Authors: Joe O’Connor & Shikhar Chaturvedi
This week: the Kuomintang releases its budget proposal, leading to a flurry of statements about special budgets; the MND confirms Abrams tanks are en route to Taiwan; Minister Koo confirms an LOA for HIMARS was received; and the ministry releases budget details on NCSIST domestic production, alongside weekly bids and solicitations.
KMT Releases Proposal + Special Budget Updates
On Thursday, 5 March, the opposition Kuomintang (KMT) party released its special defense budget proposal, after weeks of internal debate as to the amount. The proposal allocates NT$380 billion (US$11.93 billion) specifically to fund the eight U.S. arms sale cases announced in December and would require additional special budget requests for future procurement to be submitted to the Legislative Yuan. Additional reporting on Friday revealed that the request was NT$30 billion (US$940 million) higher than party leadership had planned for; with the KMT also mandating that Letters of Offer and Acceptance, which outline payment and delivery schedules, be issued and signed before funds are appropriated.
Immediately after, the Lai administration began issuing statements opposing the proposal and clarifying their own. The same day, 5 March, the MND issued a statement clarifying that three sales from December (the Taiwan Tactical Network, AH-1W SuperCobra spare parts, and Harpoon missile refurbishment) were not included in the special budget and would be in annual defense budgets. The next day, 6 March, Minister of National Defense Wellington Koo spoke to the press, stating that the KMT’s requirement that all sales be completed by December 2028 is unreasonable and impossible. On Saturday, 7 March, the MND issued a second statement, specifically discussing the KMT requirement of having LOAs before funding is approved, stating that cases follow a formal acquisition timeline and that public disclosure of budget items only occurs after U.S. congressional notification.
On Sunday, 8 March, President Lai visited Jieyun Temple in Banqiao District, New Taipei, giving a speech where he compared his special defense budget to installing a security system against a “bad neighbor.” Lai also argued for the reasonableness of his budget, comparing it to yearly defense spending by Japan and South Korea, both of which are more than his planned NT$1.25 trillion (US$40 billion) in spending over eight years. Also on Sunday, when asked by CNA if the U.S. would support the KMT’s proposal, an unnamed State Department official stated that they “encourage all parties in Taiwan’s legislature to work through political differences and quickly pass a special defense budget,” not taking a partisan side on the issue.
Today, the Legislative Yuan held elections for committee “convening members,” legislators who serve as co-chairs and who control the agenda and legislative review, electing DPP legislator Chen Kuan-ting and KMT legislator Ma Wen-jun to the Foreign Affairs and National Defense Committee, which is tasked with review of the three special budget proposals. Chen, on Monday, met with former U.S. INDOPACOM commander Admiral John Aquilino, discussing Indo-Pacific security, domestic defense production, and advocating for the Lai administration’s budget to pass quickly.
Abrams Tanks “At Sea,” Expected by End of March
An MND official told CNA on Tuesday that the final batch of 28 M1A2T Abrams tanks is “at sea,” en route to Taiwan, with delivery expected before the end of March. The first batch of 38 tanks arrived in December 2024 and was commissioned into the Army’s 584th Combined Arms Brigade in October. A second batch of 42 tanks, which arrived in July 2025, is still undergoing training and is expected to be commissioned by mid-year. This marks the last out of 108 total tanks that Taiwan began procuring in July 2019.
LOAs for HIMARS Received + MQ-9B Clarification
On Tuesday, Minister of National Defense Wellington Koo told the press that the MND had received a fourth Letter of Offer and Acceptance (LOA) from the U.S., for the sale of 82 High Mobility Artillery Rocket Systems (HIMARS) and associated munitions, worth NT$127.2 billion (US$4.05 billion), initially being notified in December. This LOA, which has a deadline of 26 March to be signed, joins three prior LOAs, for Paladin self-propelled howitzers, Javelin anti-armor missiles, and TOW-2B anti-armor missiles, that have not been signed by the MND owing to ongoing special budget negotiations and are in danger of expiry. On Thursday, 5 March, however, it was reported that the Taiwan People’s Party (TPP), the KMT’s fellow opposition party in the LY, will allow the three previous LOAs, which expire on March 15, to be signed if they are reported immediately to the LY. As of the time of writing, however, we are not aware of those three LOAs having been signed.
While speaking to the press on Tuesday, Minister Koo also clarified ongoing rumors about delays in the delivery of four MQ-9B SeaGuardian maritime surveillance drones to Taiwan, stating that the ongoing conflict in the Middle East has no effect on delivery timelines to Taiwan and that the MND continues to interface with U.S. partners if that were to change.
MND Releases NCSIST Production Budget Request
Taiwan’s Ministry of National Defense has begun releasing additional budget details tied to the National Chung-Shan Institute of Science and Technology (NCSIST), offering a clearer picture of how Taipei intends to scale domestic weapons production under the proposed NT$1.25 trillion “Defense Resilience and Asymmetric Capabilities” special budget. Per Central News Agency reporting, the MND explained that NT$80.9 billion (US$2.55 billion) of the package will fund NCSIST mass production programs, including NT$36.1 billion (US$1.14 billion) for the Strong Bow missile system, NT$16.8 billion (US$529 million) for the Rui Yuan II surveillance drone program, and NT$28 billion (US$881.7 million) for production of “small suicide unmanned surface vessels.”
The newly released figures reinforce a trend visible across Taiwan Security Monitor’s backlog and acquisition analysis: Taiwan is increasingly pairing U.S. arms purchases with expanded domestic production capacity anchored by NCSIST. Previous special budgets (such as the Sea and Air Combat Power Improvement Plan) already used this model to accelerate missile and unmanned platform production while strengthening Taiwan’s industrial supply chain. Taiwan Security Monitor’s December 2025 update on the Arms Sales Backlog showed a growing shift in U.S. arms packages toward asymmetric capabilities that are cheaper and faster to produce. The new NCSIST allocations suggest Taiwan is now extending that logic domestically, using local production to scale asymmetric systems while relying on Foreign Military Sales (FMS) programs for higher-end platforms.
Weekly Awards/Solicitations
On Thursday, the Armaments Bureau’s 209th Factory awarded an NT$480 million (US$15.09 million) contract to the Armaments Bureau’s 202nd Factory for base section maintenance of 40-mm remote-controlled turret systems, which feature on Clouded Leopard infantry fighting vehicles. The contract will be fulfilled in Jiji Township, Nantou County.
On Monday, the Naval Specialty Training Center, Naval Education and Training Command, awarded an NT$180 million (US$5.66 million) contract to NCSIST for the repair of “Sea Chain IV” training simulators. We estimate this may be some sort of tactical data link. The contract will be fulfilled in the southern region of Taiwan.
On Wednesday, the 192nd Fleet, Naval Command, the ROCN’s minesweeping force, awarded an NT$51.21 million (US$1.61 million) contract to NCSIST for comprehensive mine inspection and maintenance of various mines, including maintenance of MK 6 mine projectiles. The contract will be fulfilled in the southern region of Taiwan.