TAIPEI (Taiwan News) — President Lai Ching-te (賴清德) has proposed a NT$1.25 trillion (US$40 billion) special defense budget that emphasizes drones and asymmetric capabilities, Nikkei Asia reported Wednesday.
Premier Cho Jung-tai’s (卓榮泰) cabinet approved the plan, which was then sent to the legislature on Thursday for deliberation. If passed, it could reshape regional security dynamics and reinforce Taiwan’s partnership with the US.
Lai and his DPP face an uphill battle in securing enough votes in a parliament dominated by opposition lawmakers led by the KMT. On Tuesday, opposition members blocked a bill from being placed on Friday’s plenary agenda, highlighting political tensions.
The proposal identifies seven procurement categories to strengthen defensive resilience including precision artillery, long-range missiles, unmanned vehicles, anti-ballistic missiles, and joint projects with the US.
The allocation, covering 2026 to 2033, is a “budget ceiling” that may be funded via prior surpluses or borrowing. Economic Minister Kung Ming-hsin (龔明鑫) last week highlighted a drone initiative aiming for 100,000 unmanned aerial vehicles, supporting domestic manufacturers and international exports.
Taiwan has already delivered more than 3,000 drones and established supply chains with US company Skydio and France-based Parrot, with contracts totaling NT$3.8 billion. The move aligns with the US military’s goal of acquiring at least 1 million drones over the next few years.
The budget seeks to align Taiwan’s defense standards with NATO benchmarks and meet US expectations. Lai has set defense spending targets of 3.3% of GDP by next year and 5% by 2030, calling it “the largest sustained military investment in Taiwan’s modern history.”
Atlantic Council Senior Fellow Alexander Gray said the budget reassures Washington of Taiwan’s seriousness on defense, noting previous efforts were insufficient for the scale of the Chinese threat. American Institute in Taiwan Director Raymond Greene, the State Department, and politicians including Senator Tom Cotton praised the plan.
Royal United Services Institute Senior Research Fellow Philip Shetler-Jones noted that prioritizing air and missile defense shows Taiwan is keeping pace with modern warfare. It signals to partners and industry that the country is serious about defense innovation, he added.
The proposal also promotes domestic production to reduce reliance on external suppliers and supports Taiwan-US co-development. DPP Legislator Chen Kuan-ting (陳冠廷) emphasized that investments in military deterrence yield economic spillovers, benefiting Taiwan’s supply chain.
Chen highlighted Chiayi County’s drone park as a model for domestic UAV development. He noted that a focus on software, AI models, and human capital can generate significant economic value beyond the physical products.
However, KMT Chair Cheng Li-wun (鄭麗文) criticized the plan as provocative, warning that it risks turning Taiwan into a “weapons factory” and escalating tensions in the Taiwan Strait. Some senior KMT figures like former president Ma Ying-jeou (馬英九) share her skepticism, advocating closer alignment with Beijing.
A senior ex-cabinet official said vetoing the entire budget would be politically difficult due to the US. Instead, KMT lawmakers might propose minor cuts, particularly since the focus is on asymmetric systems rather than conventional weapons that Beijing would most fear.
Alexander Gray said the US will watch whether the KMT supports Taiwan’s high-end defense spending, noting that asymmetric systems are critical for deterring and defeating potential Chinese aggression.
