Taiwan Released 278 of 279 Frozen Defense Budget Items by June 2025

Nearly all frozen spending cleared by June 27

Taiwan's legislature had released 278 of 279 frozen defense spending items by June 27, 2025, leaving funding for the indigenous submarine program as the final unresolved item. The releases followed a dispute that temporarily restricted NT$90 billion in military spending and put the timetable for equipment, training and construction under pressure.

The Legislative Yuan froze the money in February and separately cut NT$8.4 billion from proposed defense spending. By late June, three meetings of its Foreign Affairs and National Defense Committee had cleared almost every frozen item, according to Kuomintang (KMT) legislator Chen Yeong-kang, a committee member. The last group comprised 40 items.

The practical stakes are detailed in the Ministry of National Defense's May 26 budget report. The ministry said frozen operating funds supported equipment maintenance, training ammunition, fuel for aircraft and ships, weapons procurement and the basic running of military units.

The dispute therefore concerned both the amount Taiwan planned to spend and when its armed forces could use the money. A budget freeze keeps an allocation in the budget but requires further steps before officials can spend it. A cut reduces the allocation itself.

For military planners, that difference has immediate consequences. Funds released after a committee review can support purchases already planned for the year. Funds removed from the budget require another funding decision if the government wants to restore the spending.

What the ministry asked lawmakers to release

The May 26 ministry report recorded an agenda covering 120 requests to release frozen funds. Within that agenda, 49 cases were listed for discussion: two requiring special presentations and 47 requiring written reports. Those 49 cases involved NT$84.53 billion.

The ministry described a particularly broad restriction on operating expenses: 30% was frozen until it reported to lawmakers and received permission to spend the money. That condition put committee review between the military's approved plans and its ability to pay for them.

The ministry said its operating expenditure execution rate exceeded 95% in each of the previous three years, from 2022 through 2024. Execution rate means the share of a budget actually spent. The ministry used those figures to support its request for access to the frozen funds.

By May 23, the 2025 execution rate stood at 22%. The ministry expected it to reach 30% by the middle of June, taking account of foreign currency payments for arms purchases and delivery schedules. Its spending allocation for the first half of the year represented 36% of the annual operating budget.

Those figures describe a payment calendar as well as a political dispute. An equipment purchase can require money when a contract payment falls due or a delivery arrives, rather than in equal monthly amounts.

How the reviews moved toward completion

The confirmed 2025 sequence shows the freeze moving from a broad restriction to a single outstanding program:

• February: Lawmakers froze NT$90 billion in proposed defense spending and separately cut NT$8.4 billion.
• May 23: The ministry recorded an operating expenditure execution rate of 22%.
• May 26: The ministry presented its report for an agenda covering 120 requests to release frozen funds.
• By June 27: The committee had released 278 of 279 frozen items across three meetings.
• September: Chen Yeong-kang said the remaining submarine funding would be released after the first submarine completed sea trials.

Chen Yeong-kang described a review process in which the ministry submitted written or oral explanations of why each allocation was needed. Actual spending reductions were requested and negotiated only rarely, including in a case involving army purchases of uncrewed aerial vehicles, commonly called drones.

Democratic Progressive Party (DPP) legislator Chen Kuan-Ting described another route through the dispute. He said proposed cuts affecting Minxiong Aerospace Park, part of Taiwan's domestic drone industry plans, became a freeze instead. Releasing that allocation required a report, he said.

For agencies and contractors, the important step was committee approval. Preparing a report met part of the requirement, while the release decision allowed spending to proceed.

The submarine condition remained

The final frozen item concerned Taiwan's program to build submarines domestically. Chen Yeong-kang's office said its release was tied to completion of the first submarine's sea trials in September. Sea trials test how a vessel and its equipment perform at sea before it enters service.

Some submarine funding remained available before September so that CSBC Corporation, the shipbuilder, could sign necessary contracts for future vessels. Legislators from both the KMT and DPP said the delay affecting the remaining allocation had been negotiated with the defense ministry.

The arrangement linked access to that money to a specific stage of the submarine program. At the June 27 point, the committee's budget work was therefore nearly complete, with the last release attached to a testing milestone.

Why delayed approval also matters

A separate central government budget dispute involved a much longer approval timetable. The Executive Yuan submitted the budget in late August of the preceding year, but the Legislative Yuan did not pass it until August 14, after a stated delay of 351 days. The calendar year for that sequence was not specified.

The legislature then waited until September 17 to send the approved budget to the Executive Yuan, and the president issued the promulgation order on September 18. The delay was described as the latest budget approval on record.

New capital spending and newly added projects could not proceed for more than eight months. After approval, many allocations still carried conditions requiring special or written reports and committee consent before the money could be released.

