Background Briefing:

Vietnam: Military Modernisation

Carlyle A. Thayer
October 12, 2012


Vietnams long-standing defence policy, known as all peoples national
defence, involves integrating its regular conventional forces with several million
reserves, urban-based self-defence forces and rural militia, collectively known as
the Vietnam Peoples Armed Forces. Vietnams regular conventional forces,
including the army, air defence-air force, navy and border guard, are known
collectively as the Vietnam Peoples Army (VPA). The armed forces have
responsibility for national defence, internal security and contributing to national
socio-economic development (including, for example, natural disaster relief).
Over the last five years defence priorities have altered to take into account the
growth of Vietnams maritime economy, territorial disputes in the South China
Sea, the modernisation of other regional armed forces, and emerging military
technologies. Vietnams most recent Defence White Paper, issued in December
2009, emphasised gradual modernisation of the regular armed forces. Current
defence priorities were outlined in January 2011 at the eleventh national
congress of the Vietnam Communist Party (VCP). The Political Report, delivered
by the party Secretary General, identified modernisation of the armed forces and
defence industry as one of the five key national objectives for the next five years
(then 2011-2015). According to this report, the major challenges affecting
national defence responsibilities in the new environment included: war using
hi-tech weaponry, disputes over maritime sovereignty, terrorism, and hi-tech
and transnational crimes. In order to meet these challenges the Political Report
gave priority to ensuring that the armed forces incrementally have access to
modern equipment with priority being given to the navy, air force, security,
intelligence, and mobile police forces. Speaking on the sidelines of the party
congress, General Phung Quang Thanh, Minister of National Defence, included
electronic and technical reconnaissance among the priorities for defence
intelligence while head of the VPAs General Political Department (Tong Cuc
Chinh Tri), Lt. Gen. Ngo Xuan Lich, specified armaments, ammunition and
technical means in his address to congress .
Thayer Consultancy
ABN # 65 648 097 123




2
Capability improvements
Vietnams force modernisation programme has increased pace in recent years.
Russia remains Vietnams main provider of advanced military equipment and
technology. Since 2008, the Vietnamese navy has taken delivery of two Gepard-
class guided missile frigates and four Svetlyak-class fast patrol boats. The navy
also procured some 400 Kh-35 Uran/SS-N-25 anti-ship missiles while the army
received 40 Yakhont/SS-N-26. VPA air-defences force took delivery of two
batteries of S-300PMU-1 surface-to-air systems, 200 9M311/SA-19 Grison surface
to air missiles, four Kolchnya air defence search radars and three VERA passive
radio locators. In 2010-12, the air force acquired twenty Su-30MK2V combat
aircraft armed with Kh-59MK anti-ship cruise missiles; it also procured 100 R-73
(AA-11 Archer) short-range air-to-air missiles. The army took delivery of two
batteries of the K-300P Bastion coastal defence missiles as well as Extended
Range Artillery Munitions; comparable in size, according to manufacturer Israel
Aerospace Industries in 2005 to the M270 Multiple Launch Rocket System
(MLRS).
Notable future acquisitions include six Kilo-class conventional fast attack
submarines (SSK) and four Dutch Sigma-class corvettes. The first Kilo was
launched in Russia on 28 August 2012 and delivery was expected by the end of
2012. The Kilos will likely be armed with heavy torpedoes (53-56 or TEST 76) and
anti-ship missiles (3M-54E or 3M-54E1). In July 2011, Russian industry sources
confirmed that Vietnam will take delivery of the Novator Klub-S (SS-N-27) anti-
ship cruise missile, an advanced capability with a range of around 300km; the S
designation indicates a submarine-launched version. Vietnams Defence
Minister said in August 2011 that he expects to deploy a modern submarine fleet
by 2016-2017.
This force modernisation programme has led the VPA to begin developing a
capacity to conduct military operations in Vietnams extensive maritime domain.
In September 2009, Vietnam began transferring air force assets and personnel to
the navys 1st Regional Command headquartered at the northern port city of
Haiphong. This is the first step towards creating a naval air arm in all five of
Vietnams naval commands. In June 2011, Vietnam conducted widely publicized
live-firing joint exercises off its central coast involving naval warships, coastal
artillery and air force fighter-bombers. In 2012, Vietnam commenced
reconnaissance patrols by Su-27/Su-30 aircraft over the South China Sea.
However, Vietnams procurement of big ticket items such as the Su-30s and
Kilo-class submarines has substantial implications for defence funding, as well
as training and maintenance regimes. Purchase contracts invariably include
provisions for training, service and technology transfer. For example, in 2009
when Vietnams purchase of the Kilo-class submarines was first announced, the
cost was put at between US$300 and US$350 per unit or US$1.8-US$2.1 billion in


