Defense Export Amount Decreasing Every Year Under the Current Government

Minister of National Defense Seo Wook is delivering opening remarks at the 'Defense Industry CEO Meeting' held on the 18th at KINTEX in Goyang, Gyeonggi Province. Photo by Kang Jin-hyung, Goyang.

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] It has been revealed that defense industry export amounts have been decreasing every year under the current government. Since the export amount has not exceeded the 2 trillion won mark, there are concerns that the export market is not being properly targeted.

According to the government on the 23rd, defense exports reached 2.7358 trillion won in 2016. However, it recorded 1.7013 trillion won in 2017, 1.9991 trillion won in 2018, and fell again to 1.7698 trillion won in 2019.

In particular, exports by small and medium-sized enterprises (SMEs) were only 32.7 billion won in 2017, 33.7 billion won in 2018, and 49.1 billion won in 2019. The increase in SME exports in 2019 is analyzed to be due to offset trade related to large-scale weapon procurement projects. Offset trade is a type of trade where, when purchasing weapons from abroad, certain counter-benefits are received such as exporting domestically produced weapons, equipment, or parts.

By sector, firepower showed an increasing trend. Hanwha Defense’s K-9 self-propelled howitzer began exports to India, Finland, and Norway in 2017, and extended to Estonia in 2018. Firepower export amounts were only 199.1 billion won in 2017 but increased to 226.5 billion won in 2018 and 532.9 billion won in 2019. The shipbuilding sector, once called the export hero of our defense industry, recorded 428.3 billion won in 2017 but decreased by 291.4 billion won in 2018 and was only 29.8 billion won in 2019.

The Korea Institute for Industrial Economics & Trade recently published the report “Top 10 Promising Countries for Defense Exports in 2020,” stating, “The government has set a goal of achieving $10 billion in orders, but the export ratio compared to domestic defense industry production remains only 15%,” and “Going forward, while focusing on COVID-19 response welfare and revitalizing the domestic economy, defense budgets and weapon acquisition budgets are expected to decrease.”

The report identified promising defense export countries for the next five years as India and Saudi Arabia, which rank 3rd to 4th in defense budgets and have high weapon purchasing power, along with Australia, Poland, and Colombia.

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