Global defence contractors are circling for business in Asia, with countries from Australia to Vietnam upgrading and adding everything from submarines to fighter jets as China expands its military reach.
Defence budgets will keep rising, according to IHS Jane's, which forecasts spending in the Asia-Pacific region will climb 23 per cent to US$533 billion annually by 2020.
That will put it on par with North America, which is expected to account for a third of global defence spending by then, from almost half now.
The figures reflect a shifting strategic dynamic, as China pushes for greater influence and the United States seeks to preserve decades of dominance in the western Pacific.
While military spending in Asia is coming off a low base - especially in Southeast Asia - and remains a relatively small proportion of gross domestic product, nations that for years relied on old and at-times outdated ships and planes are starting to renovate their fleets.
"There is a wide-ranging need for modernisation across most of the armed forces in the region," said Dan Enstedt, chief executive officer of Saab Asia Pacific, whose products include submarines, missiles, radars and fighter jets.
"There are many examples of old and increasingly obsolete equipment fleets that are unable to keep pace with changing national security needs."
Military outlays in Asia and Oceania - which includes Australia and New Zealand - grew 5.4 per cent in 2015, outpacing a 1 per cent rise in global spending, according to the Stockholm International Peace Research Institute. Indonesia boosted spending last year by 16 per cent, the Philippines by 25 per cent and Vietnam by 7.6 per cent.
"The unusual thing about Asia is that it is bucking the global trends," said Richard Bitzinger, who studies military modernisation as a senior fellow at the S. Rajaratnam School of International Studies in Singapore. "The trend is generally upward, though a lot of countries are erratic."
Much of the spending is on air and naval capacity amid China's assertiveness in the East China Sea, where it claims islets contested by Japan, and the South China Sea, where its land reclamation programme has spooked other claimants. China may declare an air defence identification zone over the South China Sea, similar to one it set up over the East China Sea in late 2013, the South China Morning Post reported last week, citing an official it did not identify.
"The growth of China's national power, including its military modernisation, means China's policies and actions will have a major impact on the stability of the Indo-Pacific," according to Australia's Defence White Paper published in February. A quarter of Australia's defence investment over the next decade will be devoted to maritime capabilities, for "the most comprehensive regeneration of our Navy since World War II".
President Barack Obama's recent trip to Vietnam may lead to business opportunities, as he lifted a four-decade ban on the sale of lethal weapons. The US Embassy has hosted two defence contractor symposiums in Hanoi, including one last month attended by companies including Boeing Co and Lockheed Martin Corp.
Doug Greenlaw, a vice-president at Lockheed, said in an interview in February at the Singapore Airshow that Asia is at the core of the company's strategy.
"The economies in Asia are growing faster than in the rest of the world - that tends to really drive security spending, so we see Asia as a growth market," Greenlaw said. "We have great partnerships with the countries across Asia."
Still, much of the spending comes off a low base. The Philippines spent 1.3 per cent of GDP last year, up from 1.1 per cent in 2014, according to Sipri, while Vietnam was largely flat at 2.3 per cent of GDP. China's outlays were 1.9 per cent of its economy, well below US expenditure last year of 3.3 per cent of its economy.
Indonesia's President Joko Widodo said in February he'd increase spending to 1.5 per cent of GDP if economic growth reached 6 per cent this year, which looks unlikely given the 4.9 per cent first-quarter expansion. Indonesia spent about 0.9 per cent of GDP last year.
"Budget constraints are always a reality" given the sheer scale of modernisation required in some instances, said Saab's Enstedt.
ABOUT ASIA'S SPENDING
1 IHS Jane's forecasts defence spending in the Asia-Pacific region will climb 23 per cent by 2020
2 Asia's spending would then be worth US$533 billion ($766 billion) annually
3 That will put it on par with North America, which is expected to account for a third of global defence spending by then, from almost half now.
4 Military outlays in Asia and Oceania grew 5.4 per cent in 2015
Thailand may be one growth centre this year. Defence spending will increase 7.3 per cent and account for 7.6 per cent of the overall budget, the Bangkok Post reported last month.
A shift to procurement from China and Russia may signal the Thai junta is "liberating" itself from the US, a traditional supplier, the paper said. On the shopping list: 12 MI-17 transport helicopters from Russia, and four South Korean-made T-50 TH training aircraft.
Australia in April awarded an A$50 billion contract for 12 submarines to France's DCNS Group, in one of the world's biggest defence deals. The Government is considering tenders for nine warships worth about A$35 billion and a A$3 billion deal for 12 offshore patrol vessels.
Indonesia, Japan, China, Vietnam, Singapore, Pakistan and Vietnam are building or buying submarines, and Thailand has indicated it will. Pakistan last year agreed to buy eight diesel electric submarines from China for an undisclosed price, much to the consternation of neighbour India, which has its own submarine programme.
The greater reach of China's air force is helping driving sales of planes. China has deployed combat aircraft on Woody Island in the disputed Paracel chain, where it built a runway of about 3000m in the 1990s, and has completed one airstrip of three it plans in the Spratly Islands.
India needs dozens of warplanes after it scaled back a big order for Dassault Aviation's Rafale jets to 36. Though no quantity has been announced, Boeing, Lockheed Martin and Saab have made pitches to build combat planes in India. About a third of India's 650 fighter jets are more than 40 years old.
"All the major defense names - Boeing, BAE, Lockheed Martin, Saab - they've all strengthened and established local presences in the market here in the past five years," said Jon Grevatt, an analyst at IHS Jane's in Bangkok.
"I don't think defense contractors worry whether a requirement is a prestige purchase or is a genuine requirement. They're not worried as long as they sell."