Analysis: Philippines considers increasing defense allocation 2026 to counter China’s presence.

On August 13, 2025, the Philippine government has submitted a landmark proposal to raise its defense budget for fiscal year 2026 to PHP 299.3 billion, or roughly USD 5.2 billion. This marks the third consecutive year of double-digit growth in military spending, underscoring Manila’s urgency in responding to mounting tensions in the South China Sea and intensifying competition across the wider Indo-Pacific. The figure represents a 16 percent increase over the 2025 allocation, which itself rose by 14 percent from 2024 levels.
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Philippine forces set to expand airpower and missile defenses as Manila boosts its 2026 defense budget to counter growing Chinese pressure in the South China Sea. Black Hawk attack helicopters acquired by the Philippines (Picture source: Lockheed Martin).

The 2026 proposal highlights the Marcos administration’s determination to accelerate Horizon 3 of the Revised Armed Forces of the Philippines Modernization Program. At the core of the plan is a bundled procurement package for multirole fighter aircraft, airborne early warning platforms, and aerial refueling tankers. Such acquisitions would transform the country’s current airpower doctrine by extending detection ranges, enhancing air superiority capabilities, and reinforcing deterrence posture across contested maritime zones.

This budget increase builds on a series of recent major defense contracts signed by Manila, including the acquisition of BrahMos supersonic cruise missiles from India, the purchase of C-295 transport aircraft from Airbus Defence and Space, and the earlier procurement of S-70i Black Hawk helicopters from PZL Mielec in Poland. These programs, funded under previous modernization tranches, have already strengthened the Philippine Air Force and Navy, laying the groundwork for more sophisticated capabilities now envisioned in the 2026 allocation.

Operationally, the new funding is designed to close critical gaps in aerospace power and coastal defense. The multirole fighters being considered, with the Saab JAS 39 Gripen and Lockheed Martin F-16 Block 70 still at the forefront of the competition, would give the Philippine Air Force a combat aircraft capable of both beyond-visual-range engagements and precision strike missions. Their pairing with airborne early warning aircraft, expected to include platforms in the class of the Saab GlobalEye or the Northrop Grumman E-2D, will create an integrated command-and-control structure extending radar coverage beyond 400 kilometers. Aerial refueling assets, likely configured from platforms such as the Airbus A330 MRTT, will increase mission endurance to more than eight hours, ensuring continuous patrols over the West Philippine Sea.

On the maritime side, the deployment of the BrahMos coastal defense batteries, with a range of 290 kilometers and a Mach 2.8 terminal speed, provides the Philippines with a credible anti-ship strike capability capable of denying access to Chinese surface combatants in the Luzon Strait and approaches to Palawan. Integration with existing Jose Rizal-class frigates and the planned Corvette Acquisition Program will further enhance layered defense. Forward deployment of these assets at Antonio Bautista Air Base in Palawan and at the refurbished Basa Air Base in Pampanga ensures rapid access to contested waters, while naval infrastructure at Subic Bay and Oyster Bay is being prepared to accommodate larger surface combatants and logistical hubs.

The rationale for such ambitious spending lies in the rapidly expanding Chinese influence across Southeast Asia. Beijing’s militarization of disputed reefs, the deployment of maritime militias, and frequent incursions into Philippine waters have shifted the regional security balance, compelling Manila to accelerate force modernization at a pace unseen in past decades. For the Philippines, the stakes are existential, as unchecked Chinese assertiveness threatens not only its territorial claims in the West Philippine Sea but also freedom of navigation routes vital to national and regional economies.

Similar dynamics are visible across the wider region, with Vietnam investing in Bastion-P coastal defense systems and Gepard-class frigates, Indonesia committing billions to Rafale fighter jets and Scorpène-class submarines, and Malaysia approving contracts for FA-50 light combat aircraft and Littoral Mission Ships. Together, these programs highlight a collective Southeast Asian response to China’s expanding presence, with states increasingly prioritizing deterrence, maritime domain awareness, and long-range strike capabilities. Manila’s proposed budget therefore positions the Philippines firmly within this regional defense buildup, signaling its intent to shift from a reactive posture to a more proactive strategy of safeguarding national sovereignty.

The budget submission comes as Philippine and U.S. forces intensify joint maritime patrols and exercises in the West Philippine Sea, directly challenging Beijing’s expansive claims. Manila’s defense planners are under increasing pressure to reinforce territorial defense, leading to a sharper focus on force projection, naval strike capability, and the expansion of base infrastructure in strategically sensitive areas.

If approved, the new defense funding will allow the Armed Forces of the Philippines to close critical capability gaps in both the air and maritime domains, significantly improving operational readiness and interoperability with regional allies. Beyond the technical upgrades, the sustained modernization drive reflects a rare domestic consensus that external threats are now urgent and immediate, requiring a stronger military posture to uphold national sovereignty at a time of escalating regional flashpoints.