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
Product Price
$1,295.00

BMI View: Growth in Vietnam's defence expenditure over the coming years is all but assured owing to increasing tension in the South China Sea. The China challenge in these waters has and will continue to necessitate investment into strengthening the country's deterrence capabilities and its overall asymmetrical defence strategy - especially in terms of its naval and air forces. The domestic industry remains under-developed and incapable of providing for the technologically advanced requirements of its armed forces, meaning the country will remain heavily dependent on foreign defence companies for supply in the coming years . Further, a growing but still limited budget will restrain the country from making large-scale high-end purchases recently made available to it with the lifting of the decades-old US arms embargo.

Headline Defence Expenditure Forecasts (Vietnam 2015-2020)
2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: US Dept. Of State WMEAT, BMI
Defence expenditure, % of GDP 2.2 2.1 2.1 2.2 2.1 2.2
Defence expenditure, USDmn 4,225 4,264 4,794 5,425 6,090 6,931
Defence expenditure, USD, % y-o-y -2.1 0.9 12.4 13.1 12.3 13.8

Latest Updates

  • On July 21 2016, a fleet of six Chinese fishing vessels were discovered operating within Vietnam's territorial waters and consequently stopped and removed from the area by Vietnamese authorities, reported the Border Defense Command of Quang Binh Province, Vietnam.

  • On July 21 2016, Cuba and Vietnam discussed the potential improvement to defence cooperation ties, working towards the signing of a cooperation plan in the near future.

  • On July 18 2015, local media sources reported that Vietnam had received its first Israeli-made SPYDER advanced surface-to-air missile systems.

  • On July 12 2016, the Permanent Court of Arbitration in The Hague, a tribunal under the United Nations Convention on the Law of the Sea (UNCLOS), ruled in favour of the Philippines in its case against China and its claim to historic rights within most of the South China Sea. Beijing has dismissed the validity of the ruling.

  • On July 9 2016, a Vietnamese fishing boat was allegedly sunk by two Chinese vessels near the disputed Paracel Islands in the South China Sea. China has rebutted the claims by Vietnam's Quang Ngai provincial search and rescue agency.

  • On June 6 2016, visiting Indian Defence Minister Manohar Parrika pledged to boost defence industry cooperation between Indian and Vietnamese defence industry firms.

  • In early June 2016, Vietnam received the sixth and final improved Kilo-Class diesel-electric submarine from Russian shipbuilders.

  • On May 23 2016, US President Barack Obama announced the lifting of a decades-old arms embargo placed on Vietnam.

  • On April 11 2016, Vietnam elected a new defence minister. Ngo Xuan Lich, former chief of the Vietnam People's Army's general political department, was nominated to the role and will lead the country's modernisation drive.

  • In January 2016, Vietnam received two Su-30MK2 fighters from Russia, bringing its total Su-30MK2 fleet to 32.

  • In early December 2015, local media reports revealed an indigenous high-altitude long-endurance unmanned aerial vehicle (UAV). Reports attribute the build to Vietnam's Academy of Science and Industry and Ministry of Public Security. Unconfirmed reports denote Belarus as a design partner.

Defence Industry Risk Reward Index

There is considerable demand for defence goods in Vietnam given the precarious state of its regional security environment. The Vietnamese armed forces maintain outdated Soviet-era armaments and the country's aerial and naval anti-access/area denial (A2/AD) capabilities are still lacking in the face of heightening tensions with China in the South China Sea. However, the domestic industry remains underdeveloped and incapable of meeting this demand. Further, budget limitations will continue to constrain the financing available for new procurements. A still-opaque defence budget and procurement process will also act to deter foreign involvement, not to mention the probation of private sector involvement in the domestic defence industry. With the lifting of the US arms embargo and the multilateralisation of external ties, however, there are opportunities for foreign players in the domestic industry.

Vietnam will need to modernise the system surrounding, and the makeup of, its domestic industry if it wishes to become a more attractive market for foreign players. We rank Vietnam 13th out of 14 states in our Asia Pacific Defence Industry Risk/Reward Index (RRI), with a score of 42 out of 100.

BMI Industry View
7
SWOT Analysis
9
Vietnam Defence SWOT
9
Political
11
Economic
12
Operational Risk
14
Industry Forecast
16
Defence Expenditure
16
Table: Defence Expenditure (Vietnam 2012-2019)
16
Table: Defence Expenditure Scenario - Changing % Of GDP (Vietnam 2012-2019)
19
Armed Forces
19
Table: Armed Forces Personnel (Vietnam 2005-2012)
20
Table: Manpower Available For Military Service (Vietnam 2012-2019)
21
Defence Trade
21
Table: Defence Trade Balance (Vietnam 2012-2019)
22
Imports
22
Table: Defence Imports (Vietnam 2012-2019)
23
Exports
23
Table: Defence Exports (Vietnam 2012-2019)
24
Macroeconomic
25
Economic Analysis
25
Table: Economic Activity (Vietnam 2010-2019)
30
Industry Risk Reward Indices
31
Vietnam Defence Risk Index
31
Table: Asia Pacific Defence Risk Index
31
Rewards
32
Risks
32
Market Overview
34
Vietnam Defence Market Overview
34
Defence Market Overview
34
Domestic Defence Sector
36
Domestic Market
36
Table: Vietnam Defence Agreements
37
Vietnam Security Overview
38
Domestic Threats
38
Regional Threats
38
International Threats
40
Weapons of Mass Destruction
41
Regional Overview
43
South East Asia Security Overview
43
Challenges And Threats To Stability And Security
43
Global industry overview
56
Political Risk Analysis
56
Methodology
61
Sector-Specific Methodology
62
Table: Defence Risk Reward Index Indicators
62
Weighting
63
Table: Weighting of Defence Risk Reward Index
63

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).

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.