.

Considering how modestly armed Malaysia’s new warships have turned out to be, its two French-built Scorpene-class submarines will likely continue to constitute most of its navy’s deterrent power. Fortunately for Malaysia, its naval base at Sepangar Bay, near the northern tip of Borneo, is well positioned for its submarines to make quick forays into the South China Sea.⁵⁰ But given the high cost of submarines and the financial troubles surrounding its LCS program, the navy is unlikely to purchase a second pair of Scorpene-class submarines for the time being. In contrast to its Southeast Asian neighbors, Malaysia is trying to modernize its navy without a material increase in its budget. While that may be fiscally laudable, it also means that Malaysia’s naval modernization is likely to be drawn out.

Coastal Defense Revival

Naturally, ships and submarines have dominated naval modernization plans in Southeast Asia.  But coastal defense batteries have begun to find favor in the region too. For centuries, such batteries—usually consisting of cannons or guns—played a prominent role in littoral defenses, owing to the greater ease with which a battery could disable a warship than a warship could disable it. By the mid-twentieth century, the advent of carrier-borne strike aircraft with ranges far beyond those of even the longest-range guns reversed that logic and seemed to render coastal defense batteries obsolete. However, modern versions of those batteries are now fully mobile, reducing an enemy’s ability to target them, and have anti-ship missiles that can penetrate most shipboard anti-missile defenses. Hence, coastal defense batteries have again become a genuine threat to warships in littoral waters, like those of the South China Sea.

The first country in Southeast Asia to make coastal defense batteries a part of its naval strategy was Vietnam. In the late 2000s, it began to order Russian K-300P Bastion-P coastal defense systems. One battery was delivered in 2009 and a second in 2014.⁵¹ Each battery has the ability to launch eight P-800 (SS-N-26) anti-ship missiles. Now deployed along Vietnam’s coastline, the batteries have expanded the maritime space that Vietnam can defend to a depth of between 120 and 300 km out to sea.⁵² (The variation in range depends on the missiles’ specific flight trajectories.) The batteries’ missiles, traveling at Mach 2.2, stand a good chance of defeating close-in weapon systems aboard modern warships. Meanwhile, the batteries’ mobility hinders an enemy’s ability to suppress them with air or missile strikes.

The Philippines became the second Southeast Asian country to embrace coastal defense batteries in December 2020. Manila announced that it would acquire a battery of Indian-made BrahMos anti-ship missiles, which were developed from the export variant of Russia’s P-800 missile.⁵³ With a maximum range of 292 km, the BrahMos missile can fly farther than its predecessor and do so at speeds up to Mach 2.4, making it even harder to defeat. The Philippines’ first battery will include three launchers, each armed with two to three BrahMos missiles.⁵⁴ If posted along the Zambales coast of Luzon, the battery could easily cover Scarborough Shoal; and if stationed on Palawan Island, it could cover most of the central Spratly Islands.  Given that Manila initially sought to acquire two batteries of BrahMos missiles, it may acquire a second battery in due course once new resources become available.

While Indian and Russian coastal defense missile systems have proven popular, they are not the only ones in Asia. Taiwan has manufactured its third-generation Hsiung Feng anti-ship missiles since the late 2000s. They are now deployed along Taiwan’s coasts to guard against potential Chinese amphibious landings. Further north, Japan rolled out its truck-borne Type 12 anti-ship missile system in 2012 and has begun work on an improved version of it.⁵⁵ And since 2019, Tokyo has posted a number of Type 12 coastal defense batteries on the Ryukyu Islands to better control the straits (particularly the Miyako Strait) through them.⁵⁶

The biggest reason why littoral countries have started to adopt coastal defense batteries is clear: They offer a reasonably effective and economical way to defeat naval forces at sea. Today, a modern destroyer costs several hundred million dollars to procure and even more to properly crew and operate and maintain. On the other hand, a modern coastal defense battery costs less than a third that amount and far less to operate and maintain. Consequently, one should not be surprised to see more coastal defense batteries spring up across Southeast Asia.

Counting Missile Launchers

The rising warship tonnages in Southeast Asian navies are surely a good measure of their strengthening offshore capabilities. Generally, the heavier and larger warships are, the better their endurance and seakeeping qualities are in open waters, like the South China Sea. But tonnage alone is a poor measure of the utility of warships in modern naval combat. A better assessment would also have to consider their sensors and armaments, especially the number of anti-ship missiles they can launch. A straightforward way to do so is tallying the number of anti-ship missile launchers a navy has available to it both afloat on warships and ashore in coastal defense batteries.

On that score, it is clear that of Southeast Asia’s navies, Vietnam’s has improved the most over the last 15 years. It boosted the number of missile launchers aboard its warships over four-fold and, if the country’s land-based K-300P coastal defense batteries are included, five-fold.  Over the same period, the Indonesian navy almost doubled the number of missile launchers in its fleet and may double that figure again in the next decade. Meanwhile, the Philippine navy, which will install its first heavyweight anti-ship missiles in 2022, is set to rapidly build up its inventory of anti-ship missile launchers, if it can complete its planned acquisition programs. Finally, the Malaysian navy is expected to have the smallest rise in the number of its missile launchers, given that most of its new warships are to be fitted-for-but-not-with them.

Conclusion
As expectations for China’s “peaceful rise” have gone unmet, all four of Southeast Asia’s largest maritime countries have taken steps to hedge the risks associated with China’s rise. Vietnam and the Philippines were the first to do so in the late 2000 and early 2010s, with Indonesia following in the mid-2010s. Even Malaysia showed signs of moving towards a hedging posture by the end of the decade. And although Manila and Kuala Lumpur have slid backwards at times, it appears likely that both will continue to edge towards hedging, albeit in fits rather than a smooth progression. What has been clearer is how closely each country’s naval modernization efforts has matched its hedging behavior.

Like Southeast Asia’s hedging strategies, the region’s naval modernization programs started off slowly. But it is notable how far they have come. Whereas in the early 2000s there was near unanimity among Southeast Asian leaders to avoid such programs and instead solely rely on ASEAN’s code of conduct to protect their South China Sea interests, a new consensus seems to have emerged that doing so was naïve. Though they have come to no agreement on a uniform approach to dealing with China, all of Southeast Asia’s largest maritime countries have come to accept that a stronger navy has a place in any sensible strategy.

Even so, one might conclude from this analysis that the prospects for deterrence between China and the region’s maritime countries remain poor, considering the huge scale of China’s concurrent naval modernization. But such skepticism misses the mark. What this analysis demonstrates is that China’s ability to score a quick and decisive victory against its Southeast Asian neighbors has diminished as they have modernized their navies. To be sure, Southeast Asia’s new warships and coastal defense batteries will not render Chinese maritime forces powerless. But they do make it harder for China to launch a risk-free naval campaign. And by doing so, they increase the potential for deterrence.