Defence and security to Vietnam

Trends and opportunities

The market

Moving into 2017 Vietnam is looking to develop defence cooperation with a number of new partners. Most notable among these are India and the United States. Cooperation with these countries points to a wider strategy to modernise forces for UN peacekeeping, contributing to regional security and humanitarian disaster relief. In recent years, Vietnamese Ministry of Defence announced major reorganisation of the military, with the formation of a new Vietnam Coast Guard (VCG) set to replace the Vietnam marine police.

In 2016, the United States lifted their ban on arms sales to Vietnam and is providing material assistance in this reorganisation. Procurement priorities include the acquisition of anti-submarine warfare and maritime surveillance capabilities that can deter potential aggression in the South China Sea. A growing priority is anti-shipping defence systems, particularly medium range portable missile systems supported by situational awareness radar systems.

Developing domestic defence industries was made a priority in Vietnam's revised constitution. However, as things stand, Vietnam's domestic defence industry is very limited. In order to boost its defence industry, Vietnam is looking to collaborate with international partners. Such collaboration may lead to the transfer of technology and know-how necessary for the development of a domestic defence industry.

The Vietnamese government has growing confidence in the local shipbuilding sector, as it followed up these successes with further orders in October 2012 for another patrol craft and a missile corvette. Local industry is exploring opportunities to produce larger and more sophisticated platforms. Shipyard 189 working with DAMEN has produced high quality mid-sized vessels for Australia. On the other hand, two submarine rescue ships and a recently launched Aviation Training Vessel are excellent examples of Vietnam’s capability of producing complicated platforms.

Australia has highlighted strengthened defence ties with Vietnam and other nations in Southeast Asia as a priority. In Canberra's 2016 Defence White Paper, it said Australia would help build the capacity of regional countries to respond effectively to security challenges through activities including exercises and training. In terms of potential exports to Vietnam, Australia would regard maritime security as a potential area of collaboration given its industrial capabilities and Hanoi's extensive requirements in this area.

Opportunities

With Vietnam's recent economic growth, Vietnam is looking to acquire new armoured personnel carriers, battle tanks, artillery, fighters, helicopters, transport, surface assets and anti-missile systems. Given that Vietnam relies on Soviet era defence platforms, Russia remains a key defence ally, particularly when it comes to providing maintenance, repair and training services. As part of the 'Comprehensive Strategic Partnership' agreed with Russia in August 2013, the provision is to set up a range of joint ventures that will enable Vietnam to repair and maintain its own military platforms.

In October 2011, the Vietnamese Government announced that it was acquiring four SIGMA class corvettes from the Netherlands. The deal represents Vietnam's first major procurement from Europe, and the assembly of two of the ships in Vietnam will deliver important technical know-how to the local ship-building industry. When the eight new corvettes are all in service they will greatly enhance Vietnam's ability to patrol its territorial waters. Australian companies may be able to identify and contest for downstream opportunities in the value chain.

To complement its foreign maritime procurement, Vietnam's domestic defence industry has made some important strides in recent years. In January 2011, Hong Ha, a local shipbuilder, launched the country's first ever domestically produced warship. The ship was reported to be based on the Russian Molniya-class patrol boat design, and is expected to be the first of 12 that Vietnam produces domestically under licence. The patrol boats are armed with artillery and anti-ship missiles.

In an effort to upskill and modernise its forces, Vietnam will require various training from international experts ranging from English language to specialist training.

Marketing your products and services

Market entry

Australian businesses preparing to enter the market must plan strategically and be persistent and consistent with face-to-face follow-ups. It can take up to one or two years to make a successful sale.

To enter or expand in Vietnam, depending on the nature of the business, Australian companies may directly deal with government departments or indirectly through the appointment of an agent or distributor. In order to be successful, Australian suppliers are highly encouraged to visit the market and spend time assessing market needs, sales potential and possible distributors for their products. It is important to conduct a detailed analysis of the market prior to entry.

Firms seeking a direct presence in Vietnam can do so by establishing a representative office, branch or foreign investment project.

Product demonstration and educational seminars on the latest technology, services and products in line with market demand can be a positive way to build brand recognition among potential end-users. An appropriate agent/distributor can assist in contacting developers, potential buyers/users, provide after sales service as well as organising product demonstrations. Providing technical support to your local partner will also signal your commitment to the market.

Links and Industry Contacts

Vietnam Ministry of National Defence
People’s Army Newspaper

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

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Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.