Financial regulation should be removed immediately

Buoyed by the recent flurry of contract signings for exports of major weapons systems, expectations are growing for South Korea to emerge as a powerhouse of the global defense industry. According to defense authorities and industry sources on Monday, the nation’s exports of defense systems amounted to $14 billion (approximately 18.6 trillion won) last year, making it part of the top 10 defense exporters for the second consecutive year.

This fell short of the earlier target of $20 billion as well as 2022’s overseas sales of $17.3 billion. Yet the exports hold diverse significance. For starters, the number of export markets — which stood at only four, including Poland in 2022 — expanded to 12 countries, covering the United Arab Emirates, Finland and Norway. The different types of weapons systems being exported also diversified from six to 12.

The Yoon Suk Yeol administration has been pushing for an ambitious plan to enable the nation to join the world’s four major defense industry powerhouses by 2027. Earlier this year, the government also vowed to boost the defense industry as a future growth engine.

The Stockholm International Peace Research Institute, an independent think tank on global security, said South Korea accounted for 2.4 percent of the global weapons market during the 2018-2022 period, ranking ninth.

Heralding a promising trend, LIG Nex1 has struck a $3.2 billion contract to export Cheongung II midrange surface-air-to missiles to Saudi Arabia, the defense ministry announced on Feb. 6. The deal follows a $3.5 billion contract for exports of the missile systems to the UAE in 2022. The Cheongung II is called the "Korean Patriot missile system," capable of intercepting approaching missiles at altitudes up to 400 kilometers.

Domestic weapons manufacturers are equipped with price competitiveness paired with fast delivery ability compared to competing peers in the United States and European Union. The recent deal is anticipated to help further diversify the areas and items of the "K-defense" industry.

The FA-50 aircraft, manufactured by Korea Aerospace Industries, has been cited as the most promising item for Egypt’s envisioned introduction of advanced trainer jets. Hanwha Aerospace and Hyundai Rotem already clinched contracts to sell K9 self-propelled artillery, K2 tanks and FA-50 fighter jets to Poland in 2022.

Financial support for domestic defense businesses has been urgent to facilitate their bids for exports since the exports of defense systems entail inter-government deals. Due to the usually huge amount of contract money, government financial support is essential, offering lending at low interest rates, among others.

Yet the Export-Import Bank of Korea has largely failed to provide financial assistance to domestic companies due to a limit in legal capital amount fixed at only 15 trillion won over the past 10 years. Concerns are growing that the envisaged second deal for weapons exports worht 30 trillion won to Poland will fall flat unless the bank offers due financial support.

The revision bill designed to expand the bank’s capital to up to 30 trillion won has been pending at the National Assembly amid bipartisan bickering. The rival political parties should join efforts to deal with the relevant bill at the earliest possible date instead of being engrossed in efforts to garner voter support ahead of the upcoming April 20 general elections.

Along with the need to offer further financial support for the defense industry, there should be more efforts to prevent the potential leak of defense technologies. Such a need gained momentum when an Indonesian researcher was caught attempting to steal technology related to the KF-21 supersonic fighter jet, which is being co-developed by South Korea and Indonesia. Under the KF-21 project, Indonesia is supposed to pay 1.6 trillion won, equivalent to 20 percent of the development cost, in return for getting the transfer of some technology from Korea for the production of 48 aircraft on its own land. Yet Indonesia cannot evade criticism for having attempted to steal the technology without paying the remaining overdue 1 trillion won.

The government and information authorities should double down on efforts to prevent the possible leakage of defense industry technologies committed mostly by retired or foreign employees to prevent them from undermining national interests.

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Booming 'K-defense'

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12.02.2024
Financial regulation should be removed immediately

Buoyed by the recent flurry of contract signings for exports of major weapons systems, expectations are growing for South Korea to emerge as a powerhouse of the global defense industry. According to defense authorities and industry sources on Monday, the nation’s exports of defense systems amounted to $14 billion (approximately 18.6 trillion won) last year, making it part of the top 10 defense exporters for the second consecutive year.

This fell short of the earlier target of $20 billion as well as 2022’s overseas sales of $17.3 billion. Yet the exports hold diverse significance. For starters, the number of export markets — which stood at only four, including Poland in 2022 — expanded to 12 countries, covering the United Arab Emirates, Finland and Norway. The different types of weapons systems being exported also diversified from six to 12.

The Yoon Suk Yeol administration has been pushing for an ambitious plan to enable the nation to join the world’s four major defense industry powerhouses by 2027. Earlier this year, the government also........

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