Fri, Nov 01, 2019 - Page 3 News List

Cabinet finalizes budget for F-16V procurement

PRICEY?Asked why the unit price for the F-16V appears to be higher than that for an F-35, a defense official said the price quoted by media does not include R&D costs

By Sean Lin  /  Staff reporter

The Executive Yuan yesterday finalized a special budget request of NT$247.2 billion (US$8.12 billion) to procure 66 F-16V jets from the US.

The request comes on the heels of the Special Act on the Procurement of Updated Fighter Jets (新式戰機採購特別條例) passed by the Legislative Yuan on Tuesday, which capped the budget at NT$250 billion.

The requested amount includes the cost of the jets, their avionics, other software and hardware, and research and development (R&D) costs, which total about NT$246.7 billion, while on-site technological advisory, training and transportation costs take up the remaining NT$500 million, the budget request shows.

The request seeks funding over six fiscal years from next year through 2026, when the nation expects to have received all of the warplanes.

Directorate-General of Budget, Accounting and Statistics official Lee Kuo-hsing (李國興) said that NT$232.2 billion would be sourced through loans, while NT$15 billion would be drawn from surplus revenue.

Government debt would not exceed the amount it is allowed to borrow — 40.6 percent of the average GDP of the previous three fiscal years, Lee said.

The addition to the national debt would be about NT$700 billion after factoring in the costs of the F-16Vs and the remainder of the Forward-looking Infrastructure Development Program, Lee said.

The overall national debt is at 31.5 percent of average GDP for the past three fiscal years, so there is allowance for 9.1 percent more, or NT$1.6 trillion, he said.

Asked by reporters why the unit price of the F-16V is higher than what the US quoted other nations for the F-35, which Taipei initially expressed interest in purchasing, Deputy Minister of National Defense Chang Guan-chung (張冠群) said that the comparison was “unfair,” as the quote for the F-35 did not include R&D costs, estimated at about US$53 billion.

The F-35 unit price cited by media reports was for nations that participated in R&D of those planes, while the price for Taiwan’s F-16Vs includes such costs, which makes a huge difference, Chang said.

If other nations were to acquire F-16Vs, they would also face R&D costs, he said.

Thanks to the efforts of President Tsai Ing-wen (蔡英文), the nation has secured Washington’s consent to buy the upgraded fighter jets based on the US’ Taiwan Relations Act and the “six assurances,” Premier Su Tseng-chang (蘇貞昌) told a weekly Cabinet meeting.

This shows that Taiwan plays an important role in Washington’s Indo-Pacific strategy and can help maintain peace in the Taiwan Strait and the Indo-Pacific region, Su said.

The Ministry of Economic Affairs and the Ministry of National Defense should seek technological transfer agreements from the US, Su said.

The procurement package would not only bolster the nation’s defense capabilities, but also bring opportunities to engage in industrial collaborations with the US, he said.

He asked lawmakers across party lines to support the budget proposal.

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