3
total. The cost has now risen to US$3.2billion to include armaments and Russian
construction of a submarine service and maintenance facility at Cam Ranh Bay.
Vietnamese naval ratings were sent for training to St. Petersburg, where the
Kilos are being constructed.
International defence relations
Vietnams participation in international defence cooperation has increased since
the mid-2000s in pursuit of its foreign policy aim of multilateralising and
diversifying its external relations and becoming a reliable partner to all.
Priorities in defence cooperation are to exchange military delegations, exchange
experience and information, cooperate in professional military education and
training, and cooperate in humanitarian assistance.
Vietnam has signed a wide number of and Memoranda of Understanding
(MOU) and Defence Cooperation Agreements (DCA) with foreign states. These
cooperation agreements indicate that Vietnam is seeking assistance, services and
equipment acquisitions in six major areas: the storage, maintenance and
upgrading of existing military equipment; modernisation of platforms and
equipment for the army, navy and air force; modernisation of Vietnams defence
industry; maritime logistics capacity in the South China Sea; mitigating the
effects of natural disasters, notably flooding and storm damage , and search and
rescue at sea; and finally training for future involvement in UN-endorsed
peacekeeping operations.
Its closest defence ties are with fellow members of the Association of Southeast
Asian Nations. Starting in 2008 the Vietnamese navy made its first port visits to
Malaysia and Thailand. Vietnam currently conducts joint coordinated naval
patrols with Cambodia, Malaysia and Thailand. In March 2012 Vietnam and the
Philippines agreed to start coordinated patrols, also under discussion between
Vietnam and Indonesia. But priority is given to strategic dialogues with key
interlocutors, include Australia, China, France, India, Japan, Russia and the US.
In 2010, Vietnam raised its strategic dialogues with both China and the United
States to vice ministerial level. In September 2011, Vietnam and the US held their
second Defence Policy Dialogue. The two sides signed an MOU identifying five
priorities, though these were in the low-key areas of: regular high-level
dialogues between defence ministries; maritime security; search and rescue;
studying and exchanging experiences on UN peacekeeping; and humanitarian
assistance and disaster relief. The US commenced port calls in 2003 and, in 2010,
US naval ship calls were widened to include joint naval activities with Vietnam
involving the exchange of non-combat skills. Vietnam has also agreed to conduct
minor passage repairs on U.S. Military Sealift Command (MSC) vessels. The
most recent repairs were conducted in the commercial port facilities at Cam
Ranh Bay. Vietnam makes a distinction between official good will naval warship
visits, which are restricted to one per country per year and commercial repairs.


