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Vietnam Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027

The defense budget in Vietnam was valued at $5.3 billion in 2021. The market is expected to grow at a CAGR of over 7% during the forecast period 2022-2027. Territorial claims in the South China Sea and the increasing strength and assertiveness of the Chinese armed forces have spurred the Vietnamese government to enhance its military capabilities. Vietnam is also planning to replace its obsolete equipment in order to combat the modern threat scenario. The country’s military modernization efforts are focused on preventing China from taking hold of disputed territory in the South China Sea. Over the forecast period, the country is expected to procure fighter and multirole aircraft, armored vehicles, naval vessels, patrol ships, maritime patrol aircraft, and surveillance equipment.

Overview of the defense market in Vietnam

Overview of the defense market in Vietnam

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Military doctrine, modernization goals and Vietnam’s national defense strategy

Vietnam’s military doctrine and strategy to safeguard its territory. In November 2019, Vietnam published its white paper on national defense. It explains the overall guidelines and principles of the military strategy to protect Vietnam for the next 10 years. The white paper states that the national defense policy is self-defensive and peaceful in nature. According to the white paper, Vietnam consistently and determinedly aims to settle all divergences and disputes on the basis of international law and tries to proactively repulse and prevent war. Vietnam builds its national defense power based on the overall strength of the whole nation and the great solidarity of the masses, thereby consolidating and strengthening national unity. The country’s National Defense Policy is peaceful and emphasizes self-defense and the need to settle all disputes and divergences resolutely and consistently through peaceful means based on international law. Depending on circumstances and specific conditions, Vietnam will consider developing necessary, appropriate defense and military relations with other countries based on respecting each other’s independence, sovereignty, territorial integrity, and unity.

How has COVID-19 affected Vietnam’s defense spending?

Vietnam’s economic growth slowed down in 2020 to the weakest it has been in at least three decades. This is due to the COVID-19 pandemic, natural disasters, and a sluggish global economy. Despite the Vietnamese economy being hit hard by the ongoing COVID-19 pandemic, the country had managed to show remarkable resilience. The country has been proactive in taking measures to contain the novel coronavirus both at the national and subnational level. Increasing FDI investments in Vietnam and the country fast emerging as a preferred destination companies exiting China will ensure a buoyant economy over 2023–27, with robust growth.

Vietnam has eased its COVID-related lockdowns in major cities and life is gradually getting back to normal. Vietnam was successful in containing COVID-19 in 2020, but even so, the economy is expected to be hit severely as exports and tourism account for a considerable portion of GDP. The country’s poor economic condition is expected to have a negative impact on defense procurements. The situation deteriorated in May and June 2021. There was significant pickup in reported daily new cases. COVID-19 vaccination rates still remain very low as a share of the total population, making Vietnam vulnerable to a rising and protracted COVID19 wave. According to GlobalData’s Covid-19 scorecard, Vietnam Manufacturing PMI for 2021 witnessed a sharp drop, reflecting the impact of the rising Covid wave, which turned into a challenge for Vietnam in reaching its procurement targets. Several deals got delayed. However, the Vietnamese economy is expected to rebound in 2022 due to its strong fundamentals and relative control of the COVID-19 pandemic.

What are the segment classifications in Vietnam’s defense market?

The defense market in Vietnam is segmented into infrastructure construction, multi-role aircraft, training aircraft, facilities management, and others. Multi-role aircraft is the largest segment in the defense market in Vietnam followed by infrastructure construction and training aircraft.

Defense market in Vietnam, by segment

Defense market in Vietnam, by segment

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What are the import and export market dynamics in Vietnam’s defense market?

Vietnam is highly dependent on foreign suppliers to meet its demand for advanced military hardware. Limited domestic defense capabilities, along with factors such as strained relations with its neighbouring nations, outdated military hardware, and territorial disputes, compel Vietnam to procure defense equipment from foreign suppliers. During 2016–20, the nation imported the majority of its defense equipment from Russia, which is expected to remain dominant in the country’s arms industry over the forecast period. However, given the need to modernize its existing inventory, the country is expected to place significant orders with Western defense firms. Due to the continued threat from China, Vietnam has recently invested in building relationships with Western countries and its neighbours. Vietnam’s arms imports were the highest in 2016, mainly due to the need to counter China’s increasing naval capabilities, as it imported arms equipment worth just over $909 million. Russia continued to be the largest exporter of arms, Israel is ranked as the second largest defense supplier to Vietnam, Belarus ranked as the third largest supplier to Vietnam. Other major defense suppliers include South Korea and the US.

