South Korea’s Defense Industry To Expand Its Export Markets As The Government Focuses On Developing More Social Welfare Programs
This year, the South Korean government's defense budget accounts for 10 percent of the total spending at $32.1 billion, but plans of expanding its defense export markets is underway as the government directs its attention to social welfare programs, reported Nikkei Asian Review Oct. 1.
The past decade has brought South Korea a larger and stronger defense industry amid continuous threat from North Korea, bringing the country's armed forces among the strongest in Asia, at par with Japan's.
However, as the government plan on focusing on social welfare programs, a low budget for the defense industry may be expected within the next decade, pushing defense companies to drive their products to overseas markets, especially Asia.
Business Insider noted on April 22 that the Korea Space Industries (KAI) is working on a contract to supply 24 of its FA-50 fighter jets to Peru amounting to over $2 billion. The move is in line with South Korean President Park Guen Hye's ambition to turn the country's defense industry into an export powerhouse.
Although South Korean arms makers observed a slow domestic growth, its defense exports have gone up to $3.6 billion in 2014 from 2002's $144 million, with a 31 percent average annual gain in the last five years. This placed South Korea at the 13th spot in the 2014 biggest exporter of major arms, moving up from 30th in 2006.
"They've got a strong combination of technology, skills, reasonable costs, an export-driven economy, and a domestic defense market that's large enough to justify home-grown products," noted vice president of the Virginia-based Teal Group, Richard Aboulafia.
Beginning on Oct. 20, South Korea's full range of arms production will be showcased at the biennial Seoul International Aerospace and Defense Exhibition for potential overseas buyers to see their weapons, including the Hyundai Rotem K-2 battle tank, the K-9 Thunder self-propelled 155mm howitzer and KAI's T-50 Golden Eagle supersonic trainer jet and its FA-50 fighter jet line.
"The relatively favorable prices for its defense systems have definitely helped Korea in international markets," pointed executive director of the International Institute of Strategic Studies in Asia, Tim Huxley.
