Chapter 6. National Defense Resources
/Section 2. Planning the National Defense Financial Resources
In order to achieve the objectives of our national defense policy implementation, earmark rational and adequate budgets, and ensure adequate resource allocation, we are planning to blend means of cost-effective assessment of national defense policy implementation and the resources management strategy with our budgeting procedures, such as financial forecasts, visional financial guidance, and budgetary distribution and implementation so as to maximize the effectiveness of the financial resources.
I. Financial Allocation Principles
To respond to hostile threats we are facing and current requirements for implementing our national defense policy, we have been reviewing the integrated mid-term budget estimates approved by the Executive Yuan to plan a well-rounded financial resources allocation by contemplating our mid- and long-term requirements, so as to adequately support our operational readiness. We are abiding by the principle of cost savings in designated fiscal years tokeep a lean budget allocation so as to maximize the potency of our limited resources.
II. Financial Trends and Analysis
( I ) The Proportion of Central Government Budget Allocated for Defense Purposes
Af ter reviewing the count ry's overall economic situation and future development, the Executive Yuan would then decide an adequate proportion in the central government budget for defense purposes by taking account of requirements of policy implementation and keeping a healthy financial status for the country. The Executive Yuan has pledged that once military hardware deemed necessary becomes available for procurement, it may take necessary steps to draw on special reserves, retroactive budget increase and special budgets to acquire the necessary funds for us in order to demonstrate the government's will of policy implementation for strengthening our national defense and determination to defend our country. In the past 10 years (2006 to 2015), the allocated defense budget ranged from NT$ 252.5 billion to NT$ 334.0 billion, equivalent to 16.07% to 19.51% of the total budget of the central government (per Figure 6-1).
( II ) Demarcation of Open and Confidential Budgets
In conformity with the government's information transparency policy, we have clearly defined the demarcation principle for open and confidential budgets. Preparation of Confidential budgets shall be reviewed at their lowest confidential level based on the Classified National Security Information Protection Act and the Government Information Transparency Law, provided they do not affect overall national interests as well as national security. Statistics in last 10 years revealed that our confidential budgets have been kept within 6% of the overall national defense budget since 2012 (per Figure 6-2), demonstrating the results of improved transparency of our defense budgets.
( III ) Structural Analysis of the National Defense Budget
The national defense budget can be divided structurally into personnel, operation and maintenance, military investments, and miscellaneous categories. Budget for personnel is mainly earmarked for personnel expenditures. Budget for operation and maintenance is mainly earmarked for keeping readiness of weapons, equipment and operations of every unit. Budget for Military investments is earmarked for research, development and acquisition of weapons and equipment. Budget for miscellaneous items is mainly earmarked for the National Security Bureau. Structural fluctuation to our budgets in last 10 years is shown in Figure 6-3.
(IV) Status and Key Uses of FY 2015 National Defense Budget
The enacted Fiscal Year (FY) 2015 national defense budget is NT$ 312.8 billion and its key uses are as follows:
1.Personnel: NT$ 141.5 billion. Mainly earmarked for salaries, bonuses, and insurance-related expenditures, according to requirements of increasing number of volunteer service members and recruitment and training of enlistees.
2.Operation and Maintenance: NT$ 70.2 billion. NT$ 66.7 billion of it is earmarked for keeping readiness of our major weapons and equipment, capabilities of logistics and maintenance, and improving personnel living quarters. Another NT$ 3.5 billion is earmarked for basic operational upkeep of various units.
3.Military investments: NT$ 96.2 billion. NT$ 72.8 billion of it is earmarked for 108 ongoing projects and programs, including Phase 2 Acquisition for Minesweepers and Patriot Advanced Capability-3(PAC-3) Missile Program. Another NT$ 23.4 billion is earmarked for 45 new projects and programs, such as Acquisition of Additional Assault Amphibious Vehicle (AAV-7) and Portable Unmanned Aerial System Program.
4.Miscellaneous: NT$ 4.9 billion. Mainly earmarked for Compensation for Accidental Civilian Casualties by Operations of the ROC Armed Forces and the National Security Bureau budget.
