Vietnam Defence and Security Report Q1 2012
Business Monitor International, February 2012, Pages: 81
Vietnam Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's defence and security industry.
If security fears dominated Vietnam’s strategic attention in the middle of 2011, economic fears had supplanted them by the end of the year. Tensions with China over maritime disputes in the contested South China Sea receded thanks to diplomatic efforts on both sides, leaving the uncertain economic outlook as Vietnam’s gravest concern for 2012. Of all the East Asian emerging economies, Vietnam is perhaps the most vulnerable to economic shocks, thanks to high rates of inflation, fairly high debt levels, and dependence on Western banks.
For defence, any economic downturn would of course put downward pressure on the country’s military budget. Vietnam already spends more on defence as a proportion of GDP than all its South East Asian neighbours except Singapore, and so it will be impossible to keep growing the budget rapidly if the economy starts to stall. There is no transparency about Vietnam’s defence budget. Hanoi claimed to have increased the 2011 budget by 70% to around US$2.5bn, but some analysts estimate that the true budget is already around US$4bn (roughly 3.5% of GDP). The government indicated in November that it would increase the 2012 defence budget by around 25%, but again such announcements cannot be taken at face value.
What is clear is that a funding squeeze would be a major headache for a military that is only just beginning to transform itself from an outmoded, army-centric force into a modern military with air and naval forces capable of protecting the country’s important offshore assets. Russia has been Vietnam’s main supplier of defence equipment for a long time, and this relationship is set to continue. In December 2011, Hanoi signed contracts with Russia’s defence export agency Rosoboronexport for two additional Gepard-class corvettes (two others having recently been delivered). This follows the acceptance of the last two of four Svetlyak-class patrol boats in October, and confirmation provided by senior Vietnamese military officials in mid-2011 that Hanoi has ordered six Kilo-class submarines to begin delivery in the 2013-16 timeframe, as well as 12 Sukhoi Su-30MKK fighter aircraft.
However, no less significant are Vietnam’s efforts to explore defence procurement from a wider range of sources. An order placed in October 2011 for four SIGMA-class corvettes from the Netherlands stands out: the deal represents Vietnam’s first major procurement from Europe, and the assembly of two of the ships in Vietnam will deliver important technical know-how to the local ship-building industry. Already Vietnam’s naval shipyards have been making progress, unveiling two new classes of ship in October 2011: a troop ship reported to be the largest vessel ever built in the country, and a patrol ship.
Defence diplomacy should soon open up new markets from which Vietnam can procure equipment. In August the US said it was considering lifting restrictions on the sale of materiel to Vietnam as part of a wide-ranging rapprochement, while Hanoi signed defence agreements with India, Israel, Germany and the UK in the final months of 2011. These relationships will not only help Vietnam to source material, but will also help the Vietnamese military to gain an understanding of how to develop doctrine for advanced capabilities that they have not used before.
Economic difficulties have the potential to derail these efforts. But if the government can keep the economy growing in 2012, Vietnam’s military modernisation project will proceed and evolve, especially with the country’s vocal opposition to Chinese domination of the South China Sea winning it plenty of new international allies.
Executive Summary
SWOT Analysis
Vietnam Security SWOT
Vietnam Defence Industry SWOT
Vietnam Political SWOT
Vietnam Economic SWOT
Vietnam Business Environment SWOT
Global Political Outlook
Landmark Political Events Looming In 2012
Global Flashpoints: Eurozone, Syria, Iran, Afghanistan, Korean Peninsula
Table: Election Timetable, 2012
United States
Russia
China
Wild Cards To Watch
South East Asia Security Overview
South East Asia In A Global Context
Challenges And Threats To Stability And Security
Sino-US Rivalry In South East Asia
The Outlook For South East Asia
Political Risk Analysis – Sino-US Power Struggle
Chinese Influence In Asia: A SWOT Analysis
US Influence In Asia: A SWOT Analysis
Table: Asian States And Their Relationships With China
Emerging Geopolitical Patterns
Security Risk Analysis
Asia Pacific Defence And Security Ratings
Table: Asia Pacific Regional Security Ratings
Table: Asia Pacific State Vulnerability To Terrorism Index
Vietnam’s Security Risk
Political Outlook
Domestic Politics
Long-Term Political Outlook
Security Overview
Internal Security Situation
Governance
Religion
Piracy And Maritime Security
Border Security
External Security Situation
The South China Sea
Bilateral Relations
Armed Forces And Government Spending
Armed Forces
Weapons Of Mass Destruction
Market Overview
Industry Trends And Developments
Arms Trade Overview
Procurement Trends And Developments
Industry Forecast Scenario
Armed Forces
Table: Vietnam’s Armed Forces, 2000-2008 (’000 personnel, unless otherwise stated)
Table: Manpower Available For Military Services, 2009-2016 (aged 16-49, unless otherwise stated)
Government Expenditure
Table: Vietnam’s Defence Expenditure, 2009-2016
Table: Vietnam’s Defence Expenditure Scenario – Changing % Of GDP, 2009-2016 (US$mn)
Defence Trade
Table: Vietnam’s Defence Exports, 2009-2016 (US$mn)
Table: Vietnam’s Defence Imports, 2009-2016 (US$mn)
Table: Vietnam’s Defence Trade Balance, 2008-2015 (US$mn)
Macroeconomic Forecast
Table: Vietnam – Economic Activity, 2011-2016
Country Snapshot: Vietnam Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 1999-2004
Table: Consumer Expenditure, 2000-2012 (US$)
BMI Methodology
How We Generate Our Industry Forecasts
Defence Industry
Sources
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