Who are the major market players in defense market in Vietnam?

Major market players in the defense market in Vietnam include JSC Sukhoi, Israel Aerospace Industries, United Aircraft Corporation and Mhi Aerospace Vietnam Co.

Defense market in Vietnam, by key players

Defense market in Vietnam, by key players

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Market report scope

Market size (Year – 2022) $5.3 billion
Growth Rate (CAGR) >7%
Base year 2021
Forecast Period 2022-2027
Segmentation Frigate, multi-role aircraft, armored multirole vehicle, main battle tank and others
Key players JSC Sukhoi, Israel Aerospace Industries, United Aircraft Corporation and Mhi Aerospace Vietnam Co.

This report provides a comprehensive analysis of the defense market in Vietnam and contains in-depth analysis of the following:

  • Vietnam defense budget: detailed analysis of Vietnam FY2021 defense budget broken down into market size and market share. This is coupled with an examination of key current and future acquisitions.
  • Regulation: the procurement policy and process are explained. This is coupled with an analysis of Vietnam military doctrine and strategy to provide a comprehensive overview of Vietnam military regulation. – Security Environment: political alliances and perceived security threats to Vietnam are examined; there help to explain trends in spending and modernisation.
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the Vietnam defense industry.

Reasons to Buy

  • Determine prospective investment areas based on a detailed trend analysis of the Vietnam defense market over the next five years.
  • Gain in-depth understanding about the underlying factors driving demand for different defense and internal security segments in the Vietnam market and identify the opportunities offered.
  • Strengthen your understanding of the market in terms of demand drivers, market trends, and the latest technological developments, among others.
  • Identify the major threats that are driving the Vietnamese defense market providing a clear picture about future opportunities that can be tapped, resulting in revenue expansion.
  • Channel resources by focusing on the ongoing programs that are being undertaken by the Vietnam government.
  • Make correct business decisions based on in-depth analysis of the competitive landscape consisting of detailed profiles of the top defense equipment providers in the country. The company profiles also include information about the key products, alliances, recent contract awarded, and financial analysis, wherever available.

Key Players

United Aircraft Corp

Israel Aerospace Industries

189 One Member Limited Liability Co (Z189 Shipyard)

Table of Contents

Table of Contents

Executive Summary

Defense Budget Assessment

Budgeting Process

Defense Market Size Historical and Forecast

Drivers Of Defense Expenditure

Analysis Of Defense Budget Allocation

Military Doctrine And Security Environment

Military Doctrine And Strategy

Primary Threat Perception

Political and Strategic Alliances

Geopolitical Social and Economic Scenario

Market Entry Strategy and Regulations

Procurement Policy and Process

Market Regulations and Market Entry Route

Key Challenges

Major M&A, Financing and Partnerships

Market Attractiveness and Emerging Opportunities

Market Attractiveness, 2021 26

Top Defense Segments By Value

Import And Export Market Dynamics

Import Market Dynamics

Export Market Dynamics

Defense Platform Acquisitions

Defense Platform Acquisitions By Value

Su 57

Yak 130

L 39

Heron UAV

Fleet Size

Competitive Landscape

Defense Companies Operating In Vietnam

Main Defense Companies

Appendix

About This Report

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Frequently Asked Questions

The defense budget in Vietnam was valued at $5.3 billion in 2021.

Vietnam’s defense expenditure is expected to register a CAGR of more than 7% during the forecast period 2022-2027.

In 2021, Vietnam’s defense budget as a percentage of GDP was 2.5%.

Multi-role aircraft is the largest sector in the defense market in Vietnam.

Leading market players in the defense market in Vietnam include JSC Sukhoi, Israel Aerospace Industries, United Aircraft Corporation and Mhi Aerospace Vietnam Co.

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