Domestic defense companies are projected to have difficulty achieving this year's annual export target of $20 billion (approximately 27 trillion won). Although demand for Korean weapons has increased recently, such as Poland's decision to import K2 tanks in the first half of the year, countries in the Middle East, which are considered 'big players' in the defense market, have decided to postpone the timing of weapon imports until next year.
According to the defense industry on the 29th, the export scale of domestic defense companies has been declining since last year. The defense export, which reached an all-time high of $17.3 billion (approximately 23 trillion won) in 2022, decreased to $13.5 billion (approximately 19 trillion won) in 2023 and $9.5 billion (approximately 13 trillion won) last year.
In the defense industry, it is noted that large export contracts from projects carried over from last year remain uncertain, making the attainment of this year's goals ambiguous. In particular, it has been reported that Middle Eastern countries, which domestic defense companies were pinning their hopes on, are postponing decisions on weapon imports.
Saudi Arabia has discussed the introduction of ground weapons systems worth $1 billion with Korea, but has not reached a conclusion yet. An industry insider said, "I heard that the additional export contract for the mid-range surface-to-air guided weapon Cheongung II has also been postponed until next year."
Another country in the Middle East has also been negotiating the export of ground weapons systems with Korea but has not been able to reach a conclusion. This country is known to have imported Korean-made guided weapons and aircraft. The export scale of the contract currently under negotiation is estimated to be around $5 billion (approximately 7 trillion won).
On the other hand, it is anticipated that Romania has a high possibility of introducing Korean weapons. The Romanian Ministry of National Defense previously announced that it would sign a supply contract for 246 future infantry combat vehicles (IFV) worth €2.5 billion (approximately 4.3 trillion won) this year. Hanwha Aerospace is entering the competition for arms exports to Romania with the Redback armored vehicle, which is compatible with the K9 self-propelled howitzer.
A source in the defense industry stated, "It is not the case that Korean companies have failed to secure orders due to being outperformed by overseas firms; rather, Middle Eastern countries are simply delaying their weapon import decisions. It is necessary for government-level support to ensure that these countries take a greater interest in Korean weapons systems."
However, some still argue that the possibility of achieving $20 billion in domestic defense exports remains. Hyundai Rotem and Korea Aerospace Industries have recently succeeded in large-scale orders, and if additional contracts are confirmed in the second half of the year, it could surpass the export target.
Hyundai Rotem confirmed a second export contract for K2 tanks with Poland last month. While the exact scale of the contract is set to be revealed on the date of signing, it is expected to be between $6 billion and $6.5 billion (approximately 8 to 9 trillion won). This would be the largest scale for a single contract and accounts for one-third of the annual target.
Korea Aerospace Industries also signed a contract to export 12 FA-50 light attack aircraft to the Philippine government for 975.3 billion won last month. Additionally, it entered into a contract worth about 83 billion won regarding the lifespan extension of KT-1B basic training aircraft with Indonesia. Hanwha Aerospace signed a contract for K9 self-propelled howitzer exports with India last April. Hanwha Ocean is consistently winning contracts for maintenance, repair, and overhaul (MRO) of U.S. Navy vessels.