Vietnam Defence and Security Report 2015
BMI View: We expect Vietnam's defence budget to continue increasing in absolute terms in the next fiveyears. This will be driven by the country's need to significantly modernise its armed forces, in particular itsnavy, in order to counter maritime piracy and increase its military stance against China in the South ChinaSea. Despite this increase, however, the budget will remain limited compared to the significant changes thatare 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 willremain limited for yet another few years.
Vietnam's 2009 Defence White Paper highlights a national defence policy that focuses essentially on thedevelopment of armed forces for the purpose of defending the country's sovereignty and integrity. Little tono priority is given to the development of a domestic defence sector built for the purpose of providing thearmed forces with sufficient and adequate equipment to intervene overseas, or for with the aim of increasingexports. As a result, the domestic defence market has remained significantly under-developed, with themajority of the armed forces needs being fulfilled by imports from Russia, a policy that has beencharacterised by a constant deficit in Vietnam's defence trade balance. The domestic defence sector, stateowned,comprises primarily two main companies and has seen a number of corruption scandals affect thedefence procurement process in recent years.
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