Scholars: NT$470 Billion Gap in Special Defense Procurement Act If Shifted to Public Budget May Squeeze Existing Military Investments
Scholars warn that if the NT$470 billion shortfall in Taiwan's special defense procurement act is transferred to the public budget, it could squeeze existing military investments and impact the development of asymmetric warfare capabilities like drones. Negotiations for the HIMARS payment extension are also proving difficult.
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- 📰 Published: May 11, 2026 at 18:16
- 🔍 Collected: May 11, 2026 at 18:32 (15 min after Published)
- 🤖 AI Analyzed: May 12, 2026 at 00:28 (5h 56m after Collected)
Taipei, May 11 (CNA) President Lai Ching-te today issued a presidential order to promulgate the special defense procurement act. The version passed by the Legislative Yuan on the 8th has a NT$470 billion gap compared to the Executive Yuan's version. Scholars pointed out today that if this defense procurement shortfall is shifted to the annual budget, it would require bearing approximately NT$50 billion annually, which would severely squeeze the Ministry of National Defense's existing military investment quotas and force delays in the execution of procurement projects, even impacting the research and development and resilience of asymmetric warfare capabilities such as drones.
The Legislative Yuan passed the "Special Act for the Procurement of Plans to Safeguard National Security and Enhance Asymmetric Warfare Capabilities" on the 8th with a total budget of NT$780 billion, stipulating a budget cap of NT$300 billion for the first batch of defense procurement letters of offer and NT$480 billion for the second batch. However, commercial purchases and commissioned manufacturing items crucial for drones, unmanned boats, Taiwan Tactical Network (TTN), troop awareness kits (TAK), and Strongbow missiles were not included.
Regarding the urgent first installment of the HIMARS multiple launch rocket system (NT$800 million), the original payment date was March 30. The US later agreed to extend it until negotiations between the US and the contractor, with May 31 being the payment deadline. As only the special defense procurement act has been passed by its third reading, it is highly difficult to secure the budget before May 31, based on past practical operations.
Jieh Chung, a scholar at the Institute for National Defense and Security Research (INDSR), a Ministry of National Defense think tank, believes that the decision on the impending HIMARS payment deadline rests with the US. The US might choose to cancel existing procedures and restart, or agree to a delay until the first payment is in place before formally initiating. If the US decides to cancel, restarting subsequent administrative procedures would be extremely complex, significantly impacting project progress.
Jieh Chung pointed out that since the special defense procurement act has been passed, the Ministry of National Defense should strive to secure budget allocation time. He suggested that both the ruling and opposition parties should prioritize discussing whether the Ministry of National Defense can be authorized to advance funds for contract fulfillment, in accordance with relevant provisions of the "Budget Act." If the Legislative Yuan cannot reach a consensus on advancing funds, the Ministry of National Defense should immediately discuss with the US and seek to delay the project's initiation to avoid procedural interruptions due to untimely payments.
As for the NT$470 billion gap between the Legislative Yuan's version of the special defense procurement act (NT$780 billion) and the Executive Yuan's version (NT$1.25 trillion for 8 years), Jieh Chung stated that if a special budget cannot be allocated separately, the relevant budget can still be handled through the annual budget. Based on time cost estimates, the review period for additional budgets is similar to preparing the next year's budget, so it is still possible to initiate the transfer process now.
However, Jieh Chung noted that the NT$470 billion difference between the NT$780 billion passed in the third reading and the NT$1.25 trillion would, if spread over 8 years in the annual budget, severely squeeze the Ministry of National Defense's existing military investment quotas.
Jieh Chung analyzed that due to the budget crowding-out effect, the original execution schedule of procurement projects might face delays. Given the limited resources in the annual budget, some items will inevitably need adjustment, leading to budget crowding-out and consequently extending the duration of some individual projects.
Jieh Chung pointed out that according to the budget formulation process, the Executive Yuan will determine the budgets for various ministries by the end of May this year. The Ministry of National Defense still has an opportunity to include relevant items in next year's annual budget, but the key is to actively communicate and negotiate with the Executive Yuan to obtain approval for an increased annual budget allocation.
Furthermore, the special defense procurement act passed in the third reading excluded commercial purchases and commissioned manufacturing, meaning equipment such as drones were not included. Su Tzu-yun, a scholar at the INDSR, stated that the unapproved NT$470 billion budget is crucial. If Taiwan possessed sufficient unmanned equipment (aircraft, vessels, vehicles), the Taiwan Strait would be an even more difficult landing obstacle for China.
Su Tzu-yun pointed out that if Taiwan had complete drone and artificial intelligence (AI) systems, it could deter China and compensate for the yearly decrease in manpower due to the declining birthrate in the future. Moreover, for manufacturers, without stable order demand, it would be difficult to continue investing in drone R&D and reduce costs, which could affect investment incentives and thus impact defense resilience and export opportunities.
