South Korea’s defense industry, government team up to improve competitiveness
Defense firms in South Korea are working with national agencies to enhance global competitiveness by focusing on resource allocation, industry reform and the export process.
Leaders from 16 companies, including LIG Nex1, Hanwha, Firstec and Victech, convened with state-owned defense firms and Republic of Korea (ROK) Defense Minister Chung Kyung-du in Seoul on July 24, 2019. Representatives of the state-owned National Defense Agency for Technology and Quality and the National Institute of Defense Science attended.
“The defense industry is a core industry contributing to both the security and economic sectors,” Chung told the industry leaders, “and the Ministry of Defense will do its best to activate the defense industry.”
(Pictured: Republic of Korea Defense Minister Chung Kyung-du, center, speaks to defense industry leaders at a meeting in Seoul in July 2019.)
Chung clarified that the meeting was an open discussion and that concerns would be examined. “We will make every effort to ensure that the issues raised by companies are reflected in future policies and institutions,” he said.
The ROK Defense Ministry is working to guarantee that defense manufacturers have their electrical power needs met, Chung said. Energy needs are becoming more of an issue as the country advances a reform program that will make the military more reliant on new technologies.
Representatives from LIG Nex1, which makes defense products ranging from missiles and torpedoes to radar, avionics and electronic communications, expressed concerns over an explosion and fire that occurred at a Hanwha factory in the city of Daejeon, about 143 kilometers south of Seoul, on February 14, 2019. It was the second explosion and fire at the plant in a 10-month period. Production delays caused by such events affect supply chains, the LIG representatives explained, adding that measures need to be taken to compensate for delays.
Government officials said they are working on the problem and that they are also making the exportation of South Korean defense products a priority.
Korea Aerospace Industries representatives suggested that government assistance could make South Korea defense exports more competitive from a price standpoint. Defense Ministry officials responded that they are in discussions with the Export-Import Bank of Korea to provide financial support for defense exports.
The South Korean government has been working to enhance the global competitiveness of its defense industry since 2010, with positive results, wrote defense analyst Felix K. Chang in an essay for the Foreign Policy Research Institute in April 2019.
“It eased the defense offset requirements on foreign companies, promoted greater competition among South Korea’s chaebols [large family-owned firms], and nurtured small- and mid-sized defense companies that could efficiently produce the components for combat systems,” he said.
Such measures, along with generous research and development investment, could push the country’s exports to exceed its previous record of U.S. $3.5 billion in 2019, Chang added.
Felix Kim is a FORUM contributor reporting from Seoul, South Korea.
