Defense Industry Equipment
Republic of Korea
Overview
2004 2005 2006 (estimated)
Total Market Size 4,595 4,468 4,900
Total Local Production 4,400 4,100 4,200
Total Exports 417 262 300
Total Imports 612 630 1,000
(Unit: USD million)
[Source: Ministry of National Defense (MND), Korea Defense Industry Association (KDIA) , Joint US Military Affairs Group-Korea (JUSMAG-K)]
[ USD1= 1,200 Won (2004), 1,100 Won (2005), 950 Won (2006)]
The Republic of Korea (ROK) is currently seeking to modernize its armed forces to a level commensurate with its economic strength. The ROK is in need of significant materiel modernization and replacements that will involve major investments. Although U.S. defense companies have been very successful in selling their products to Korea, future sales could be influenced by European competitors who are becoming increasingly significant in the market. Nevertheless, Korea should continue to be a good market for U.S. defense companies especially when competitive products and services and good offset packages are offered.
The 2007-2011 mid-term plan was developed in 2006, with an emphasis on research and development and allocating 20 percent of arms buildup expenditures to improve domestic defense technology as well as defense industry development. The Ministry of National Defense (MND) plans to steadily raise defense spending to 2.89 percent of Gross Domestic Product (GDP), from the current 2.57 percent level, by 2011. The military plans to invest about USD156 billion in force improvement programs, during 2007-2011, to acquire advanced weapons and equipment as well as change the command structure.
Recently interoperability has become less of a factor, when purchasing equipment, due to Korea’s desire to diversify sources of supply. It is also expected that there will continue to be tension between indigenous development and cost-effective acquisition. The MND is trying to solve this dilemma by demanding a high degree of technology transfer and offsets for projects. Currently the most important elements for purchasing decisions by MND are price, technology transfer and offsets. The MND is aggressively seeking to increase competition and diversify their sources of supply. U.S. industry must closely follow any and all developments in programs and be prepared to move quickly if the need arises. The Korean government has made it clear that they will procure leading edge technologies to defend Korea, which presents opportunities for the U.S. defense industry.
Best Products/Services
- Military Aerospace (fighters)
- Avionics
- C4I
Opportunities
F-15 Follow-on (FX-follow on; est. $2 billion)
The ROKAF strongly supports an additional procurement of 20 F-15Ks. Currently, 20 “F-15K Class” fighters are in the ROK Defense Mid-Range Plan (DMP) with a 2007 program start planned.
Airborne Mine-sweeping Counter Measures (AMCM; est. $500 million)
The ROKN plans to procure eight MH-60 class mine warfare helicopters by 2011.
Next Generation Frigates (FFX)
The ROKN plans to deploy a total of nine 2,500 ton class frigates by 2018. The delivery of one ship per year will begin from 2010-2018.
Resources
Trade Shows
Korea Aerospace & Defense Exhibition (Seoul Air Show 2007)
October 16–21, 2007
Naval & Defense 2007
October 24-27, 2007
Key Contacts
Ministry of National Defense (MND)
Local Contact
(Mr.) Yong Tak Lee
Senior Commercial Specialist
Commercial Service Korea
U.S. Embassy
32 Sejong-ro Jongro-gu
Seoul 110-710 Korea
Tel: 82-2-397-4509
Fax: 82-2-739-1628
Email: yong.tak.lee@mail.doc.gov
Website: www.buyusa.gov/korea