Market Potential

Despite global headwinds, Vietnam’s economy will continue to expand on the back of robust domestic demand and export-oriented manufacturing. The dynamic country has developed a competitive advantage in sophisticated value-added manufacturing sectors such as electronics and will remain one of the world’s most attractive emerging markets as foreign direct investment (FDI) and rapid growth in manufacturing exports and will fuel rapid growth.

Vietnam’s mid-to-long term fundamentals remain sound with continued FDI likely to support a gross domestic product (GDP) growth rate in excess of 6% over the coming years, while the country’s single-party system underpins national stability. Recent and continuing economic reforms are also beginning to bear fruit, ensuring that it remains well-placed to adapt to global shocks.

The country is rapidly modernising its armed forces, the Vietnam People’s Army (VPA), to safeguard its vast economic and sovereign interests, which comprise a 3,300 km coastline and an exclusive economic zone (EEZ) that is over 400,000 km2 in size. To complement the VPA, the country is also strengthening its Vietnam People’s Public Security (the security and police) and Vietnam People’s Security Forces.

The United States had lifted its long-standing military arms embargo on Vietnam and Japan has also placed maritime security co-operation at the forefront of its growing engagements with Vietnam in response to growing territorial concerns.

Indeed, Vietnam’s defence expenditure is expected to continue increasing from US$5 billion in 2018 to exceed US$7 billion by 2022 to enable the VPA to replace its obsolete equipment and introduce new and modern capabilities, according to a report by Strategic Defence Intelligence (SDI).

With almost half a million active personnel, and another five million or so in reserve, the Vietnam defense and security market has immense potential that all industry players cannot afford to miss.

 

Army

The VPA maintain the largest fleets of land combat vehicles in Southeast Asia – with over 2,500 self-propelled and towed artillery, 3,000 armoured fighting vehicles, 1,500 combat tanks, and 1,000 rocket launchers, although many of these were introduced from the 1960s and are now considered to be obsolete by modern standards despite upgrades over the years. The army is expected to spend around US$200-300 million for procurement annually by 2024, which will enable the service to modernise its vehicles although it is also possible that it will opt to phase out older equipment and platforms to make resources available for new ones.

Likely acquisition targets include:

  • Armored vehicle mobility and protection upgrades
  • Vehicle maintenance, repair, and overhaul
  • Infantry weapons
  • Self-propelled and towed tube and rocket artillery
  • Infantry fighting vehicles
  • Digital voice and data communication systems
  • Ground-based sensor systems
  • Command and control systems
    and much more ..

 

Air Force

The Vietnam People’s Air Force (VPAF) is also steadily modernizing and have acquired Russian Sukhoi Su-30 Mk2 Flanker-F multirole combat aircraft too boost its air power. However, other combat aircraft in service such as the MiG-21, Su-27s and Su-22 attack aircraft are approaching the end of their operational lifespans. Its transport aircraft, comprising worn out Russian An-2 and An-26 aircraft also suffer from poor serviceability and require replacement. It is therefore timely that the service will spend US$400-600 million annually for procurement by 2024.

Potential acquisition targets include:

  • Multirole combat aircraft
  • Trainer and light attack aircraft
  • Maritime patrol aircraft
  • Tactical air transport aircraft
  • Medium-lift helicopters
  • Combat aircraft avionics
  • Aircraft maintenance, repair, and overhaul
  • Airborne C4ISR systems
  • Unmanned aerial vehiclesand much more ..

 

Navy and Coast Guard

The Vietnam People’s Navy has steadily grown in recent years with the acquisition of high-end platforms such as its new Kilo-class (Project 636) diesel-electric attack submarines and Gepard-class frigates, which were delivered by Russia along with considerable technology transfer as well as technical assistance for local shipbuilding facilities. Despite these impressive outlays, the navy is still expected to spend between US$300-400 million out to 2024 to further enhance its capabilities. To integrate its latest capabilities with the air forces, the service will likely prioritise the acquisition of network-centric systems, while continuing to upgrade its existing platforms.

Potential acquisition targets include:

  • Frigates
  • Corvettes
  • Fast-attack craft
  • Naval C4ISR systems
  • Point-defence systems
  • Surface to air missiles
  • Ship self-protection systems
  • Anti-submarine warfare systems
  • Coast guard patrol vessels
  • Maritime surveillance radarsand much more ..

 

Homeland Security

Vietnam’s annual homeland security expenditure is expected to exceed US$4.5 billion by 2024. This will be largely be driven by efforts to police its extensive maritime boundaries, along with the enduring requirement to counter human trafficking and the illicit drug trade. This is likely to increase the demand for police and security equipment that will enhance airport and seaport safety as well as border surveillance.

Potential acquisition targets include:

  • Small arms
  • Non-lethal weapons
  • Personal ballistic and anti-stab protection
  • CCTV cameras
  • Scanners
  • Data analytics
  • Anti-UAS/counter-drone systems
  • Security systems
  • Personal communications
  • Command and control systems
  • Anti-riot vehicles
  • Armored personnel carriers
  • Armored VIP vehiclesand much more ..