Taiwan's legislature passes NT$240 billion unmanned systems act targeting defense needs and industrial growth

Taiwan's legislature has passed an opposition-backed NT$240 billion unmanned systems act that a defense expert says advances defense self-reliance and could drive drone-industry growth if backed by stronger institutional and budget support. 

The act

The Legislative Yuan on Aug. 27 gave final approval to the opposition-backed Act for Strengthening Defense Self-Reliance and Developing the Unmanned Vehicle Industry. The legislation provides for NT$240 billion (about US$7.6 billion) in spending over six years. 

Funding will be allocated through annual budgets, with NT$40 billion to be budgeted in principle each year. The six-year total and annual allocations may be increased if funding proves insufficient.

The Ministry of Economic Affairs (MOEA) will serve as the competent authority under the act, while the Ministry of National Defense (MND) will oversee military procurement. The law requires the defense ministry to prioritize the procurement, integration and operational training of Taiwan-made, low-cost and high-performance unmanned systems.

Under the legislation, the MND must procure attack and surveillance unmanned systems based on operational requirements and technological developments, particularly platforms suited to operations during an enemy’s sea transit and amphibious landing stages, such as the three systems already approved by the Executive Yuan — coastal surveillance drones, coastal attack drones and small suicide unmanned surface vessels.

The final version also requires the Executive Yuan to establish a National Strategic Special Committee for Unmanned Vehicle Industry Development, which will coordinate industrial policy and review industry-development guidelines, including funding needs and financing plans. More than half of its members are required to be experts and scholars nominated by legislative caucuses.

Government and opposition reactions

Following the bill’s passage, the MOEA stated on Aug. 27 that it regretted the legislature’s decision not to adopt the Executive Yuan’s version of the bill.

The ministry warned that requiring the Executive Yuan to establish a special strategic committee could create a risk of political gridlock in the future.

It also said that funding through annual government budgets could expose the program to budget crowding-out, review delays and spending cuts, potentially falling short of industry expectations.

Speculation has emerged over whether the legislation will be countersigned. The Cabinet said it would review the bill after receiving it, assess whether it meets the needs of defense self-reliance and industrial development, and carefully consider implementation issues.

Kuomintang caucus whip Fu Kun-chi (傅崐萁) said Taiwan should seize the opportunity to build a complete unmanned-systems industrial chain and even work toward creating a “second sacred mountain protecting the nation,” a reference to Taiwan Semiconductor Manufacturing Co.

Need for institutional support

Su Tzu-yun (蘇紫雲), director of the Division of Defense Strategy and Resources at Taiwan’s Institute for National Defense and Security Research, told TCN that passage of the act represents tangible progress in strengthening Taiwan’s drone and unmanned surface vessel capabilities.

However, Su said the government will still need to strengthen cross-ministerial coordination, budget arrangements and confidentiality mechanisms to ensure resources are prioritized for defense needs and can further support the development of Taiwan’s defense industry.

From an international perspective, Su said Taiwan’s willingness to earmark substantial funding for unmanned systems would help demonstrate its determination to defend itself.

Citing Britain’s more than £5 billion four-year investment in drones and autonomous systems, Su said Taiwan’s planned spending is comparable in scale. Still, he said the institutional design must clearly uphold a “defense-first” principle to prevent a gap from emerging between industrial-development goals and military requirements.

Su noted that the Executive Yuan’s original version had incorporated funding, intended uses and the defense-first principle into a more comprehensive framework, with the expectation that military demand would drive industrial benefits.

If the Executive Yuan ultimately countersigns the opposition-backed version, Su said the government should use administrative measures to address institutional shortcomings. These could include assigning a minister without portfolio to coordinate the MOEA and MND, incorporating unmanned-systems funding into annual budgets, and establishing rules on committee-member qualifications and the scope of public disclosure at meetings.

Such measures, he said, would help balance professional consultation with the protection of classified information.

A catalyst for industry

Su said the planned NT$240 billion investment would still not fully meet Taiwan’s future needs, but could serve as an initial foundation.

If funding is steadily and reasonably implemented, he noted, it would send a clear signal to industry and encourage companies to expand research, development and investment.

The government’s role, Su said, is to provide “ignition” funding to first meet urgent defense requirements, after which private-sector investment can expand research and development and increase the overall size of the industry.

Competitiveness

Regarding international competitiveness, Su said Taiwan’s current advantage lies in “value” rather than price.

Taiwan’s drone supply chain is “non-red” and offers security and reliability, giving its products a distinct market position, he said. However, Taiwan-made systems may cost three to four times more than comparable Chinese products.

Su assessed that costs could gradually decline once Taiwan-developed control chips enter mass production and domestic demand generates economies of scale, improving price competitiveness.

If the necessary resources are put in place, Taiwan could see initial results within about 18 months, he said.