Su Tzu-yun suggested that the executive branch could consider allocating a separate special budget or cross-year allocation within the annual budget to mitigate the impact.
Military sources stated that it is currently uncertain which action will be taken. The bigger problem is that the process requires time; if another special act were to be drafted, it would take at least two months from drafting to subsequent budget review. Besides drafting a special act, if the issue is to be resolved through an additional budget, it is practically difficult to process an additional budget as this year's budget has not yet been approved. Therefore, there are many factors to consider, and no solution has been finalized so far. (Editor: Lin Ke-Lun) 1150511
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The Legislative Yuan passed the "Special Act for the Procurement of Plans to Safeguard National Security and Enhance Asymmetric Warfare Capabilities" on the 8th with a total budget of NT$780 billion, stipulating a budget cap of NT$300 billion for the first batch of defense procurement letters of offer and NT$480 billion for the second batch. However, commercial purchases and commissioned manufacturing items crucial for drones, unmanned boats, Taiwan Tactical Network (TTN), troop awareness kits (TAK), and Strongbow missiles were not included.
Regarding the urgent first installment of the HIMARS multiple launch rocket system (NT$800 million), the original payment date was March 30. The US later agreed to extend it until negotiations between the US and the contractor, with May 31 being the payment deadline. As only the special defense procurement act has been passed by its third reading, it is highly difficult to secure the budget before May 31, based on past practical operations.
Jieh Chung, a scholar at the Institute for National Defense and Security Research (INDSR), a Ministry of National Defense think tank, believes that the decision on the impending HIMARS payment deadline rests with the US. The US might choose to cancel existing procedures and restart, or agree to a delay until the first payment is in place before formally initiating. If the US decides to cancel, restarting subsequent administrative procedures would be extremely complex, significantly impacting project progress.
Jieh Chung pointed out that since the special defense procurement act has been passed, the Ministry of National Defense should strive to secure budget allocation time. He suggested that both the ruling and opposition parties should prioritize discussing whether the Ministry of National Defense can be authorized to advance funds for contract fulfillment, in accordance with relevant provisions of the "Budget Act." If the Legislative Yuan cannot reach a consensus on advancing funds, the Ministry of National Defense should immediately discuss with the US and seek to delay the project's initiation to avoid procedural interruptions due to untimely payments.
As for the NT$470 billion gap between the Legislative Yuan's version of the special defense procurement act (NT$780 billion) and the Executive Yuan's version (NT$1.25 trillion for 8 years), Jieh Chung stated that if a special budget cannot be allocated separately, the relevant budget can still be handled through the annual budget. Based on time cost estimates, the review period for additional budgets is similar to preparing the next year's budget, so it is still possible to initiate the transfer process now.
However, Jieh Chung noted that the NT$470 billion difference between the NT$780 billion passed in the third reading and the NT$1.25 trillion would, if spread over 8 years in the annual budget, severely squeeze the Ministry of National Defense's existing military investment quotas.
Jieh Chung analyzed that due to the budget crowding-out effect, the original execution schedule of procurement projects might face delays. Given the limited resources in the annual budget, some items will inevitably need adjustment, leading to budget crowding-out and consequently extending the duration of some individual projects.
Jieh Chung pointed out that according to the budget formulation process, the Executive Yuan will determine the budgets for various ministries by the end of May this year. The Ministry of National Defense still has an opportunity to include relevant items in next year's annual budget, but the key is to actively communicate and negotiate with the Executive Yuan to obtain approval for an increased annual budget allocation.
Furthermore, the special defense procurement act passed in the third reading excluded commercial purchases and commissioned manufacturing, meaning equipment such as drones were not included. Su Tzu-yun, a scholar at the INDSR, stated that the unapproved NT$470 billion budget is crucial. If Taiwan possessed sufficient unmanned equipment (aircraft, vessels, vehicles), the Taiwan Strait would be an even more difficult landing obstacle for China.
Su Tzu-yun pointed out that if Taiwan had complete drone and artificial intelligence (AI) systems, it could deter China and compensate for the yearly decrease in manpower due to the declining birthrate in the future. Moreover, for manufacturers, without stable order demand, it would be difficult to continue investing in drone R&D and reduce costs, which could affect investment incentives and thus impact defense resilience and export opportunities.
Su Tzu-yun suggested that the executive branch could consider allocating a separate special budget or cross-year allocation within the annual budget to mitigate the impact.
Military sources stated that it is currently uncertain which action will be taken. The bigger problem is that the process requires time; if another special act were to be drafted, it would take at least two months from drafting to subsequent budget review. Besides drafting a special act, if the issue is to be resolved through an additional budget, it is practically difficult to process an additional budget as this year's budget has not yet been approved. Therefore, there are many factors to consider, and no solution has been finalized so far. (Editor: Lin Ke-Lun) 1150511
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