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Market |
Defence |
Report Type |
Market Research |
Country |
Vietnam |
Published |
12 February 2009 |
Number of Pages |
42 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Vietnam’s large – and famously battle-tested – army, strategic location and dynamic economy mean that it has the capacity to be a major regional player in terms of security and defence production. However, the extent to which Vietnam is able to live up to its potential in this respect is largely dependent upon its ability to withstand the prevailing global economic uncertainty. We have revised up our 2008 GDP growth forecast somewhat from 5.5% to 6.0%, while simultaneously bringing down the 2009 projection from 7.0% to 5.0%. Further revisions might be needed on the back of a deeper-than-anticipated recession in the US. Indeed, odds now appear tilted towards a more prolonged economic downturn in Vietnam as an adverse global macroeconomic backdrop extends the policy-induced slowdown in 2008. Our previous outlook envisaged the Vietnamese economy taking off again in H209 as eased monetary conditions and a global recovery gave impetus to domestic and external demand. This anticipation now looks overly optimistic as the true depths of the financial troubles in the European and US economies have been revealed, prompting us to revise our outlook for a host of export-dependent Asian economies.
Another issue impacting on Vietnam’s defence-related aspirations remain the on-going competition with China for resources in the South China Sea. Vietnam is strengthening its defence ties via alliances with traditional allies and other regional South East Asian partners. It has also strengthened military ties with India. The government’s policy is to consolidate all state-owned enterprises, and as part of this, it has decreed that all military-owned industries will also be managed by the government by the end of 2012.
Part of this vetting and restructuring is creating a more professional armed force in the Vietnam People’s Army. However, despite its formidable fighting history, Vietnam’s defence industry is smaller than Thailand or Singapore’s, and there is acute competition for technology from the more established regional players.
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