Seoul puts a premium on military imports

South Korea plans to boost self-reliance through the implementation of reforms that will provide advantages to local defence firms over foreign bidders.

The move was confirmed in a notice issued by the South Korean Ministry of Trade, Industry and Energy (MOTIE) on 11 August.

The ministry said that one of the proposed measures will introduce a “premium” on imports that could make foreign equipment up to 1.5 times more expensive to procure than similar locally manufactured products.

MOTIE also said that government, including the Ministry of National Defense (MND), will ensure that when defence imports are necessary foreign companies that operate partnerships with local firms will be favoured in procurement decisions.

MOTIE provided no further details but referenced the two proposals as part of a new “Korean-product priority acquisition system”. It added that the proposed reforms will boost domestic defence-industry revenues and jobs.

The ministry added that the reforms are aligned with a government objective to spend at least 80% of the modernisation expenditure contained in South Korea's defence budget on local products.

According to Janes data, South Korea currently spends about 65% of modernisation expenditure on local products. The majority of imports are from the United States. Other suppliers include France, Germany, Israel, and the United Kingdom.

South Korea's mid-term defence spending plan, which runs through 2021–25, proposes total defence funding of KRW300.7 trillion (USD270 billion). Two-thirds of this is for operating expenses, while the remainder will be allocated towards military modernisation, including procurement and research and development (R&D).