K-Defense Industry Needs to Shift Its Support System from Finished-Product Exports to 'Local Production'

[Financial News] As the K-defense industry, which has achieved success in Europe and the Middle East, seeks to enter Latin America to diversify its export markets, experts have called for expanding the existing support system beyond finished-product exports and export financing to include local production, overseas investment, and exports to third countries. Given the differences in weapons-purchasing and budget structures among countries, as well as the growing importance of local industrial cooperation, relying solely on existing export methods is unlikely to support further market expansion.
At the 'Public-Private Cooperation Seminar on Expanding Defense Exports to Latin America,' hosted by Democratic Party of Korea lawmaker Min Hong-chul at the National Assembly of the Republic of Korea on the 21st, government officials, financial institutions, and defense companies discussed support measures for entering Latin American markets.
Jang Woong-sik, head of Innovative Growth Finance Division 2 at The Export-Import Bank of Korea (KEXIM), cited Poland's recent moves toward defense cooperation and assessed that "the paradigm has changed." Rather than simply providing financing for the direct import of South Korean weapons, cooperation is expanding to include local production and exports to neighboring countries. Jang explained, "It's no longer just about exports. The idea is to build factories locally, produce goods there, and have local financial institutions participate when those products are exported to neighboring countries." He emphasized, "Policy, legal, and institutional support should also be provided when defense companies invest overseas to manufacture locally or export to third countries."
There were also calls for tailored approaches that take each Latin American country's political and fiscal system into account. Citing Peru as an example, Jang said, "Consultations with the Ministry of Economy and Finance are essential," adding, "Just because these are ground weapons, we should not meet only with senior Army officials; we must also meet with the fiscal and budget authorities." He explained that loans and guarantees for weapons purchases are reflected in national budgets, making consultations with fiscal authorities necessary from the sales stage onward.
Kim Geon-hwa, MOFA's senior official for Latin American affairs, who attended the seminar, stressed that the size of the Latin American market should not be overestimated, while emphasizing the need to broaden the focus to public security and the development of advanced industries. Kim said, "A comprehensive package strategy is needed to build allies within the government, including the Ministry of Trade, Industry and Energy and the Ministry of Education." He also identified geopolitical factors, such as the United States' efforts to counter China, as variables that should be considered when entering Latin American markets.
The National Assembly of the Republic of Korea is also moving to improve the institutional framework. Rep. Min said, "For the defense industry to become firmly established as a strategic industry, a separate contract-related law is needed to legally protect and regulate the unique contractual relationships in the defense sector." He added, "The reason I came to the National Defense Committee of the National Assembly of the Republic of Korea this time is that I want to gather various opinions and try to create a contract law."
[email protected] Song Ji-won Reporter