Taiwan’s Defense Ministry announced last month that the contract design of the island’s first locally made submarine was complete, and that a prototype vessel would be ready in the early 2020s.

Defense Minister Yen De-fa told lawmakers that a number of foreign contractors would still be involved in the project to transfer technologies and supply some of the required equipment.

However, he admitted that several foreign contractors that had previously agreed to work with Taiwan in the design phase had opted to pull out because of pressure from Beijing.

Taiwan’s Central News Agency also quoted military sources as saying that the island did not have a sufficient pool of talent to develop core technologies needed for the locally made sub’s main diesel engine and torpedoes and missile systems. This means that the military has to pay a fat markup to source talent and solutions from overseas because of the limited number of contractors left as a result of Beijing’s efforts at containment.

The completion of the contract design was the first phase of the project. It will now be followed by a blueprint design, then construction of a prototype as well as sea trials to pave the way for production and entry into service with the Taiwanese navy.

Taiwan has already sunk NT$49 billion (US$1.59 billion), a sum that will be spread over some years, into the indigenous submarine program, as the navy has to replace and modernize its aging and rather limited submarine fleet.

Taiwan only has two diesel-electric subs in active service, bought from the Netherlands in the 1980s. Another two, built in the US during World War II, are used for training purposes.

Taiwan reached a deal with a Dutch company in May last year to modernize the two subs currently in service. Rotterdam-based RH Marine, which supplies a range of maritime electrical and automation systems, will provide technical support for the refits, scheduled to take place from 2020 to 2022, to extend their lifespan beyond the 2030s and to equip them with long-range heavy torpedoes from the US to enable attacks against Chinese assets from Taiwanese waters.

Taiwan has been trying for decades to place orders for new diesel-powered submarines capable of circumventing Chinese naval blockades to ensure that its sea lanes remain open. However, the island’s pariah status is a barrier to the successful completion of such orders. The most recent bid was in the late 1980s, when the Dutch scrapped a deal because of pressure from Beijing.