Falling defence sales in South Korea prompts pledge to boost industrial capability

17 December 2018

Concern is growing in South Korea about falling defence industry revenues. Reflecting the trend, Korea Aerospace Industries, which produces the T-50 Golden Eagle advanced jet trainer (a version of which is pictured here), posted a 30% fall in sales in 2017. Source: Korea Aerospace Industries/Park SooJin

South Korean Defence Minister Jeong Kyeong-doo has pledged to revitalise the country's defence industry by leveraging advances in 4th Industrial Revolution technologies such as artificial intelligence and robotics.

Jeong made the remarks in a statement by the Ministry of National Defense (MND) on 14 December following the release of statistics by the Korea Defense Industry Association (KDIA), which showed the country's defence companies collectively recorded a double-digit decline in sales in fiscal year 2017-18.

Jeong said, "We know that our defence industry is experiencing difficulties due to poor performance and sluggish exports," he said. "The government is trying to strengthen export support through defence diplomacy [and] ensure that the [South Korean] military … will play a role in helping revitalise the domestic market."

He added, "We will strive to secure the technological power of domestic companies and enhance export competitiveness by utilising the core technologies of the 4th Industrial Revolution in the military. [We will also] establish mid- and long-term plans to ensure stable and planned production conditions."

Jeong said efforts to strengthen the defence industry are also being channeled through the government's overhaul of the country's defence offset regime, plans to improve defence research and development capability, and its programme to promote the development of small and medium-sized enterprises (SMEs) within the defence sector.

According to the KDIA, its analysis of defence industry revenues showed total sales were KRW12.76 trillion (USD11.3 billion) in 2017-18, which represented a 13.9% decline compared with one year earlier. It added that the decline was the first it has registered since it started compiling such data in 1983.

KDIA reportedly attributed the decrease in sales to declining defence exports, increased costs for research and development, and "strengthened punitive measures" introduced by the MND's procurement agency - the Defense Acquisition Program Administration (DAPA) - following a series of corruption scandals.

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