South Korea Defence & Security Report

Providing expert analysis, independent forecasts and competitive intelligence on the defence & security industry.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Security Risk Reward Index, Company Profiles and Global, Regional and Country Industry Overviews.

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South Korea Defence & Security Report
Product Price
$1,295.00

BMI View: We expect South Korea's defence budget to continue increasing in absolute terms in the next five years. This will be driven by South Korea's need to maintain well-prepared and well-equipped armed forces to deter, or defend from, an attack from North Korea. Moreover, the 2014 Defence White Paper puts significant emphasis on the government's desire to continue expanding the domestic defence market, providing additional support to private companies seeking to participate and increasing exports worldwide. This will contribute to opening up development opportunities for both international and national companies operating in the defence sector.

The conflict that has been characterising South Korea's relationship with North Korea in the past sixty years remains to date the country's main driver for defence spending. Indeed, despite many attempts from Seoul to convince Pyongyang to establish a dialogue and resolve the situation peacefully, the latter has continued to carry out nuclear tests and regularly threatens to attack the former. As such, South Korea is constantly working to maintain and upgrading the equipment and capabilities of its armed forces in order to be prepared for an eventual attack or even as a simple deterrent. Significantly supported by the US, which has 29,300 troops on the territory and supplies a significant share of the country's equipment, South Korea maintains its advantage over its northern neighbour, but a new strategy is necessary if the situation does not drastically change in the near future - that is, if North Korea does not collapses.

The 2014 Defence White Paper highlights such strategy, which is focused on two main objectives. Firstly, South Korea will reorganise its armed forces in order to ensure that they are as flexible and adequately prepared as possible in the event of an attack from the North. The army will therefore see a reduction in the number of personnel, but this reduction will be compensated by a number of measures to increase its efficiency, including: better training, better living conditions, better pay and state of the art equipment and capabilities. The navy and the air force will maintain the same number of personnel, but a significant upgrading of their platforms is foreseen in the procurement programmes for the coming years. For instance, in March 2015 KAI was selected with its partner Lockheed Martin to develop 120 indigenous fighter jets for the air force, while in June 2015 the Defence Acquisition Programme Administration (DAPA) announced that it will invest in the development of class frigates and surface-to-air missiles for its navy.

Secondly, in order to fulfil these needs, South Korea will seek to expand and diversify its domestic defence. The Defence White Paper puts particular emphasis on technological transfer with key defence cooperation partners and on increased investments in the country's defence R&D facilities. It will also provide more support for private companies looking to enter the domestic defence market. These steps will not only ensure that the country's exports increase in the coming years as the domestic market expands, but will also contribute to decreasing the country's dependence on its international and regional defence partners (especially the US) in relation to capabilities.

Key BMI Forecasts:

  • We forecast South Korea's defence spending to reach USD34.1bn by 2015, which would signify a 2.6% year-on-year (y-o-y) decrease. It will however be compensated by an increase of defence spending in 2016, reaching USD36bn for a 5.4% (y-o-y) increase.

  • We forecast South Korea's defence spending to decrease to 2.4% as a share of the country's GDP but to then remain stable at that level in the next five years.

  • South Korea will maintain, in 2015, a defence trade balance with a surplus, which will continue increasing in the coming years as the country expands its domestic defence market.

BMI Industry View
7
SWOT
9
South Korea Defence SWOT
9
Political
11
Economic
12
Operational Risk
13
Industry Forecast
15
Defence Expenditure
15
Table: Defence Expenditure (South Korea 2012-2019)
17
Armed Forces
18
Table: Armed Forces Personnel (South Korea 2005-2012)
19
Table: Manpower Available For Military Service (South Korea 2012-2019)
19
Defence Trade
20
Table: Defence Trade Balance (USDmn) (South Korea 2012-2019)
21
Table: Defence Exports (USDmn) (South Korea 2012-2019)
22
Table: Defence Imports (USDmn) (South Korea 2012-2019)
23
Macroeconomic Forecast
24
Economic Analysis
24
Table: Economic Activity (South Korea 2010-2019)
28
Industry Risk Reward Ratings
29
South Korea Security Risk Index
29
Table: Asia Pacific Defence Risk Index
29
Rewards
30
Risks
30
Market Overview
32
South Korea Defence Market Overview
32
Table: South Korea International Deployments
33
Domestic Defence Sector
34
Domestic Defence Market
35
Table: South Korea Defence Agreements
37
South Korea Security Overview
38
Domestic Threats
38
Regional Threats
39
International Threats
41
Weapons of Mass Destruction
42
Company Profile
44
Daewoo Shipbuilding & Marine Engineering (DSME)
44
Hyundai Heavy Industries
45
Korea Aerospace Industries (KAI)
46
Samsung Thales
47
Regional Overview
48
North East Asia Security Overview
48
The Geopolitical Importance Of North East Asia
48
Flashpoints And Fault Lines In North East Asia
49
The Evolution Of North East Asia
57
Global Industry Overview
61
Political Risk Analysis
61
Methodology
68
Sector-Specific Methodology
69
Table: Defence Risk Reward Index Indicators
69
Weighting
70
Table: Weighting of Defence Risk Reward Index
70

The South Korea Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI's South Korea Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Korean defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on South Korea to test other views - a key input for successful budgetary and strategic business planning in the Korean defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

  • Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
  • Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
  • Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.