Taiwan's drone procurement bill heads to legislature floor as cross-party talks fail

Legislative deadlock

Taiwan's Legislative Yuan Economics Committee failed to reach a consensus on 14 versions of a draft uncrewed vehicle act, sending the bill to a plenary session for further deliberation, as reported by the Taipei Times. The committee's chair, Hung Yu-hsiang, announced that the bill would go to the floor along with one amendment from committee review and one from KMT negotiations. The KMT and TPP caucuses have called for Legislative Speaker Han Kuo-yu to chair future negotiations.

The breakdown in cross-party talks leaves the bill's fate uncertain, with fourteen variations expected to be put to a vote in the opposition-controlled Legislature by the end of August, according to Focus Taiwan.

Funding and authority at odds

At the center of the debate are two questions: how the procurement of drones should be funded and which agency should be in charge of the project, as reported by Focus Taiwan.

The Cabinet's draft proposes a special budget of NT$210 billion from 2026 through 2031 to procure coastal surveillance drones, coastal attack drones, and small kamikaze uncrewed surface vessels, according to both Focus Taiwan and the Taipei Times. The main opposition Kuomintang (KMT) and the Taiwan People's Party (TPP) have proposed alternative versions that would promote industry development through the annual budget rather than a special budget, the Taipei Times reported.

The KMT's proposal would cap funding at NT$40 billion per year for six consecutive years through the regular budget process, totaling NT$240 billion, Defense Minister Wellington Koo said during negotiations, as quoted by the Taipei Times.

Koo argued that the annual cap would be insufficient. He said the ministry plans to allocate 8 billion this year and 1 billion next year if the special act passes, a combined 9 billion that far exceeds the KMT's proposed cap. He also noted that next fiscal year's spending on uncrewed capabilities, excluding the three categories covered by the special act, already totals 1 billion for military purchases, commissioned production, and commercial procurement.

Vice President Hsiao Bi-khim echoed these concerns in an interview with CNA on Aug. 21, as reported by Focus Taiwan. She said the NT$40 billion annual spending cap could leave the Ministry of National Defense's drone procurement plans underfunded, as payments vary over the course of a contract and are bound to balloon during peak delivery periods. "On this point, we should respect the Ministry of National Defense's force-building schedule and requirements," Hsiao said.

The KMT, meanwhile, has highlighted the larger overall amount in its proposal, arguing that the annual spending cap would require expenditure to be reviewed each year, thereby strengthening oversight and reducing the risk of corruption, according to Focus Taiwan.

Who should be in charge?

The second sticking point is which agency should serve as the bill's competent authority. The Cabinet's proposal designates the Ministry of National Defense, while the KMT and TPP have designated the Ministry of Economic Affairs, arguing it handles drone manufacturer support, technology imports, cybersecurity reviews, and testing sites, as reported by Focus Taiwan.

Hsiao said the MND should be the competent authority because no agency knows Taiwan's defense needs better, according to Focus Taiwan. DPP caucus chief executive Chuang Jui-hsiung criticized the opposition proposals for excluding the Ministry of National Defense, as reported by the Taipei Times.

Diverging visions for the drone industry

The dispute reflects deeper disagreements over how to build Taiwan's drone industry. KMT caucus secretary-general Lin Pei-hsiang said drone technology advances rapidly, so procurement should be phased with regular adjustments, according to the Taipei Times. KMT Legislator Lai Shyh-bao said the act should focus on industrial development and technological capacity-building, with procurement in a separate defense procurement chapter.

Lai Shyh-bao argued that the opposition's proposal is the more practical one because technology advances rapidly and buying a huge quantity all at once would quickly become outdated, as reported by Focus Taiwan.

TPP Legislator Wang An-hsiang said his party supports defense self-reliance but has concerns over funding sources and fiscal discipline.

DPP Legislator Fan Yun cited research by the Research Institute for Democracy, Society and Emerging Technology showing that international drone manufacturers are turning to partners like Japan due to stable funding and clear policy, according to the Taipei Times. DPP Legislator Chung Chia-pin questioned why legislation is needed if the KMT version is not a special act and cannot use a special budget.

Hsiao argued that the Cabinet's proposal, which would fund 1,446 coastal reconnaissance drones, 208,200 coastal attack drones, and 1,320 small suicide unmanned surface vessels as requested by the MND, fits Taiwan's "island defense" and "multi-domain denial" strategies. She said high demand will help develop the local drone industry and that large-scale purchases can build capabilities for serial production, making Taiwan's drones more competitive internationally, according to Focus Taiwan.

Security concerns and international attention

Hsiao also framed the debate in terms of national security, saying other countries are watching whether Taiwan is determined to defend itself against China's threats, pressure, and harassment. She referenced Putin's miscalculation in invading Ukraine as a caution against Beijing miscalculating Taiwan's determination, as reported by Focus Taiwan.

The wars in Ukraine and West Asia have shown the importance of uncrewed weapons in modern warfare, according to a claim in the material. Parliament earlier this month passed separate drone-related spending plans aimed at developing the industry, with a focus on building a "non-red" supply chain independent of China, which dominates the global drone market, as reported by Focus Taiwan.

China's Taiwan Affairs Office spokesperson Zhang Han said that the overwhelming trend towards reunification cannot be stopped, according to a claim in the material. Lai rejects Beijing's sovereignty claims and says only Taiwan's people can decide their future, as reported by Focus Taiwan.