III. Financial Management Strategies
Due to our limited funding from the government f inancial resources, the success of our force buildup depends heavily on the optimum control management of comprehensive national defense resources. We have been employing a highly professional and effective management mechanism to adopt concepts of performance-based management functions, financial resource integration and cloud-based comptroller data to provide dedicated support for force buildup, and achieve the desired objectives of policy implementation.
( I ) Accomplishing Budget Implementation and Justifiably Managing Budget Resources
Given the difficulty in securing national defense budget, the budgetary requirements of the subsequent year are subject to a preliminary node control mechanism and the like to ensure proper planning of monthly budget allocations. We have been doing regular and irregular supervision activities to identify gaps between the pre-defined nodes and their actual progresses so as to make timely reviews and responses. Simultaneously, we may adopt a budget resource management mechanism to minimize ineffective budgets and maximize the combined benefits of all the budget resources.
( II ) Restructuring Accounting System and Improving Utilization Performance
In conformity with the Accounting System of Ordinary Government Activities of the Central Government, Gazettes of Governmental Accounting Standards and Doctrine, as well as relevant regulations and operational schedules of the Directorate-General of Budget, Accounting and Statistics (DGBAS) of the Executive Yuan, the MND has been restructuring the ROC Armed Forces accounting system by integrating its hierarchies with its budgeting structures. By so doing, we may fully use national defense financial information so as to improve financial utilization performance of the government.
( III ) Developing Digital Platforms and Integrating Cloud Data
The MND has been integrating the ROC Armed Forces budgeting, general accounting and final accounting information systems to continue developing the ROC Armed Forces comptroller information and cloud services. We have been introducing digital certifications and signatures, time stamps and quick response two-dimensional barcodes (QR codes) to the ROC Armed Forces. Moreover, we have issued ROC Armed Forces smart cards with digital stamps to strengthen verification of identities in our financial operations (per Figure 6-4).
Following main strategic objective of expanding service contents as the pillar and establishing national defense strategic analysis requirements as the beam, together with pragmatic measures for improving efficiency, saving energy, and reducing carbon emission, we have accelerated the pace of our operational digitalization and use of electronic documents in order to reduce both manual workload and redundant resource consumption. Our efforts have been recognized by receiving the prestigious Honorable Award for Operational Innovation, Revolution and Improvement from the DGBAS of the Executive Yuan in 2014.
( IV ) Establishing Cost Systems and Achieving Management Functions
Following the essence of the ROC Armed Forces Military Strategic Plan, the ROC Armed Forces Planned Budget System, and our 5-year Policy Plan, we have been pushing forward a cost-effectiveness system for national defense. By means of on-site consultations and verifications as well as our information systems, we have been analyzing data from different angles, such as personnel resources, maintenance capabilities, cost control, and resources integration, so as to provide reference for decision-making and reviewing necessary costs in various stages in our projects and programs.
( V ) Integrating of National Defense Resources and Reforming Fund Management
The MND is in charge of 3 specialized funds, namely the ROC Armed Forces Camp and Facility Rebuilding Fund, the ROC Armed Forces Fund for the Rebuilding of Old Military Dependents' Village, and the ROC Armed Forces Production and Service Operations Fund. For the purposes of not adding to government's financial burdens and driving our 2 goals of exploring channels of revenue and expanding our scope of care, we have been continuing the National Defense Resources Integration Project to introduce corporate management practices for managing these specialized funds. By doing this reform, we have established their close reciprocal connection with the national defense budget so as to create a parallel and complementary financial operations model between them in order to satisfy our force buildup requirements.
To explore channels of revenue, because the MND has been trying to get additional revenues to renovate our aging camps and living quarters in conformity with the government's policy of revitalizing land use, we have been planning to establish strategic alliances with financial institutions for the purposes of encouraging mutual investment initiatives and expanding the scope of our investments, so as to create new channels of revenue and improve our overall financial performance. To expand scope of care, we have been planning to improve the service capacities of our specialized funds in order to provide more practical care to service members and their families.