Is K-Defense Expanding Local Facilities in the Middle East? [Yang Nakkyu's Defence Club]
South Korea and Saudi Arabia to Pursue Joint Development, Local Production, and Joint Exports to Third Countries
Custom Export Strategies Planned After Building Local Facilities in the Middle East
The South Korean defense industry is expected to expand its local production facilities in Middle Eastern countries. On November 18 (local time), President Lee Jaemyung agreed to further strengthen defense cooperation with President Mohammed bin Zayed Al Nahyan of the United Arab Emirates (UAE) during a summit, mentioning joint exports to third countries through local production.
Kang Hoonshik, Chief Presidential Secretary, stated during a briefing after the summit, "Moving beyond a simple export and purchase structure, the two countries agreed to pursue joint development, local production, and joint exports to third countries from an industrial perspective, and to support the UAE in securing independent operational capabilities for Korean defense equipment." He added, "By establishing this comprehensive value chain cooperation model, we expect to increase the chances of South Korean defense companies winning contracts in defense export projects worth more than 15 billion dollars (approximately 21 trillion won)."
Kang first visited the UAE as the President's Special Envoy for Strategic Economic Cooperation. It is known that he focused discussions on the UAE Air Force's introduction of the Korean supersonic fighter jet KF-21. The presidential office's emphasis on strengthening defense cooperation between the two countries is interpreted as being aimed at joint development and local production of weapon systems such as the KF-21. The KF-21, currently under development, is a 4.5-generation fighter jet. The UAE is considering participating in the development of a fifth-generation KF-21 (an upgraded model with stealth capabilities). The UAE side reportedly wants to customize the fifth-generation KF-21 for exclusive use and to produce it locally.
There could also be rapid progress in expanding local facilities for ground weapon systems. Most of the UAE's currently operated ground and aerial weapon systems are reportedly outdated, making large-scale replacements inevitable. Among the UAE's weapon systems, about 390 tanks, 60 fighter jets, and 80 self-propelled artillery units are known to be up for replacement.
Among South Korean defense companies, Hanwha Aerospace is already expanding its local production system into the Middle East. In November last year, Hanwha Group Vice Chairman Kim Dongkwan and Abdullah, Saudi Arabia's Minister of National Guard, agreed to cooperate on "Vision 2030," which aims to locally produce 50% of military supplies by 2030. They also confirmed the establishment of a new regional headquarters (RHQ) corporation in Saudi Arabia. The RHQ mainly handles internal activities such as business strategy planning and management of affiliated companies, rather than specific external business operations. Multinational companies that establish an RHQ must have a separate office or business entity in Saudi Arabia to conduct weapons business locally. According to the Stockholm International Peace Research Institute (SIPRI), Saudi Arabia ranked fifth in global defense spending in 2022, spending 75 billion dollars (about 104.88 trillion won), following the United States, China, Russia, and India.
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An industry official said, "K-Defense exports are contributing not only to simple arms exports but also to strengthening supply chains, creating jobs, and developing the industrial ecosystem through localization strategies that include local production and maintenance." The official added, "Hanwha Aerospace's localization strategies in Poland, Australia, and Romania are prime examples."
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