Only the Overseas Market for Weapon Imports Expanded

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Although the defense budget increases every year due to the introduction of advanced weapons, there is criticism that the focus is solely on importing overseas weapons, highlighting the need for a defense line to protect domestic companies. As imports of foreign weapons increase, there are concerns that follow-up Maintenance, Repair, and Overhaul (MRO) projects are monopolized by overseas companies, causing domestic defense companies to lose their business opportunities.

According to the government on the 30th, the defense capability improvement budget for weapon procurement in 2017, when the Moon Jae-in administration took office, was 12.6806 trillion KRW. Of this, domestic procurement costs accounted for 8.8332 trillion KRW (69%), and overseas procurement costs were 3.8474 trillion KRW (30%). However, last year, the domestic procurement share decreased to 10.6278 trillion KRW (64%), while the overseas procurement share increased to 5.826 trillion KRW (35%).

Most of the upcoming weapon procurement projects are also foreign weapons. With the plan to build a 30,000-ton light aircraft carrier underway, the F-35B (expected procurement amount of 3 trillion KRW) has become a foregone conclusion, followed by overseas procurement projects such as the second phase of large attack helicopters (2 trillion KRW), large transport helicopters (2 trillion KRW), CH-47 performance upgrades (1 trillion KRW), and F-15K performance upgrades (1 trillion KRW). The industry predicts the total scale will exceed 12 trillion KRW.

Therefore, the industry voices the need to promote cooperative production through offset trade when importing foreign weapons. An industry official said, "When the Air Force procured the F-15K, parts such as the forward fuselage were produced domestically," adding, "If a foreign helicopter is selected for the Army's second large attack helicopter project, cooperative production should be considered."

As imports of foreign weapons increase, MRO projects handled by overseas companies are also expected to grow. According to the 'Military MRO Status and Outlook Report' published by the Korea Institute for Industrial Economics and Trade, the budget allocated to domestic companies from 2015 to last year was 4.1 trillion KRW, accounting for 67% of the total. However, from this year to 2023, it is expected to decrease to 6.6 trillion KRW with a share of 61%. Conversely, overseas companies received 2 trillion KRW (33%) from 2015 to last year but are predicted to secure 4.1 trillion KRW by 2023, increasing their share to 39%.

Jang Won-jun, head of the Defense Industry Research Department at the Korea Institute for Industrial Economics and Trade, said, "When importing foreign weapons, the Buy Korea policy should be promoted through offset trade," adding, "This can lead to increased localization of parts and foster small and medium-sized venture companies."

This content was produced with the assistance of AI translation services.