French Ship Builder Eyes Asia Naval Defense Market

SINGAPORE — French warship builder DCNS said Thursday it's in talks with Asian navies to sell submarines, ships and other naval equipment as the region looks to boost defense spending to protect burgeoning economic interests.

Malaysia's first submarine, "KD Tunku Abdul Rahman," docks in Port Klang outside Kuala Lumpur, Malaysia, on Sept. 3. The submarine arrived at a naval base on peninsular Malaysia's west coast after a 54-day voyage from France. (Photo: AP)

"Everybody in the area—Thailand, Vietnam, Indonesia, the Philippines—is looking to upgrade their naval forces," said Eric Lassalle, managing director for DCNS's Asian unit.

"It's not an arms race. They have to protect their investments."

Lassalle declined to say which countries DCNS is in talks with or when deals may be announced.

Asian countries, which have prospered from the surge in global trade over the last two decades, are seeking to safeguard shipping lanes, ports and assets such as offshore oil rigs from piracy and terrorism, Lassalle said in an interview.

Asia will likely account for about 32 percent of global military spending, or $480 billion, by 2016, up from 24 percent in 2007, according to consultancy Frost & Sullivan.

"The epicenter of the defense market is moving from America to Asia," Lassalle said. "Asia is quickly becoming the main market for arms."

DCNS, which has sold naval equipment to Singapore, Malaysia, Thailand and India, said earlier this month it plans to partner with Rio de Janeiro-based construction company Odebrecht SA to build four Scorpene-type submarines for Brazil for $9 billion.

DCNS has 12,000 employees worldwide and had revenues of 2.5 billion euros ($3.7 billion) last year.