(Bloomberg) -- The Philippines is seeking offers as it plans to buy 40 new multirole fighter jets to boost its military capability, its defense chief said Thursday, amid recent hostilities with China in the airspace.
“We have decided that acquisitions shall be for capabilities that can make a real difference,” Defense Secretary Gilberto Teodoro told a budget hearing on Thursday on his agency’s proposed spending. To have credible defense provisions, “the minimum for us will be 36 aircraft,” equivalent to a squadron-and-a-half, plus four in reserve, he said.
Potential bidders will have to submit a proposed financing package that will lower government’s borrowing costs, Teodoro said.
Manila is seeking to bolster its air force as tensions with Beijing reach the airspace above the disputed South China Sea. The nation’s military chief, in a separate briefing on Thursday, also flagged a plan to acquire the latest weapon system.
Earlier this year, President Ferdinand Marcos Jr. approved a military modernization plan which will allow the government to spend $35 billion in 10 years, focused on strengthening external defense.
Teodoro also said during the hearing that the government will seek legislation “to creatively” finance the acquisitions because the existing law limits external loans for any defense acquisition to $300 million.
The defense chief called on the Philippine central bank to support proposals to amend the rules and allow local banks to lend to defense establishments, which is currently prohibited.
“The intent there is to prevent financing offensive weaponry,” but the world has changed, Teodoro said.
“The banking system with a lot of liquidity right now certainly should really pitch in,” he said. “Any addition to our credible deterrent posture would reduce country risk and will invite more foreign direct investments.”
(Updates with defense chief’s call on central bank to support looser rules.)
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