The domestic defense industry has gained new momentum through the revision of the Export-Import Bank of Korea (Korea Eximbank) Act. It is expected to accelerate towards achieving the goal of US$20 billion in defense exports this year.
On Feb. 29, a bill to amend the Korea Eximbank Act, which increases the statutory capital limit of the Korea Eximbank from the current 15 trillion won (US$11.24 billion) to 25 trillion won, was passed during a plenary session of the National Assembly.
This amendment to the Korea Eximbank Act is expected to provide a boost to the overseas exports of the domestic defense industry. Domestic defense companies had already utilized their entire financial support limit during the initial contract of the 17 trillion won agreement with the Polish government. Therefore, an increase in the statutory capital limit was necessary to facilitate the second contract worth 30 trillion won.
Last year’s first-stage weapon export contract with Poland led to the depletion of 98.5 percent of the statutory capital limit of the Korea Eximbank. With the amendment to the Korea Eximbank Act, the depletion rate of the statutory capital limit has dropped to the 60 percent range, enabling additional financial support from the bank for domestic defense companies.
The Ministry of National Defense expects that this year’s defense exports will significantly increase to over US$20 billion compared to last year. Finalizing the second implementation contract with the Polish government is also seen as a critical task in achieving the defense export target.
Poland stands as South Korea’s primary export destination for defense products. In 2022, Poland accounted for a significant 72 percent of the total defense exports. Even in the preceding year, it maintained a substantial share at around 32 percent, constituting approximately one-third of the total.
With the revision of the Korea Eximbank Act, domestic defense companies can now accelerate the finalization of weapon contracts with Poland. According to the basic contract signed with Poland, the remaining contract items include 308 units of the K9 self-propelled howitzers from Hanwha Aerospace and 820 units of the second batch of the K2 tanks from Hyundai Rotem. Additionally, Korea Aerospace Industries plans to deliver 36 units of the FA-50PL under the second contract from the latter half of 2025 to 2028.