Vietnam Defense Market Outlook to 2028
Description
Vietnam Defense Market Overview
The Vietnam Defense market is valued at USD 6.1 billion, based on a five-year historical analysis. This market is driven by a combination of factors, including the government’s focus on modernizing military infrastructure and increasing defense budgets to address rising geopolitical tensions in the Asia-Pacific region. The government’s continuous investments in modernizing its armed forces, including the acquisition of cutting-edge technologies such as fighter jets and submarines, play a significant role in driving the market's growth. In addition, technological collaborations with global defense players are a key catalyst for the market’s expansion.
Hanoi, the capital of Vietnam, and Ho Chi Minh City dominate the market. These cities host the majority of defense procurement, research, and development centers, as well as the headquarters of major defense contractors. Their dominance can be attributed to the presence of Vietnam’s central military command, major government institutions, and leading universities that collaborate on defense innovation. These cities also serve as hubs for international defense firms seeking partnerships within the Vietnamese defense industry.
Vietnam's defense procurement is governed by strict regulations to ensure transparency and competitiveness. The Law on Public Procurement, revised in 2022, mandates public tenders for most defense-related contracts, although exceptions are made for classified or urgent purchases. This legal framework ensures that the procurement process is transparent but often slows down acquisitions Delays in defense equipment acquisition remain a significant issue.
Vietnam Defense Market Segmentation
By Military Branch: The market is segmented by military branch into Army, Navy, Air Force, and Special Forces. Recently, the Navy has captured a dominant market share within this segmentation. The dominance of the Navy is due to Vietnam's significant investments in its maritime defense to counter territorial disputes in the South China Sea. Additionally, the acquisition of advanced naval assets, including submarines and missile-equipped frigates, reflects the country’s increased focus on enhancing its maritime capabilities and ensuring the security of its territorial waters.
By Equipment Type: The market is also segmented by equipment type, including land equipment (tanks, armored vehicles), naval equipment (submarines, frigates), air defense systems (fighter jets, UAVs), and communication and surveillance systems. Among these, naval equipment has captured a significant share of the market, primarily due to Vietnam’s increased focus on its maritime security and strategic naval capabilities. The country’s procurement of advanced submarines and missile-equipped naval vessels underpins the dominance of this segment, driven by the need to safeguard its territorial waters and trade routes.
Vietnam Defense Market Competitive Landscape
The Vietnam Defense market is dominated by a few key local and international players, including Viettel Group and international defense contractors such as Lockheed Martin and Airbus Defense. This consolidation of power among major players highlights the significant role of international collaboration and technology transfer in shaping the industry’s competitive dynamics. Local companies like Viettel benefit from strong government backing, while foreign firms provide cutting-edge technology and expertise, enabling Vietnam to rapidly modernize its defense sector.
Company
Establishment Year
Headquarters
No. of Employees
Revenue (USD Bn)
Key Contracts
Technology Collaborations
R&D Investment
Local Partnerships
Export Activities
Lockheed Martin
1912
Bethesda, USA
Boeing Defense
1916
Chicago, USA
Airbus Defense
2000
Toulouse, France
Viettel Group
1989
Hanoi, Vietnam
BAE Systems
1999
London, UK
Vietnam Defense Industry Analysis
Growth Drivers
Military Modernization: Vietnam's military modernization has seen significant investment, driven by rising geopolitical tensions in the South China Sea. The Ministry of National Defense budgeted approximately VND 129 trillion for defense expenditures in 2024, prioritizing procurement of advanced weaponry and surveillance systems. Recent purchases include modern fighter jets, submarines, and coastal defense systems. This modernization is critical in enhancing Vietnam's defensive capabilities, especially considering its proximity to regional powers such as China.
Rising Defense Budgets: Vietnam's defense spending continues to rise, with defense expenditures reaching over USD 5.5 billion in 2024, compared to USD 4.9 billion in 2022. This increase is primarily driven by the need to bolster military preparedness and enhance maritime security in light of escalating territorial disputes in the South China Sea. As Vietnam's GDP continues to grow, defense expenditure is expected to maintain its upward, reflecting the country’s commitment to securing its borders and upgrading its military infrastructure.
Geopolitical Tensions: Geopolitical tensions, particularly in the South China Sea, where Vietnam has ongoing territorial disputes, have been a major factor in its growing defense market. As of 2024, Vietnam continues to face aggressive actions from neighboring countries, necessitating increased defense readiness. The country has invested heavily in naval and air defense systems, with a reported acquisition of six Kilo-class submarines in the past five years.
