The Executive Yuan on Thursday last week approved a draft bill authorizing a special budget to fund the procurement and development of domestic drones, with a budget cap of NT$210 billion (US$6.6 billion) to be allocated over the next five years. However, Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) said that the legislature would not pass the bill before Chinese President Xi Jinping’s (習近平) planned visit to the US in September.
Uncrewed vehicles (UVs), including aerial and surface vessels, have become a crucial element in asymmetric warfare, enabling small countries with limited budgets to leverage the low-cost systems to deter larger and militarily superior adversaries.
Ukraine’s all-out development of its drone industry, with an estimated annual production of millions of uncrewed vehicles, has stalled invasion by the world’s second-largest military power. Kyiv’s large-scale drone strikes have even brought the war back onto Russian territory. According to Institute for the Study of War analysis, Ukraine is beginning to regain more ground than it is losing for the first time since 2023.
In contrast, in Taiwan, the opposition — the KMT and its smaller ally Taiwan People’s Party (TPP) — removed all funding for drone procurement and development from the NT$1.25 trillion special defense budget proposed by the Executive Yuan. This has created gaps in the nation’s defense capability and stifled opportunities to develop the domestic UV industry.
KMT heavyweights and legislators, including Taichung Mayor Lu Shiow-yen (盧秀燕), Legislative Speaker Han Kuo-yu (韓國瑜) and Deputy Legislative Speaker Johnny Chiang (江啟臣), have pledged to support Taiwan’s UV industry. Regrettably, the party has yet to introduce any budget proposal for the drone industry. Moreover, none of these senior figures have publicly objected to the KMT slashing the drone budget. Critics see the budget cuts as a result of the dominant leadership of China-leaning Cheng and KMT caucus whip Fu Kun-chi (), who have aggressively blocked defense funding to accommodate China’s opposition to Taiwan’s defense modernization.
To offset the shortfall in funding needed for sustainable drone procurement and industrial development, the Ministry of National Defense proposed the “Special Act for the Procurement of Indigenous Uncrewed Vehicles,” with a budget cap of NT$210 billion. This would include the procurement of 1,446 coastal reconnaissance drones, 208,200 coastal attack drones and 1,320 uncrewed surface vessels.
The ministry said the military’s large orders could provide crucial initial support for local defense contractors, helping them invest in innovation and expand production so they can keep pace with rapidly evolving drone technology.
With China controlling more than 70 percent of the global drone market, Taiwan urgently needs to strengthen its domestic UV industry. This would enhance defense autonomy and support economic growth, delivering benefits on both fronts.
As the US and European countries phase out Chinese-made drones and seek alternatives to China-linked supply chains, Taiwan’s drone industry has experienced rapid growth in the past few years. Official statistics show the industry’s output value increased 2.5-fold last year, and first-quarter exports exceeded 181,100 units, surpassing the total exported in all of last year.
Taiwan is facing a critical window of opportunity. Su Tzu-yun (蘇紫雲), a researcher at the state-run Institute for National Defense and Security Research, said that if aligned with international demand, Taiwan’s uncrewed systems industry could become another strategic economic pillar like a “sacred mountain protecting the nation.”
However, the bill is likely to face obstruction in the legislature again, with the KMT and the TPP saying they would propose their own version or just include funding for drones in the annual general budget.
In an interview with The Economist last week, Cheng said that a drone-related bill is unlikely to pass the legislature before Xi’s planned visit to the US in September. Her claim suggests that KMT leadership’s policymaking is heavily influenced by China.
Delays in the legislature’s review and sharp cuts to government budgets have already raised public concern. Approval of the central government budget for this year has been stalled in the legislature for more than 300 days, severely hindering military procurement and creating uncertainty in national governance.
National defense needs concrete actions, not just words. Whether the UV special budget bill could pass legislative review would test the opposition blue-white alliance’s claim that they “support national defense.”
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