Taiwan Proposes $35 Billion in Defense Spending as Drone Funding Fight Continues

The Taiwanese Cabinet on Aug. 20 proposed about $35.2 billion in defense spending for 2027, including a 23 percent increase for the military, as lawmakers continued to fight over how to fund thousands of drones and unmanned boats.The $35.2 billion total covers the Defense Ministry, Coast Guard, military retirement payments, special defense programs, and other defense accounts.The Defense Ministry itself would receive about $21.7 billion, up 23.2 percent from the government’s original proposal for this year.Much of that increase would go toward weapons and military equipment. The government plans about $8.1 billion for those purchases, largely to make scheduled payments on military procurement programs, according to the Cabinet’s budget materials.About $7 billion would go toward operating and maintaining the armed forces, including ammunition and spare parts.The overall defense package equals about 3 percent of Taiwan’s projected economy next year. President Lai Ching-te has said Taiwan should keep defense spending above 3 percent and raise it to 5 percent by 2030.“Investing in national defense is investing in peace,” Lai said while previewing the budget on Aug. 17, according to the Presidential Office.Beijing claims Taiwan, a self-governed democracy, as part of China and has not ruled out using force to bring the island under its control. Taiwan rejects Beijing’s sovereignty claims.Drone Fight Tests Spending PlansThe same day the Cabinet unveiled the new budget, lawmakers remained deadlocked over one of Taiwan’s biggest planned military expansions: unmanned aircraft and boats.The government wants authority to spend up to about $6.6 billion through 2031 on coastal surveillance drones, attack drones, and small unmanned attack boats under a separate Cabinet bill.Taiwanese defense officials pose with an MQ-9B unmanned aircraft during a delivery ceremony in the United States on March 17, 2026. Taiwan has purchased four MQ-9Bs, with two scheduled for delivery in 2026 and two in 2027. Courtesy of Taiwan Ministry of National DefenseA competing Kuomintang proposal would cover a broader range of unmanned systems but limit spending to about $1.25 billion a year for six years.Defense Minister Wellington Koo said that cap would be too low for the military’s plans.Taiwan already expects to spend about $974 million next year on unmanned systems through arms purchases, commissioned production, and commercial purchases.If the Cabinet’s drone bill passes, another roughly $1.32 billion would be budgeted under it for 2027, Koo said.Koo told lawmakers that limiting overall unmanned system spending to the opposition proposal’s annual ceiling would prevent the military from building the force it needs.He also said Taiwan wants to buy drones in yearly batches so the military can change specifications as technology improves instead of locking in six years of equipment at once.Lawmakers ended their Aug. 20 talks without agreement, according to the legislative record.Weapons Left Out of Earlier PackageThe drone dispute follows an earlier fight over Lai’s broader military buildup.His administration originally sought authority for about $39.2 billion over eight years for 23 procurement programs.Lawmakers in May approved 10 of the programs and reduced the spending ceiling to about $24.4 billion, leaving 13 programs outside the package.The Defense Ministry said at the Aug. 20 press conference that three of those programs are now being pursued through the drone legislation and the other 10 are planned for a forthcoming supplemental budget.Among them is Strongbow, a domestically developed medium-range anti-ballistic missile that the Defense Ministry has described as a backbone of Lai’s planned “T-Dome” air-defense system. The ministry’s May 8 statement said the program had been excluded when lawmakers narrowed the package.Lt. Gen. Hsieh Chi-hsien, director-general of the Defense Ministry’s Comptroller Bureau, said at the press conference that Strongbow and nine other programs left out of the special defense package would be included in a forthcoming supplemental budget.Legislature Holds the Next MoveThe proposed $35.2 billion defense total is part of Taiwan’s roughly $123 billion central government budget for 2027. It still requires approval by the opposition-controlled Legislative Yuan.The previous annual budget was not passed until Aug. 14, after a 351-day delay.President Lai said after the vote that lawmakers should not repeat the delay when they take up the new budget, which he said would include stronger defense preparations.Legislative Yuan Speaker Han Kuo-yu also called for the next budget to be handled differently. After presiding over the Aug. 14 vote, Han urged lawmakers to complete the next annual budget on schedule.The Cabinet approved the 2027 budget on Aug. 20 and sent it to the Legislative Yuan for review together with the government’s 2027 policy plan.