More than 150 defense budget freeze proposals were awaiting review during the opening weeks of the legislative session described in that dispute. None had cleared review, and committee conveners had not scheduled hearings on them. With just over two months left in the year, agencies faced a compressed period for gaining permission and carrying out their plans.

KMT convener Hsu Chiao-hsin had arranged hearings on the proposed relocation of Songshan Airport and the use of Overseas Community Affairs Council resources. DPP convener Wang Yi-chuan had scheduled two days of inspections and a National Security Bureau work report. Hsu said she handled foreign affairs and overseas community matters, while defense ministry scheduling was Wang's responsibility.

Body armor shows what oversight covered

The ministry's May 26 submission went beyond a request to release money. One of its two special presentations explained the development, sourcing and testing of new body armor plates for soldiers.

The Armaments Bureau said development began in September 2023 in response to the threat from Chinese 5.8 millimeter steel core ammunition. Its work combined ballistic fibers with ceramic material and a protective waterproof coating, drawing on research with I-Shou University and Lunghwa University of Science and Technology.

A contract signed on January 15, 2025, covered 160,000 sets of ceramic components. Domestic suppliers were responsible for 60% and foreign suppliers for 40%. The ministry prohibited materials from mainland China throughout the procurement.

The bureau's 205th Arsenal planned annual production capacity of 60,000 sets. At that rate, producing 160,000 sets would take about two years and eight months, assuming continuous production at full capacity and timely component deliveries.

The ministry also said the testing facility at Dafu obtained accreditation on February 8, 2025, for testing under United States military ESAPI specifications. Completed plates would undergo testing before delivery to troops. These details gave lawmakers specific production and quality checks to examine when considering the release request.

Construction problems brought demands for changes

The second special presentation addressed military construction, including barracks, housing, ammunition storage, aircraft shelters and facilities needed for new weapons.

Under the Hsing An barracks improvement program, the ministry listed 103 projects costing more than NT$114.5 billion. By the end of 2024, 83 had been completed, with the remaining 20 scheduled for completion from 2025 through 2029. A further 13 projects, with more than NT$10.2 billion allocated, were planned for 2026 through 2031.

The ministry acknowledged problems behind some construction delays. Project budgets had sometimes failed to reflect current building costs, resulting in unsuccessful tenders or reduced project scope. Contract disputes, contractors' financial difficulties and the illegal employment of foreign workers had also caused problems.

Its proposed changes included assigning ordinary military construction projects worth more than NT$200 million to a dedicated Armaments Bureau engineering unit from 2026, while retaining exceptions for urgent or specialized military work.

Revised contracts also provided fines of NT$100,000 to NT$300,000 for illegally employing foreign workers, with escalating penalties for repeat violations. Contractor performance and occupational safety records would form part of procurement assessments.

The construction presentation showed why lawmakers sought explanations alongside the ministry's request for faster access to funds. Spending permission, realistic cost estimates and effective contractor management all affected whether facilities could be completed on schedule.

Political agreement and a larger spending gap

Lawmakers remained divided over the reasons for the freezes even as they agreed to release almost all the money. DPP committee member Chen Kuan-Ting said the committee's handling of releases had changed dramatically during the preceding two to three months, which he attributed to political pressure from recall campaigns.

Taiwan People's Party (TPP) legislator and committee member Lin Yi-chun rejected the claim that opposition parties were trying to obstruct military spending. She said:

The situation is not as the Democratic Progressive Party (DPP) has portrayed. In fact, both Kuomintang (KMT) and Taiwan People's Party (TPP) legislators agreed to unfreeze the budgets. There was no attempt to block the defense budget.

The release decisions settled most of the immediate restrictions, while a larger funding debate continued. Figures provided by Chen Yeong-kang put defense spending for 2025 at 2.38% of gross domestic product (GDP), the value of goods and services produced by the economy. President Lai Ching-te had pledged a target of 3%.

The gap was 0.62 percentage points of GDP. Using the same GDP estimate, reaching 3% would require spending about 26% more than the amount represented by 2.38%. Releasing money already included in the budget and adding enough funding to meet a higher target were separate decisions.

A proposed special budget would bring lawmakers back into the process because it, too, would require legislative approval. For military units, the immediate gain by late June was access to almost all previously frozen allocations. For the government, the remaining task was securing agreement on how much more Taiwan should spend.

Key Points

• By June 27, 2025, lawmakers had released 278 of 279 frozen defense spending items.
• The February decisions froze NT$90 billion and separately cut NT$8.4 billion.
• The ministry said restricted operating funds supported maintenance, ammunition, fuel, procurement and basic military operations.
• The last frozen item concerned the indigenous submarine program, with release tied to sea trials expected in September.
• Budget reviews included detailed examinations of body armor production and military construction problems.
• Defense spending stood at a reported 2.38% of GDP, below President Lai Ching-te's pledged 3% target.