DATE=3/6/2000 TYPE=BACKGROUND REPORT TITLE=ASIA/MILITARY SPENDING NUMBER=5-45583 BYLINE=AMY BICKERS DATELINE=HONG KONG INTERNET=YES CONTENT= VOICED AT: INTRO: Beijing announced Monday that China would increase military spending by nearly 13-percent. This marks the 11th year in a row in which China has announced double-digit defense spending increases. As Amy Bickers reports from Hong Kong, many other Asian governments say defense spending has yet to fully recover from the effects of the Asian financial crisis of 1997. TEXT: The jump in China's military budget was made known Monday during the Third Session of the National People's Congress, now taking place in Beijing. Analysts say the spending hike is the result of strong lobbying for more money by China's military, which argued that increased tension with Taiwan, the military conflict with NATO in the former Yugoslavia last summer and the bombing of China's Belgrade embassy justify more funds. Beijing does not disclose its actual defense budget, so the increase simply indicates that the trend of higher military spending continues. Western analysts estimate that the country's military budget totals about 36-billion dollars. That kind of increase is in contrast to many other countries in the region, especially in Southeast Asia, where the after-effects of the economic crisis are forcing countries to rein in military spending. While many Asian economies have shown strong signs of recovery, Bud Hollenbom, regional sales manager for the U-S defense firm Raytheon, says military procurement is still weak. /// HOLLENBOM ACT /// First of all, the recovery has been very slow coming. I think people were optimistic in thinking that it was going to turn around much quicker than it has. It has been slow, and we see signs of that now. /// END ACT /// Nevertheless, there are indications that change is on the way. Last week, India announced a three-billion dollar increase in defense spending -- the nation's largest ever. The announcement follows a recent series of bloody skirmishes along the border between India and Pakistan in Kashmir. With the increase, military spending will account for about one-sixth of India's 79-billion dollar budget. Richard Aboulafia, senior analyst for the defense consultancy Teal Group, predicts defense budgets in a number of Asian countries will rise substantially in the next decade. /// ABOULAFIA ACT /// Far and away the most important market for the next two years is South Korea with their fighter aircraft market. Taiwan is also a fairly guaranteed market, particularly with the U-S political will to support them in the confrontation with China. Singapore is probably going to be a market for a new fighter in the next three to five years. Same for Australia -- six or seven years out. /// END ACT /// Mr. Aboulafia says that a big defense contract can take three to six years to negotiate and finalize. He says that defense companies around the world are now trying to woo Asian buyers. He forecasts that aviation-related military procurement will be the area where most spending takes place. /// ABOULAFIA ACT /// I think one aspect of Asian defense is it is very difficult to know what the future threat will look like. Procurement has to be based on a variety of scenarios and allow for a variety of potential opponents equipped with a variety of potential systems. It is difficult to determine where the next 10 years will go. The one thing that is certain is that air dominance remains absolutely the most important thing. /// End Act /// Government officials in Malaysia, South Korea and Japan have hinted that military spending in their countries will rise. As it does, defense analysts say a number of purchases will also take place in the technology sector. They add governments will look for new high-tech products that will quickly transmit large amounts of data, provide good reconnaissance and integrate different systems as seamlessly as possible. (SIGNED) NEB/AB/FC/KL 06-Mar-2000 07:13 AM EDT (06-Mar-2000 1213 UTC) NNNN Source: Voice of America .