4
The MSC vessels are not warships and three have been serviced in Cam Ranh
Bay (and 2 other vessels in two different ports). Otherwise, port visits are
restricted to Hanoi, Da Nang and Ho Chi Minh City.
In August 2011 at the second China-Vietnam Strategic Defence and Security
Dialogue, it was agreed that military exchanges would be increased and a hot
line established between the two defence ministries. China agreed to share its
experiences in UN peacekeeping. In April 2006, China and Vietnam commenced
biannual joint naval patrols in the Gulf of Tonkin. In recent years the joint
patrols have included search and rescue exercises. The thirteenth joint patrol,
which was conducted in June 2012, included day and night signalling exercises
and an anti-piracy drill. The PLA Navy resumed port visits to Vietnam in
November 2008 after a hiatus of seventeen years. PLAN ships now visit
annually. The VPA Navy made its first port call to China in June 2009 and
revisited in June 2011. On September 3, 2012 both sides held their sixth defence
and security consultations at vice ministerial level. The two sides agreed to
continue high-level visits, strengthen dialogue and consultation, promote
cooperation in the fields of personnel training border exchanges, navy and
multilateral security issues.
Marine Police
Though the above might indicate that China and Vietnam seem to have
compartmentalised their territorial dispute in the South China Sea from wider
bilateral relations, it is clear that there are challenges in managing the simmering
tensions between the two over their disputes around the Spratley Islands, the
Paracels and Johnston Reef. One way that states party to these disputes seek to
exert influence, while simultaneously seeking to manage escalation, is by using
paramilitary forces instead of regular armed forces. In Vietnams case, its Marine
Police (Canh Sat Bien) has confronted China Marine Surveillance vessels
particularly in these areas of overlapping sovereignty claims. The Marine Police
was formally established as an independent unit in March 1998 under an
ordinance adopted by the National Assembly. This ordinance places the Marine
Police under the direction of the Ministry of National Defence and assigns the
Marine Police a role in national defence in cooperation with the navy.
In peacetime the Marine Police has responsibility to enforce marine law in
Vietnams internal waters, territorial waters, exclusive economic zone and
continental shelf. They are tasked with countering smuggling, drug and human
trafficking, piracy and armed robbery against ships and tackling marine
pollution. The Marine Police are also responsible for protecting Vietnam
sovereignty and sovereign jurisdiction, maritime law enforcement, marine
assistance to vessels in distress, and search and rescue. Their equipment
inventory consists of thirty-five ships, of which twenty-five fall in the 120-400
tonne range. Vietnams Song Thu shipbuilding company and the Damen Group


5
from the Netherlands have constructed ten Offshore Patrol Vessels in the 1,200-
2,500 tonne range. Moves increase the number salvage of ships and all-weather
OPVs in the 2,000 ton range will boost Marine Police capabilities, as will plans to
expand the Marine Polices naval aviation element. The Marine Police received
the first of three CASA-212-400 maritime patrol aircraft in August 2012.The
Marine Police OPVs are deployed in the South China Sea and have taken the
initiative to confront China Marine Surveillance vessels particularly in areas of
overlapping claims.
Defence economics and industry
Vietnams 2009 Defence White Paper broke new ground when it released figures
on the total defence budget between 2005-2008. At the same time, it was
reported that the government had resolved to allocate 1.8% of Gross Domestic
Product (GDP) to the defence budget though it has, as Table One below
indicates, exceeded this figure every year with an average of 2.64% of GDP for
the five years from 2008-2012.The defence budget is tied to national economic
growth. Over the last decade, defence spending as a percentage of GDP peaked
at US$5 billion in 2007 and then fell to US$2.5 billion in 2010 due to the effects of
the global financial crisis. Defence spending recovered in 2011 with an 8.5% real
increase over 2010. The defence budget is expected to rise to US$3.3bn in 2012.
This trend is also reflected in the percentage of nominal government expenditure
on defence (see Table One)
Table One Vietnams Defence Budget, 2008-2012
Defence Budget 2008 2009 2010 2011 2012
Vietnamese dong (trillion) 47.3 50.0 44.4 55.1 70.
U.S. dollars (billion) 3.2 3.2 2.5 2.7 3.3
Percentage of GDP 3.2 3.0 2.2 2.3 2.5
% Nominal Government
Expenditure
11.4 9.0 7.0 7.7 -
Source: Australia, Defence Intelligence Organisation, Defence Economic Trends in the Asia-Pacific
2011, DIO Reference Aid 11-2, p. 15 and Vietnam Announces a 2012 Defence Budget of VND70
trillion (3.3 billion USD), Defense Studies, November 23, 2011.
Vietnam does not provide a detailed breakdown of its defence budget. A
member of a Vietnamese National Assembly delegation that visited the
Pentagon in August 2008 to study its budget procedures informed his hosts that
defence budget details are only provided to the chairman of the National
Defence and Security Committee. Members of the committee vote up or down
on the total figure and do not examine detailed allocations. One defence analyst
was told by defence ministry sources, when visiting Hanoi, that the Defence
Minister could approach the prime minister with special extra budgetary
requests and if the funds were available these requests would be approved.


