ឧស្សាហកម្ម​ការពារ​ជាតិ​របស់​កូរ៉េ​ខាង​ត្បូង​បង្កើន​ការ​បញ្ជា​ទិញ​ពី​បរទេស​ទ្វេ​ដង

 Government steps in to make 'high quality' arms competitive globally

Hyundai Rotem has signed a deal to build 180 tanks for Poland. (Photo courtesy of the company)

SEOUL -- The South Korean defense industry has doubled orders from overseas compared with last year, underscoring the government's ambitions of transforming the country into an arms-exporting powerhouse.

President Yoon Suk-yeol visited Korea Aerospace Industries' (KAI) main production hub in Sacheon Thursday to hold a strategy meeting concerning how the public and private sectors can boost weapons exports.

"The defense industry is the new growth engine," said Yoon.

This will be done by improving conditions for research and development, as well as for investments, Yoon said, adding "we'll build an ecosystem that will shift the defense industry from a sector centered on internal demand to one that is centered on exports."

Yoon also toured weapons factories operated by Hanwha Aerospace and Hyundai Rotem that day.

KAI's factory is adjacent to Sacheon Airport, which is used for military and civilian purposes. Since summer, the company has been using the airport to stage test flights for prototypes of the KF-21, South Korea's first homegrown fighter. Mass production is due to start 2026.

The KF-21, developed in conjunction with Indonesia, is billed as a 4.5 generation fighter, meaning its capabilities fall between fourth-generation fighters -- the mainstream type in service globally -- and cutting-edge fifth-generation fighters.

KAI is responsible for assembling the fighter, collecting data from test flights, and improving designs of the KF-21.

South Korea's air force plans to add 120 KF-21s to its fleet, and Indonesia's military will receive some jets as well.

The South Korean government has set aside 8.8 trillion won ($6.6 billion) in development funds for the project. By setting the price of the aircraft relatively low, Seoul hopes to appeal to emerging economies looking for cost-effective equipment, making the new plane its arms export centerpiece.

KAI's current mainstay export is the FA-50 light attack aircraft, based on technology from U.S. company Lockheed Martin. The company inked a deal in September to sell 48 FA-50s to Poland for $3 billion.

Warsaw is buying more than $12 billion in defense equipment from South Korea, including 180 tanks from Hyundai Rotem as well as artillery and ammunition from the Hanwha group, as it rushes to build up defenses amid the conflict between Russia and Ukraine next door. Hyundai Rotem is in talks with a Polish partner on manufacturing tanks in the country.

The Polish government has indicated that it opted for South Korean gear because, after 70 years of preparing for a potential war with the North, the equipment "must be of the highest quality."

Looking beyond Poland, the Philippines has deployed KAI jets while Egypt and Malaysia are negotiating purchases of the same model. The United Arab Emirates signed a multibillion-dollar deal with South Korean defense contractor LIG Nex1 for a surface-to-air missile system.

Hanwha Aerospace has a $700 million-plus contract with the Australian government to supply armored vehicles and self-propelled artillery. The company is working on setting up a factory there -- the first overseas production facilities for a South Korean defense contractor -- slated to come online in 2024.

South Korea's defense exports have skyrocketed recently, from around $3 billion in overseas orders a year to $7.2 billion in 2021. This year, the tally has swelled to $17 billion as of the end of October, with two months still to go.

The surge came amid a push by previous President Moon Jae-in's administration to invest more in research to bolster domestic production of defense equipment. While Yoon's government has criticized much about its predecessor, it has kept this policy in place.

Hopes for a long-term boost to the defense sector have lifted stocks. Even as the benchmark KOSPI index has slumped around 20% so far in 2022, KAI and Hyundai Rotem have each climbed roughly 40%, with Hanwha Aerospace soaring roughly 50%. Securities companies expect all three, plus LIG Nex1, to keep seeing growth in both revenue and profit over the medium term.

South Korea has started to reorganize businesses to bolster the defense industry. In September, the Hanwha Group was named as the preferred bidder to purchase Daewoo Shipbuilding & Marine Engineering (DSME), the third-largest shipbuilder in the world, from state-owned lender Korea Development Bank.

By acquiring DSME's naval vessel business through the deal, Hanwha said this will establish an integrated defense portfolio ranging over "land, sea and air."

The acquisition will contribute to expanded exports of submarines and warships through shared customer bases in the Middle East, Europe and Asia, according to Hanwha.

KAI traces its origins to a merger of aerospace segments once held by the Samsung, Hyundai and Daewoo conglomerates. The consolidation was led by the government following the Asian currency crisis. South Korea's public and private sectors appear poised to shake up the defense industry further going forward.

Nikkei Asia