Executive Summary
Canada should turn growing Indo-Pacific ties into defence-industrial partnerships, led by five priority partners.
The reshaping of trade, alliances and industrial supply chains presents a rare opening for middle powers such as Canada.
The Indo-Pacific defence market is large and growing.
Fourteen markets account for 99% of addressable spend, about C$455B in total defence spending in 2025.
Japan, South Korea and Australia are contemplating defence spending targets of 3% of GDP or more by the 2030s.
Canada’s engagements in the region have not yet produced matching industrial results.
Since 2021, Canada has held dozens of ministerial and senior-official meetings and signed many agreements.
Over the same period the region’s share of total Canadian defence exports fell from 8.0% to 5.9%, and the value of export permits has stayed flat since 2020.
Five anchor partners offer the strongest fit for direct exports and partnership (co-development and sourcing).
Japan, Australia, South Korea, Singapore and New Zealand lead; all offer opportunity at low or modest risk.
Seven emerging partners offer selective upside with more complexity and higher risk.
India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam and Taiwan.
Political challenges, localization rules, budget limits and integrity risks call for focused approaches.
Canadian firms are not starting from zero and should build on links that already exist.
Canada has much to offer the region: sensors, subsystems, sustainment, training and simulation, space, communications, design and engineering, and more.
Major regional trade shows in 2027 and 2028 give firms direct access to buyers.
About the report
Our central finding is that Canada has a significant opportunity to diversify its defence-industrial relationships by applying build-partner-buy logic with five anchor partners in the Indo-Pacific. Canadian firms can build on links that already exist, and major regional trade shows in 2027 and 2028 give them direct access to buyers and partners. For now, Ottawa appears to be ahead of much of Canadian industry in this region. Government has built or is building the agreements, dialogues and military-to-military contacts, but firms have yet to follow at the same scale.
Since 2021 Canada has held more than 200 ministerial and senior-official engagements referencing defence with Indo-Pacific partners, the Canadian Armed Forces take part in about 70 exercises and operational contacts in the region each year, and Canadian and Indo-Pacific firms have more than 200 active partnerships, sales, joint ventures and teaming agreements. Nevertheless, over the same period the value of Canadian defence export permits to the region has been more or less flat, and the Indo-Pacific’s share of Canada’s total defence exports has fallen from 8.0% to 5.9%.
The market justifies the effort. It is large and growing. Close partners such as Japan, South Korea and Australia are moving toward spending 3% of GDP on defence. Singapore has spent around 3% of its GDP on defence for decades, and New Zealand has recently unveiled significantly increased spending to modernize its forces.
This report assesses partners and their markets against five criteria: market size and growth, strategic alignment, industrial capacity, market addressability and partnership potential. It identifies five anchor partners, Japan, Australia, South Korea, Singapore and New Zealand, that offer the strongest fit for Canadian exports and partnership, and seven emerging partners, India, Indonesia, Malaysia, the Philippines, Taiwan, Thailand and Vietnam, that offer opportunities amid additional complexity. For each anchor partner it sets out where Canada should sell, where it should partner or buy, and where government and industry can work together to obtain diversification outcomes.
About the authors
Mike Petric is Managing Director of PerceptX Inc. and a Fellow of the Canadian Global Affairs Institute. Isabella Aung-Camilleri is a research analyst at PerceptX. Aoi Saginuma provided research and analytical support to the project.
Acknowledgement
This research was supported by the Canadian Department of National Defence through a Mobilizing Insights in Defence and Security (MINDS) Targeted Engagement Grant. The research was conducted independently by PerceptX. The opinions expressed are those of the authors and do not reflect the opinions or positions of the Department of National Defence or the Government of Canada.
I hope someone in government reads your articles, Mr. Petric. And thanks to you and your team in providing same.