Market Challenges
Bureaucratic Barriers: Vietnam's defense procurement process remains complex and bureaucratic. According to government records from 2023, approvals for defense procurement can take up to 18 months due to multiple layers of regulatory oversight. This lengthy process can hinder timely acquisition of critical defense equipment. For instance, Vietnam’s purchase of new coastal defense systems faced delays due to extended approval times. This bureaucratic inefficiency remains a challenge, especially as the country seeks to rapidly modernize its military capabilities.
Limited Technological Infrastructure: Vietnam’s technological infrastructure in defense production is still developing, with a heavy reliance on imports for sophisticated technologies. In 2024, local manufacturers produced only 15% of the total defense equipment, while the remaining 85% was imported. This dependency on foreign suppliers, particularly Russia and Israel, limits Vietnam’s ability to produce advanced military technologies domestically.
Vietnam Defense Market Future Outlook
Over the next five years, the Vietnam Defense market is expected to experience sustained growth, driven by the government’s commitment to modernizing its defense capabilities and safeguarding its territorial integrity. Continuous investments in high-tech military equipment, coupled with international collaborations in areas such as cybersecurity and autonomous systems, will accelerate this growth. Additionally, the ongoing geopolitical tensions in the region, particularly concerning the South China Sea, will continue to prompt significant defense spending.
Future Market Opportunities
Strategic Partnerships: Vietnam is increasingly forming strategic defense partnerships with countries such as Japan, India, and the United States. In 2023, Vietnam and India signed a defense cooperation agreement worth USD 500 million, focusing on technology transfer and joint military training. These partnerships not only provide Vietnam access to modern defense technologies but also strengthen its geopolitical stance in Southeast Asia.
Emerging Local Manufacturers: Vietnam's defense industry is beginning to see the emergence of local manufacturers, although they currently contribute to only 15% of defense equipment production. Local companies, like Viettel Group, are leading efforts to produce communication systems and military-grade technology. In 2023, Viettel manufactured more than 10,000 military communication devices for the armed forces, contributing to the localization of non-combat technologies. With government support, this sector is expected to grow further.
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The Vietnam Defense market is valued at USD 6.1 billion, based on a five-year historical analysis. This market is driven by a combination of factors, including the government’s focus on modernizing military infrastructure and increasing defense budgets to address rising geopolitical tensions in the Asia-Pacific region. The government’s continuous investments in modernizing its armed forces, including the acquisition of cutting-edge technologies such as fighter jets and submarines, play a significant role in driving the market's growth. In addition, technological collaborations with global defense players are a key catalyst for the market’s expansion.
Hanoi, the capital of Vietnam, and Ho Chi Minh City dominate the market. These cities host the majority of defense procurement, research, and development centers, as well as the headquarters of major defense contractors. Their dominance can be attributed to the presence of Vietnam’s central military command, major government institutions, and leading universities that collaborate on defense innovation. These cities also serve as hubs for international defense firms seeking partnerships within the Vietnamese defense industry.
Vietnam's defense procurement is governed by strict regulations to ensure transparency and competitiveness. The Law on Public Procurement, revised in 2022, mandates public tenders for most defense-related contracts, although exceptions are made for classified or urgent purchases. This legal framework ensures that the procurement process is transparent but often slows down acquisitions Delays in defense equipment acquisition remain a significant issue.
Vietnam Defense Market Segmentation
By Military Branch: The market is segmented by military branch into Army, Navy, Air Force, and Special Forces. Recently, the Navy has captured a dominant market share within this segmentation. The dominance of the Navy is due to Vietnam's significant investments in its maritime defense to counter territorial disputes in the South China Sea. Additionally, the acquisition of advanced naval assets, including submarines and missile-equipped frigates, reflects the country’s increased focus on enhancing its maritime capabilities and ensuring the security of its territorial waters.
By Equipment Type: The market is also segmented by equipment type, including land equipment (tanks, armored vehicles), naval equipment (submarines, frigates), air defense systems (fighter jets, UAVs), and communication and surveillance systems. Among these, naval equipment has captured a significant share of the market, primarily due to Vietnam’s increased focus on its maritime security and strategic naval capabilities. The country’s procurement of advanced submarines and missile-equipped naval vessels underpins the dominance of this segment, driven by the need to safeguard its territorial waters and trade routes.
