{"id":17723,"date":"2020-08-17T08:50:00","date_gmt":"2020-08-17T08:50:00","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2020\/08\/17\/reform-efforts-in-south-korea-create-ecosystem-for-defense-industry-growth\/"},"modified":"2026-08-07T21:41:09","modified_gmt":"2026-08-07T21:41:09","slug":"reform-efforts-in-south-korea-create-ecosystem-for-defense-industry-growth","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/top-100\/2020\/08\/17\/reform-efforts-in-south-korea-create-ecosystem-for-defense-industry-growth\/","title":{"rendered":"Reform efforts in South Korea create ecosystem for defense industry growth"},"content":{"rendered":"\n

MELBOURNE, Australia \u2014 South Korea has over the past decade become a defense industry powerhouse in its own right, and it\u2019s seeking to widen its reach, with progress in international markets in recent years marking the maturity of its defense articles.<\/p>\n\n\n\n

This year\u2019s Defense News Top 100 list<\/a> of the biggest defense companies in the world features four South Korean businesses. They are Hanwha (ranked 32rd), Korea Aerospace Industries (55th), LIG Nex1 (68th) and Hyundai Rotem Company (95th), all of which made last year\u2019s list.<\/p>\n\n\n\n

Continued reform<\/b><\/p>\n\n\n\n

The strong performance of South Korean defense companies comes in the wake of a series of reforms over the past decade, with the latest designed to consolidate industrial gains and create momentum for growth.<\/p>\n\n\n\n

The defense industry reforms are part of President Moon Jae-in\u2019s Defense Reform 2.0 program announced in 2018 \u2014 a complement to efforts seeking to create a slimmer, yet more efficient South Korean military that is less reliant on foreign defense technology.<\/p>\n\n\n\n

The push for further self-reliance is most prominent in Korea Aerospace Industries\u2019 KF-X program. KAI is developing a next-generation fighter for the South Korean Air Force. Although an American GE F414 turbofan will power the aircraft, its avionics will primarily be indigenous. These include the active electronically scanned array radar under development by Hanwha and the country\u2019s Agency for Defense Development, with support and some components supplied by Israel\u2019s Elbit Systems.<\/p>\n\n\n\n

Click here to see the Defense News Top 100 list.<\/b><\/a><\/p>\n\n\n\n

Defense Reform 2.0 also puts emphasis on defense industry investment, and it comes as little surprise that the domstic market still takes up the biggest share of the pie where sales are concerned, backed up by the steady growth in defense spending: South Korea\u2019s defense budget grew 20 percent from 2009 to 2017, reaching $43 billion.<\/p>\n\n\n\n

Export success<\/b><\/p>\n\n\n\n

The reform program also places an increased priority on defense exports. The country is already successful in this area, with research by the Stockholm International Peace Research Institute think tank showing the country was the 11th biggest arms supplier in the world in 2017, with sales totaling $5.5 billion.<\/p>\n\n\n\n

In a further indication of how much South Korea\u2019s industry has grown, SIPRI also noted in a 2018 report that the country\u2019s defense exports grew 94 percent in the 10 years prior, a growth figure only bettered by Turkey for the same period.<\/p>\n\n\n\n

This growth has been underpinned by two of the highest-profile South Korean defense exports in the past decade: the KAI T-50 Golden Eagle family of trainer and light combat aircraft, and the Hanwha K9 Thunder self-propelled howitzer.<\/p>\n\n\n\n

\"\"
US soldiers look at a performance of the Black Eagles, the aerobatic team of T-50 jets belonging to South Korea’s air force, during “Air Power Day” preview at US Osan Air Base in Pyeongtaek on September 20, 2019. (JUNG YEON-JE\/AFP\/Getty Images)<\/figcaption><\/figure>\n\n\n\n

The T-50 was earmarked by the Air Force as its mainstay advanced trainer and light combat aircraft. Despite losing a number of trainer competitions, including in Poland, Singapore and the United States, the Golden Eagle has since scored a number of notable contracts for export.<\/p>\n\n\n\n

Compared to its rivals in the trainer market, such as the Leonardo M-346 and the Boeing T-7, the main draw of the T-50 family is its combat capability in the form of the TA-50 and FA-50 equipped with sophisticated combat capabilities in the form of radars and precision weapons employment capability. This makes the aircraft attractive to nations unable to afford a high-end trainer with a light attack capability, and the list of the type\u2019s customers bears this out, with Indonesia, Iraq, the Philippines and Thailand operating the type in their respective air forces. The Philippine Air Force used its FA-50PH fleet to attack Islamic State militants in the southern part of the country in 2018.<\/p>\n\n\n\n

Meanwhile, Hanwha\u2019s K9 Thunder has carved a niche for itself in the global market for self-propelled howitzers. The 52-caliber, 155mm system has been selected by a number of NATO nations, beating out the similar Panzerhaubitze 2000 by Germany\u2019s Rheinmetall in Estonia, Finland and Norway. Turkey is building the K9 under license as the T-155 Firtina.<\/p>\n\n\n\n

The system has also been selected for license production by India and Poland, and had previously been selected by Australia in the early part of the 2010s only to be canceled following budget issues caused by the global financial crisis.<\/p>\n\n\n\n

Hanwha is also one of two companies left in the running to supply the Australian Army with a new infantry fighting vehicle. The AS21 Redback, which is based on the K21 vehicle operated by the South Korean Army, is to take part in an evaluation program against the Rheinmetall KF41 Lynx to supply 450 vehicles to replace M113 armored personnel carriers.<\/p>\n\n\n\n

\"\"
South Korea’s Hanwha makes the AS21 Redback infantry fighting vehicle. (Hanwha)<\/figcaption><\/figure>\n\n\n\n

The evaluation will see three of each vehicle delivered to Australia for testing, with the first two Redbacks due to reach Australia at the end of August, having left South Korea by ship late last month.<\/p>\n\n\n\n

Post-pandemic support<\/b><\/p>\n\n\n\n

Like much the rest of the world, the COVID-19 pandemic has hit South Korea hard, though the worst appears to be over for the country. The local defense industry was forced to adjust financially and operationally, and it remains unclear how revenue will be hit by the events of 2020.<\/p>\n\n\n\n

The pandemic has claimed at least one sale for the South Korean defense industry, with Argentina, which had appeared set to be the next customer for the T-50 family, deciding in April to put off the acquisition indefinitely. The South American country is yet to sign a contract, despite choosing the aircraft for purchase in July 2019.<\/p>\n\n\n\n

However, the South Korean government is not waiting for foreign action. Defense Minister Jeong Kyeong-doo has unveiled plans for the country to spend more on locally produced defense articles, partly as a move to help curtail the effects of the pandemic.<\/p>\n\n\n\n

Jeong said during a mid-June meeting with industry CEOs that his ministry plans to adjust spending plans to continue its drive to spend more on indigenous products, and move delivery timelines to reflect the reality of schedule delays while also waiving penalties for late payments.<\/p>\n\n\n\n

He also plans to expand an existing strategy aimed at establishing \u201cdefense industry innovation clusters\u201d; this move adds to the first one established in April with an initial government investment. As a result, more funding will be made available to industry and research institutes, and will be used to support regional collaboration in defense-related research and development as well as manufacturing.<\/p>\n","protected":false},"excerpt":{"rendered":"

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