KUALA LUMPUR (Reuters) - U.S. industrial conglomerate Honeywell International Inc (HON.N) is targeting a roughly 10 percent increase in revenue from Southeast Asia this year, in part boosted by growing defense spending in the region, a company executive told Reuters.
The company, which makes everything from jet engines to thermostats, is primed to benefit in the region as China’s territorial stance on South China Sea has raised the stakes for its ASEAN neighbors.
“For a long time, militaries in Southeast Asia were a bit laissez faire about ordering and upgrading aircraft and so on,” Honeywell’s Southeast Asia president Briand Greer told Reuters in a recent interview.
“They are not anymore; they realized that they want to have capability,” he said.
Countries are spending on extending the life of old aircraft through mechanical modifications and software upgrades, a big growth segment for the firm, Greer told Reuters in a separate interview on Thursday.
The company targets a growth rate of twice that of ASEAN’s gross domestic product, he said, making the region one of Honeywell’s fastest growing businesses.
ASEAN contributed $800 million to Honeywell’s global revenue last year, Greer said, but declined to specify what the company got from the region’s military business.
The New York-listed company had said in January it expects global sales from all its businesses to rise 2 percent to 4 percent this year, reaching up to $42.5 billion.
Greer pegs military spending in Southeast Asia to grow 4 percent this year, driven by Singapore, Indonesia, Thailand and Malaysia.
Global defense expenditure is expected to hit $1.67 trillion this year, the highest since the end of the Cold War, according to the IHS Jane’s Defence Budgets Report released in December.
Reporting by Liz Lee in Kuala Lumpur; Additional reporting by Jamie Freed in Singapore; Editing by Sayantani Ghosh and Muralikumar Anantharaman