2024.06.12. The Fair Economy — The Office of the President of the Republic of Korea said that In Seong-hwan, Second Deputy Director of the National Security Office, chaired the "Fifth Defense Export Strategy Evaluation Meeting" on the 12th at a meeting room in the presidential office in Yongsan-gu, Seoul.
Led by the National Security Office, the meeting brings together government officials and industry executives to discuss current issues and strategies for defense exports. This is its fifth session.
According to the presidential office, the meeting was held to assess the achievements and outlook of South Korea's rapidly growing defense industry since the current administration took office, and to explore strategic ways to support defense companies in opening up overseas markets. In particular, participants had an in-depth discussion on how to resolve difficulties domestic firms may face as export markets diversify into countries such as Peru and Angola from the first half of this year.
Senior officials attended from government ministries including the Ministry of National Defense, the Ministry of Economy and Finance, the Ministry of Foreign Affairs, the Ministry of Trade, Industry and Resource, and the Defense Acquisition Program Administration; from defense companies including Hanwha Aerospace, Hyundai Rotem, LIG Nex1, KAI, HD Hyundai Heavy Industries, Hanwha Ocean and Poongsan; and from organizations including the Korea Defense Industry association, the Defense Trade Support Center at KOTRA, and KRIT.
The participating agencies and defense companies agreed to cooperate closely to achieve this year's target of $20 billion in defense exports. Riding on the momentum of completing export contracts with six countries, including Poland and Peru, in the first half of the year, the government and private sector plan to work together to export weapon systems to at least 15 countries during the remaining period to meet the $20 billion target.
Defense companies noted that demand among major defense-purchasing countries is shifting toward requests for a "comprehensive package" that includes localization, technology transfer and the establishment of military units, amid fluid security conditions stemming from international conflicts. They stressed that full-fledged government support is needed to carry out this type of defense export.
In response, relevant ministries including the Ministry of National Defense and the Defense Acquisition Program Administration pledged to continue high-level consultations with individual countries on defense cooperation, and to actively provide support by forming joint government negotiating teams when necessary.
The government has achieved record-high defense exports averaging over $15 billion annually in the past two years, with the number of defense export destinations increasing to 12 countries in 2023. As the excellence of K-Defense becomes known worldwide, more countries are seeking to expand defense cooperation with South Korea.
Taking these changes into account, the government plans to pursue country-specific, tailored export support. It will broaden cooperation with existing partner countries, while offering countries seeking new cooperation the approach best suited to their particular security threats, thereby enhancing the competitiveness of South Korea's defense industry. The government also stressed that it will continue government-wide communication and cooperation on financial support, an essential requirement for global defense cooperation.
The government and industry took note of the "lock-in effect" created by defense exports, and agreed to further activate bilateral defense and military supply committees with each country through the expansion of K-defense, using these committees as leverage to broaden cooperation into diplomatic, security and industrial fields as well.
The lock-in effect refers to the phenomenon where, after Country A adopts weapon systems from Country B, security cooperation benefits are expected between the two, which can then develop into enhanced compatibility of weapon systems and strengthened military cooperation.
Further, the government and industry agreed to pursue pilot industrial cooperation projects linked to defense exports, establishing and expanding an "ODA industrial cooperation + defense export" model. For example, when exporting aircraft as part of a weapons system, the South Korean government would set up an aviation technology training program, based on official development assistance, at a university in the importing country. Going forward, defense exports will be used to further expand the scope of cooperation into areas such as "defense + industry," "defense + education" and "defense + R&D."
Closing the meeting, Second Deputy Director In Seong-hwan said, "Since this administration took office, the president personally chaired meetings on defense exports in both 2022 and 2023, and we achieved results by reflecting the opinions raised at those meetings, including designating defense technology as a new growth and source technology." He added, "The government shares the view that defense exports and the defense industry will play a very important role in the national economy and job creation going forward, so let us continue to work together, government and industry alike." In particular, the Deputy Director urged that "for the success of K-defense, companies need to maintain a broader perspective and continue to engage in good-faith competition."
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