Vietnam 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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Vietnam Defence & Security Report
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BMI View: We expect Vietnam's defence budget to continue increasing in absolute terms in the next five years. This will be driven by the country's need to significantly modernise its armed forces, in particular its navy, in order to counter maritime piracy and increase its military stance against China in the South China Sea. Despite this increase, however, the budget will remain limited compared to the significant changes that are needed, as well as the investments required for the development of the domestic defence sector, therefore the number of opportunities for third parties seeking to enter the Vietnamese defence market will remain limited for yet another few years.

Vietnam's 2009 Defence White Paper highlights a national defence policy that focuses essentially on the development of armed forces for the purpose of defending the country's sovereignty and integrity. Little to no priority is given to the development of a domestic defence sector built for the purpose of providing the armed forces with sufficient and adequate equipment to intervene overseas, or for with the aim of increasing exports. As a result, the domestic defence market has remained significantly under-developed, with the majority of the armed forces needs being fulfilled by imports from Russia, a policy that has been characterised by a constant deficit in Vietnam's defence trade balance. The domestic defence sector, state-owned, comprises primarily two main companies and has seen a number of corruption scandals affect the defence procurement process in recent years.

The regional situation in which Vietnam finds itself, however, has led the General Department for Defence to modify its policy focus and priorities. Indeed, tensions between China and Vietnam regarding the conflicting territorial claims over the Paracells and the Spratlys islands are not likely to end in the near future. Both countries have recently indicated that they would like to find a peaceful resolution to these conflicting claims, but China's early 2015 actions in the region have raised significant concerns amongst Vietnam's allies who are now pushing for the country to modernise its navy and increase its presence and stance in the South China Sea in opposition to China. Moreover, in the past few years Vietnam has seen an increase in the number of maritime piracy incidents along its Southern coastline, bringing to the fore the importance of upgrading its Coast Guards' equipment.

In responses to these challenges, Vietnam has indicated that it will be seeking to expand its currently very limited domestic defence industry in order to modernise its armed forces. Particular attention ought to be paid to the navy, as the main responsible body for defending the interests of the country in the South China Sea. The main strategy for expanding the development industry will be to continue signing defence cooperation agreements with other countries in order to facilitate technology transfer. Imports are also set to continue as they have over the past decade, maintaining a constant defence trade balance deficit. Finally, Vietnam will also seek to diversify the countries from which it is importing, as it is currently mainly trading with Russia. In this context, the US, Vietnam's main foe since the end of the war in 1975, has taken advantage of tensions in the South China Sea to begin a significant rapprochement with the country, and has recently announced that they would provide Vietnam with USD18mn in order to upgrade its navy. This falls within the US strategic goal to increase their presence in the Asia Pacific region, building strong defence alliances in order to counter Chinese rising military power against all the other countries in the region.

Despite these important policy shifts, we expect that it will take Vietnam a few years to be able to develop its domestic defence sector, especially in view of a limited, albeit increasing, budget. Opportunities for procurement will continue increasing, but opportunities to enter the Vietnamese defence market may still be a little way away as the country takes time to implement the required changes.

Key BMI Forecasts:

  • We forecast Vietnam's defence spending to reach USD4.7bn by 2015, which would signify a 10.6% year-on-year (y-o-y) increase.

  • We forecast Vietnam's defence spending to remain stable at a 2.4% share of the country's GDP in the next five years.

  • Vietnam will maintain, in 2015, a defence trade balance that shows high levels of imports and quasi non-existent exports: while imports will continue to rise in the next five years, export levels will remain non-existent, thus incurring an increase in the defence trade balance deficit.

BMI Industry View
SWOT Analysis
Vietnam Defence SWOT
Operational Risk
Industry Forecast
Defence Expenditure
Table: Defence Expenditure (Vietnam 2012-2019)
Table: Defence Expenditure Scenario - Changing % Of GDP (Vietnam 2012-2019)
Armed Forces
Table: Armed Forces Personnel (Vietnam 2005-2012)
Table: Manpower Available For Military Service (Vietnam 2012-2019)
Defence Trade
Table: Defence Trade Balance (Vietnam 2012-2019)
Table: Defence Imports (Vietnam 2012-2019)
Table: Defence Exports (Vietnam 2012-2019)
Economic Analysis
Table: Economic Activity (Vietnam 2010-2019)
Industry Risk Reward Indices
Vietnam Defence Risk Index
Table: Asia Pacific Defence Risk Index
Market Overview
Vietnam Defence Market Overview
Defence Market Overview
Domestic Defence Sector
Domestic Market
Table: Vietnam Defence Agreements
Vietnam Security Overview
Domestic Threats
Regional Threats
International Threats
Weapons of Mass Destruction
Regional Overview
South East Asia Security Overview
Challenges And Threats To Stability And Security
Global industry overview
Political Risk Analysis
Sector-Specific Methodology
Table: Defence Risk Reward Index Indicators
Table: Weighting of Defence Risk Reward Index

The Vietnam 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 Vietnam Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Vietnamese defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on Vietnam to test other views - a key input for successful budgetary and strategic business planning in the Vietnamese 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).


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.


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.