As a country significantly facing external threats from China, Taiwan has consistently prioritized military procurement – whether by purchasing foreign arms or relying on domestic defense suppliers – as an essential component in strengthening its self-defense capabilities. In November 2024, media reports revealed that the Taiwanese government was “considering buying a big package of U.S. weapons” in response to incoming U.S. President Donald Trump’s expectation that Taiwan would need to increase its defense budget.
In fact, Taiwan’s military spending has grown significantly since the Democratic Progressive Party (DPP) assumed office in 2016. Defense spending is expected to rise to $20.25 billion next year, representing an increase from 2.38 percent of GDP this year to 2.45 percent in 2025.
Despite this, Taiwan’s military procurement has long been plagued by deep-rooted issues that require thorough examination and significant reform to enhance its defense capability.
Issues Around Taiwan’s Military Procurement
Like many countries, Taiwan obtains most of its major military equipment and weapons from foreign providers but has also made great efforts to encourage domestic entities to develop their manufacturing capacities in recent years. Yet issues have arisen during the procurement process involving the Ministry of National Defense (MND), private weapon manufacturers, and particularly, the arms brokers who serve as intermediaries. Beyond foreign military sales from the United States, international arms dealers have been unable to directly and openly sell weapons to Taiwan’s MND due to political pressure from China, thereby creating opportunities for intermediaries to facilitate these transactions.
In the early 1990s, a political scandal broke out surrounding the sale of six French La Fayette-class frigates to the Taiwanese navy. Several high-ranking officials from France as well as Taiwan’s Kuomintang (KMT) were alleged to have received bribes amounting to a $500 million commission paid by the French arms manufacturer Thomson-CSF.
In 1993, Andrew Wang, a Taiwan-based arms broker for the French company involved in the deal, fled to the United Kingdom after Yin Ching-feng, a Taiwanese military officer responsible for naval procurement, was found dead under suspicious circumstances off the coast. A total of eight individuals died in mysterious ways in relation to this significant scandal in Taiwan’s military history, involving authorities from both Taiwan and France.
Most importantly, the La Fayette frigate scandal highlights the negative effects caused by arms brokers – such as Andrew Wang and others (e.g., Shan Yi-cheng, a veteran and a broker implicated in another scandal involving Yin) engaged in military deals. These brokers are primarily retired military officers with close ties to the KMT, which ruled Taiwan continuously from the end of World War II until 2000.
Networks forged between the military and retired officials-turned-arms-brokers have persisted through continuous arms deals. Even after Taiwan’s democratization and electoral turnovers, individuals have sought to join the networks as brokers to grab a share of the lucrative profits generated by arms deals. Often, these actors have no solid knowledge of weapons but maintain strong connections between government and business.
Since 2016, the Indigenous Defense Submarine program – one of the key policies of the DPP under President Tsai Ing-wen’s administration – has been regarded as a vital component of Taiwan’s self-defense strategy, but it also faces numerous challenges, particularly during the tendering process. According to news reports, the company that successfully facilitated the $32.41 million submarine-building contract, Gavron Limited, came under scrutiny for its credentials and capabilities in weapon manufacturing. The Gibraltar-based consultancy was described as resembling a shell company, which raised further suspicions.
Gavron Limited is linked to Kuo Hsi, a Taiwanese arms broker and former naval officer who had served under Yin and left the military following Yin’s death. The implication is that arms agencies continue to have a significant presence in Taiwan’s military procurement process.
Inside Taiwan: Challenges and Opportunities
Building on my personal experience with Taiwan’s defense policy and industry, greater attention should be given to how authorities support and engage with domestic suppliers, in addition to foreign arms sales.
In 2023, I traveled to the United States with several friends, all military enthusiasts, to test the bullet resistance of panels used in bulletproof vests manufactured by the MND’s Armaments Bureau. To our surprise, the results of our tests revealed that the panels could not only be penetrated by a bayonet but were also dented by three types of cartridges: M855/M193 (5.56 NATO), M80 (7.62 NATO), and 7.62 Soviet, which are comparable to the equivalents used by the Chinese military. These concerning findings quickly drew public attention in Taiwan.
However, the MND maintained that all vests purchased by the army met the ballistic resistance standard set by U.S. authorities 20 years ago. Clearly, such an outdated standard is insufficient to protect Taiwanese soldiers in a potential armed conflict across the Taiwan Strait, especially given China’s rapid military development over the past years.
Moreover, the bulletproof vests also present a financial issue. According to Taiwan’s military, a vest with two panels costs $1,100, while a vest with higher-standard panels capable of withstanding Chinese rifle ammunition is priced at just $200 in the United States. Moreover, similar vests and panels could likely be produced domestically in Taiwan at an even lower cost.
Military personal equipment may not be as costly as tanks or fighter aircraft, but this incident – seemingly just the tip of the iceberg – raises further questions, particularly concerning how Taiwan can purchase arms and military equipment that both meet its needs and are reasonably priced. Taiwan’s reliable manufacturing capabilities and advanced techniques in certain fields provide a solid foundation for developing its defense industry community, which could serve as a feasible solution to the issues outlined above.
In other words, collaboration between the military and domestic suppliers is critical not only for strengthening Taiwan’s defense industries but also for ensuring that the military acquires arms without being undermined by scandals or corruption stemming from arms brokers, who exploit information asymmetry in the procurement process. For example, the establishment of Taiwan’s “Drone National Team” program, which connects the military with domestic firms in the drone industry, is a positive step forward. However, challenges similar to those faced by the Indigenous Defense Submarine program lie ahead, as there are some techniques or equipment that need to be procured from foreign providers.
Thus Taiwan’s military challenges cannot be resolved by simply supporting the indigenous defense industry. Issues persist in the procurement process, even when suppliers are domestic – not to mention the continued reliance on importing critical technologies and weapons from abroad. From this perspective, the fundamental key to Taiwan’s self-defense lies in establishing well-functioning institutions to oversee arms manufacturers and their agencies, and this approach is not mutually exclusive with building a resilient defense industry.
On the other hand, the frequent occurrence of scandals in military procurement can significantly undermine public trust in Taiwan’s armed forces. This is especially concerning as the Taiwanese government seeks to expand the defense budget to handle growing military sales and develop domestic suppliers – efforts that require support from both the legislature and the people of Taiwan. Well-institutionalized military procurement practices are crucial for bridging public support with Taiwan’s goal of strengthening its self-defense capabilities.