Vietnam Defense Market Competitive Landscape
The Vietnam Defense market is dominated by a few key local and international players, including Viettel Group and international defense contractors such as Lockheed Martin and Airbus Defense. This consolidation of power among major players highlights the significant role of international collaboration and technology transfer in shaping the industry’s competitive dynamics. Local companies like Viettel benefit from strong government backing, while foreign firms provide cutting-edge technology and expertise, enabling Vietnam to rapidly modernize its defense sector.
Company
Establishment Year
Headquarters
No. of Employees
Revenue (USD Bn)
Key Contracts
Technology Collaborations
R&D Investment
Local Partnerships
Export Activities
Lockheed Martin
1912
Bethesda, USA
Boeing Defense
1916
Chicago, USA
Airbus Defense
2000
Toulouse, France
Viettel Group
1989
Hanoi, Vietnam
BAE Systems
1999
London, UK
Vietnam Defense Industry Analysis
Growth Drivers
Military Modernization: Vietnam's military modernization has seen significant investment, driven by rising geopolitical tensions in the South China Sea. The Ministry of National Defense budgeted approximately VND 129 trillion for defense expenditures in 2024, prioritizing procurement of advanced weaponry and surveillance systems. Recent purchases include modern fighter jets, submarines, and coastal defense systems. This modernization is critical in enhancing Vietnam's defensive capabilities, especially considering its proximity to regional powers such as China.
Rising Defense Budgets: Vietnam's defense spending continues to rise, with defense expenditures reaching over USD 5.5 billion in 2024, compared to USD 4.9 billion in 2022. This increase is primarily driven by the need to bolster military preparedness and enhance maritime security in light of escalating territorial disputes in the South China Sea. As Vietnam's GDP continues to grow, defense expenditure is expected to maintain its upward, reflecting the country’s commitment to securing its borders and upgrading its military infrastructure.
Geopolitical Tensions: Geopolitical tensions, particularly in the South China Sea, where Vietnam has ongoing territorial disputes, have been a major factor in its growing defense market. As of 2024, Vietnam continues to face aggressive actions from neighboring countries, necessitating increased defense readiness. The country has invested heavily in naval and air defense systems, with a reported acquisition of six Kilo-class submarines in the past five years.
Market Challenges
Bureaucratic Barriers: Vietnam's defense procurement process remains complex and bureaucratic. According to government records from 2023, approvals for defense procurement can take up to 18 months due to multiple layers of regulatory oversight. This lengthy process can hinder timely acquisition of critical defense equipment. For instance, Vietnam’s purchase of new coastal defense systems faced delays due to extended approval times. This bureaucratic inefficiency remains a challenge, especially as the country seeks to rapidly modernize its military capabilities.
Limited Technological Infrastructure: Vietnam’s technological infrastructure in defense production is still developing, with a heavy reliance on imports for sophisticated technologies. In 2024, local manufacturers produced only 15% of the total defense equipment, while the remaining 85% was imported. This dependency on foreign suppliers, particularly Russia and Israel, limits Vietnam’s ability to produce advanced military technologies domestically.
Vietnam Defense Market Future Outlook
Over the next five years, the Vietnam Defense market is expected to experience sustained growth, driven by the government’s commitment to modernizing its defense capabilities and safeguarding its territorial integrity. Continuous investments in high-tech military equipment, coupled with international collaborations in areas such as cybersecurity and autonomous systems, will accelerate this growth. Additionally, the ongoing geopolitical tensions in the region, particularly concerning the South China Sea, will continue to prompt significant defense spending.
Future Market Opportunities
Strategic Partnerships: Vietnam is increasingly forming strategic defense partnerships with countries such as Japan, India, and the United States. In 2023, Vietnam and India signed a defense cooperation agreement worth USD 500 million, focusing on technology transfer and joint military training. These partnerships not only provide Vietnam access to modern defense technologies but also strengthen its geopolitical stance in Southeast Asia.
Emerging Local Manufacturers: Vietnam's defense industry is beginning to see the emergence of local manufacturers, although they currently contribute to only 15% of defense equipment production. Local companies, like Viettel Group, are leading efforts to produce communication systems and military-grade technology. In 2023, Viettel manufactured more than 10,000 military communication devices for the armed forces, contributing to the localization of non-combat technologies. With government support, this sector is expected to grow further.
