January 16 2012, Seoul: As the global economy continues to struggle, countries around the world are increasingly seeking to tighten military spending.
Top officials at the state-run Defense Acquisition Program Administration (DAPA), however, see it rather as an opportunity for South Korea to increase its global market share in the defense industry.
In fact, the country last year exported a record amount of defense goods worth $2.4 billion as high-tech military products such as T-50 training jets successfully entered the foreign market, exceeding its $1.6 billion goal.
They point out that South Korean defense companies armed with advanced technology, quality and attractive pricing will continue to expand their territories overseas at a time when everyone wants to get “better value for their money.”
“DAPA set a goal of nearly doubling exports to $3 billion this year, compared to its 2011 export target of $1.6 billion,” said DAPA commissioner Noh Dae-lae in an interview with The Korea Times Friday.
“I believe DAPA can exceed its goal once again as export deals worth $5 billion are currently under negotiations.”
The DAPA chief said South Korea may seal new foreign sales deals for T-50 high-end trainers, propeller-driven KT-1 basic trainers and military support ships in the first half of the year.
Korea’s growing dominance
Noh said South Korea will become a major player in the global defense market, overtaking nearly all competitors, including Germany, France and the United Kingdom.
“South Korea can boost its annual volume of arms exports to $10 billion,” said the former head of the Public Procurement Service.
Only the United States signed contracts for weapons worth more than $10 billion in 2010, according to the Global Defense Market Year Book 2011 by the Defense Agency for Technology and Quality.
The United States sealed deals for weapons worth $21.2 billion, taking up 52.7 percent of the global export market that year, followed by Russia with $7.8 billion, or 19.3 percent.
The United Kingdom, France and Germany, which sold more than $3 billion worth of weapons on average over the past several years, only managed to sign deals worth $1.4 billion, 1.3 billion and $100 million, respectively in 2010.
South Korea’s arms exports reached a new high of $1.17 billion in 2010, despite the global economic slowdown
Laying foundation for tenfold growth
Noh said South Korea’s export volume of arms products will see a significant leap in the next few years as it has successfully laid the foundation for stable demands last year.
“Unlike other commodities, defense products require at least 20 to 30 years of maintenance and support from manufacturers,” he said.
“Once we gain trust in foreign markets, more contracts are certain to follow.”
He said the price of weapons manufactured here will significantly drop as the country’s defense firms continue to increase exports and enjoy economies of scale.
South Korea signed a $400 million contract with Indonesia to sell 16 T-50s in May last year, becoming the world’s sixth country to export a supersonic aircraft.
It also won a $1.12 billion deal to supply three 1300-ton, Type-209 submarines to the Southeast Asian country.
Seoul is currently carrying out the final round of a feasibility study for a new jet development project, codenamed KF-X, in partnership with Indonesia, which has expressed a willingness to buy 50 jets and shoulder 20 percent of the $5 billion development funding.
Turkey has also expressed its intention to invest funds worth 20 percent of the KF-X project.
He said the country's defense industry will soon turn into an export-oriented one, given that the local defense market amounted to $7 billion last year.
“South Korea’s defense products have a competitive edge over those from other countries as developers here take into account all possible threats from North Korea,” he said.
He stressed that he will make extensive field tests mandatory prior to deploying them from this year in an effort to ensure zero-defect products.
Mutual benefits with allies
Noh said a significant portion of arms deals with South Korea have been made with the country’s blood allies that fought to defend democracy on the peninsula during the 1950-53 Korean War.
He noted that DAPA is ready to offer a generous technology transfer especially to its allies and those who participated in the Korean War.
“We had to acquire technologies in a very humiliating way,” Noh said. “We do not want our allies to go through the same ordeal that we had to go through.”
“It is not desirable to think of only maximizing profits in dealing with defense exports,” he said. “I think defense exports can be undertaken for mutual benefit and in partnership, which helps our allies deter possible threats from other nations with conflicted interests.
Korea designated the defense industry as one of the country’s new growth engines of the economy in 2009.
Who is Noh Dae-lae?
Noh Dae-lae is the sixth commissioner of the state-run Defense Acquisition Program Administration (DAPA). The 55-year old has a straightforward personality and extensive experience in financial planning and budget management.
He spearheaded a number of crisis management measures, such as job creation, when the nation was hit by the global economic downturn in 2008.
The seasoned bureaucrat studied law at Seoul National University, completed a doctoral course on finance and economics at the University of Cologne in Germany and earned his Ph.D. in public administration at Kyungwon University.
Noh entered public service after passing the examination for higher civil service in 1979. He is known for getting things done and making decisions in a rational manner.
The DAPA chief worked at the Economy Planning Board until 1993 and headed the public administration coordination division under the Prime Minister’s Office from 1994 through 1996.
He served as a finance and economics advisor at the Korean Embassy in Frankfurt and later as a finance and economy counselor at the Korean Embassy to the United States.
Noh was also a director general for the policy coordination bureau at the Ministry of Finance and Economy, assistant secretary at the Ministry of Strategy and Finance and an administrator at the Public Procurement Service.
Source: Korea Times
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