TAIPEI (Taiwan News) — Taiwan's two major political parties are divided on how the country should fund and build its drone industry, Nikkei Asia reported.
The Cabinet under President Lai Ching-te (賴清德) has proposed a special drone budget of NT$210 billion (US$6.5 billion) through 2031 to fund coastal surveillance drones, coastal strike drones, and attack unmanned surface vessels. The Ministry of National Defense would oversee procurement and deployment.
The KMT has introduced its own proposal, calling for NT$240 billion to be divvied up over six years (NT$40 billion a year), with the economy ministry managing the program. The plan would focus on aerial drones, unmanned surface and underwater vessels, and unmanned ground vehicles, per Nikkei Asia.
Top KMT official Charles Chen (陳以信) defended the proposal, saying that including drones in the annual budget and having the Legislative Yuan review them can provide the industry with steady orders and confidence to grow, while also keeping defense needs and spending under control, according to Nikkei Asia.
However, many industry insiders disagree. A high-level executive at a leading Taiwanese defense contractor told Nikkei Asia that the KMT’s plan creates uncertainty and frequent changes for the industry, with no guaranteed funding. "The opposition don't want to back the ruling party's special budget for drones, but they do want to signal they're supportive of the technology, and hence they came up with this odd idea," he said.
The executive said the special budget should be approved quickly and manufacturers need clear guarantees about orders. Without progress, he said his colleagues feel “helpless.”
A senior Western diplomat questioned whether the KMT's proposal, despite a higher budget, would be a blow to Taiwan’s defense, given that only the DPP’s plan seems to emphasize prioritizing suicide drones.
Rupert Hammond-Chambers, president of the US-Taiwan Business Council, said the KMT’s strict funding approach could put drone purchases and industry growth at risk. "A flat NT$40 billion allocation per year for six consecutive years seems to be mechanically designed rather than shaped by this industry lifecycle," Hammond-Chambers said, per Nikkei Asia.
"Typically, drone programs go through an initial ramp-up period when standards, suppliers, and capacity are being developed, and a peak period dominated by contracts and payments. Spending tends to fall at a final delivery stage," he added.
The debate over the drone budget comes as local elections, scheduled for November, are fast approaching and the January 2028 presidential election is not far off, Nikkei said.
Michael Fahey, an American lawyer, said, "The special budget on drones doesn't have the same mass appeal and doesn't easily translate into the kind of highly localized issue like flood control or new roads that drive city and council elections.” However, Fahey said the debate's results will directly affect Taiwan’s stability, its ability to deter Beijing, and how well it can meet US expectations to strengthen its own defense.
Legislators are set to vote on a drone bill Thursday, after debates the previous day failed to resolve disputes over oversight and funding.