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Table of Contents
100 Pages
- Vietnam Defense Market Overview
- 1.1. Definition and Scope
- 1.2. Market Taxonomy
- 1.3. Market Growth Rate
- 1.4. Market Segmentation Overview
- Vietnam Defense Market Size (In USD Bn)
- 2.1. Historical Market Size
- 2.2. Year-on-Year Growth Analysis
- 2.3. Key Market Developments and Milestones
- Vietnam Defense Market Analysis
- 3.1. Growth Drivers (Military Modernization, Rising Defense Budgets, Geopolitical Tensions)
- 3.2. Market Challenges (Bureaucratic Barriers, Limited Technological Infrastructure, Import Dependency)
- 3.3. Opportunities (Strategic Partnerships, Emerging Local Manufacturers, Technological Advancements)
- 3.4. Trends (Defense Digitalization, Cybersecurity in Military Operations, Rising Focus on Unmanned Aerial Vehicles)
- 3.5. Government Regulations (Defense Procurement Laws, Offset Agreements, Local Content Requirements)
- 3.6. SWOT Analysis
- 3.7. Stakeholder Ecosystem
- 3.8. Porter’s Five Forces Analysis
- 3.9. Competition Ecosystem
- Vietnam Defense Market Segmentation
- 4.1. By Military Branch (In Value %)
- 4.1.1. Army
- 4.1.2. Navy
- 4.1.3. Air Force
- 4.1.4. Special Forces
- 4.2. By Equipment Type (In Value %)
- 4.2.1. Land Equipment (Tanks, Armored Vehicles, Artillery Systems)
- 4.2.2. Naval Equipment (Submarines, Frigates, Corvettes)
- 4.2.3. Air Defense Systems (Fighter Jets, Helicopters, UAVs)
- 4.2.4. Communication and Surveillance Systems
- 4.3. By Technology (In Value %)
- 4.3.1. Conventional Warfare Systems
- 4.3.2. Cybersecurity and Electronic Warfare Systems
- 4.3.3. Autonomous Systems
- 4.4. By End User (In Value %)
- 4.4.1. Military Forces
- 4.4.2. National Security Agencies
- 4.5. By Region (In Value %)
- 4.5.1. North
- 4.5.2. East
- 4.5.3. South
- 4.5.4. West
- Vietnam Defense Market Competitive Analysis
- 5.1. Detailed Profiles of Major Companies
- 5.1.1. Lockheed Martin
- 5.1.2. Boeing Defense
- 5.1.3. Airbus Defense and Space
- 5.1.4. BAE Systems
- 5.1.5. Thales Group
- 5.1.6. Northrop Grumman
- 5.1.7. Raytheon Technologies
- 5.1.8. Viettel Group
- 5.1.9. Israel Aerospace Industries
- 5.1.10. Rostec
- 5.1.11. Hanwha Defense
- 5.1.12. Saab AB
- 5.1.13. General Dynamics
- 5.1.14. Leonardo S.p.A
- 5.1.15. Rolls-Royce Defense
- 5.2. Cross Comparison Parameters (No. of Employees, Headquarters, Inception Year, Revenue, Investment in R&D, Technology Collaboration, Key Contracts, Export vs. Domestic Market Share)
- 5.3. Market Share Analysis
- 5.4. Strategic Initiatives
- 5.5. Mergers and Acquisitions
- 5.6. Investment Analysis
- 5.7. Venture Capital Funding
- 5.8. Government Grants
- 5.9. Private Equity Investments
- Vietnam Defense Market Regulatory Framework
- 6.1. Military Procurement Procedures
- 6.2. Compliance with International Arms Trade Regulations
- 6.3. Offset Policies
- 6.4. Local Manufacturing Incentives
- Vietnam Defense Future Market Size (In USD Bn)
- 7.1. Future Market Size Projections
- 7.2. Key Factors Driving Future Market Growth
- Vietnam Defense Future Market Segmentation
- 8.1. By Military Branch (In Value %)
- 8.2. By Equipment Type (In Value %)
- 8.3. By Technology (In Value %)
- 8.4. By End User (In Value %)
- 8.5. By Region (In Value %)
- Vietnam Defense Market Analysts’ Recommendations
- 9.1. TAM/SAM/SOM Analysis
- 9.2. Customer Cohort Analysis
- 9.3. Strategic Marketing Initiatives
- 9.4. White Space Opportunity Analysis
- Disclaimer
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