6
Because of the lack of transparency, informed observers estimate that Vietnams
defence expenditure could be double the officially published figures.
The 2009 Defence White Paper noted that the major portion of the defence
budget was spent on ensuring decent living conditions for uniformed and
civilian defence personnel and supporting the operations of defence industry
and maintaining [] VPA readiness. The White Paper also noted the budget
included defence requirements in general and for the acquisition of equipment
and weapons for the armed forces in particular.
According to the Defence White Paper, priorities for Vietnams defence industry
include the maintenance, manufacture, improvement and upgrading of weapons
and equipment. The Defence Cooperation Agreements noted above contain
general clauses on bilateral defence industry cooperation in five priority areas:
promotion of defence research and technology transfer; co-production of
weapons, maintenance, upgrading and repair; technical support; and personnel
training.
Russia is Vietnams main defence industry partner. Moscow and Hanoi have
entered into co-production of patrol boats from pre-assembled components.
Vietnam has approached Russia and India for assistance in co-producing anti-
ship cruise missiles and the repair and maintenance of naval vessels, and is
seeking the transfer of Russian technology to help maintain its fleet of Su-30
aircraft and Kilo-class submarines. That said, Hanoi does not rely solely defence
industrial ties on Moscow. It is also expected to co-produce two Sigma-class
corvettes in-country with the assistance of the Dutch Damen Group. Also,
Vietnam has supported a Malaysian proposal to promote defence industry
cooperation among ASEAN members. Vietnam has separately discussed co-
producing, with Indonesia, fixed wing transports, maritime surveillance aircraft
and multirole helicopters and various military equipment with the Philippines.
Vietnam has also south assistance from Singapore to develop its capacity to store
ordnance underground.
The 2011 Political Report listed objectives for the next five years including to
further push the development of defence and security technology industry and
to strengthen scientific research in military and security capable of defeating hi-
tech wars from enemy forces. In 2011-12, three important defence industry
accomplishments occurred. First, Hong Ha defence shipbuilding company
successfully launched Vietnams first indigenously constructed naval vessels, a
54-metre 400 ton fast patrol boat (Project TT400TP) and, in October 2011, a 72-
metre troop transport vessel. The patrol boat was based on a Russian designs
and constructed by Vietnamese engineers who had been sent abroad to study
shipbuilding Second, it was the announcement in February 2012 that Vietnam
and Russia would co-produce a modified Uran (Switchblade) anti-ship missile in
Vietnam. The modifications could enable Vietnam to fit the missile to aircraft,


7
helicopters, ships and coastal batteries. The third development was the
announcement, in June 2012, that the Military Institute of Technology had
mastered the production of a key oxidizing ingredient for fuel used by
Vietnams R-17E (Scud) missile force.
Suggested citation: Carlyle A. Thayer, Vietnam: Military Modernisation, Thayer
Consultancy Background Brief, April, , 2013.
Thayer Consultancy Background Briefs are archived at Scribd.com
1.6bn (:1..7(X,) in 2009
'th several level s in
Iget was US$lO.}bn,
g national revenue
I US$16bn spent on
I, Taiwan is unlikel y
~ ' time soon.
r force will further
{reducing the sha re
The plan to triple
H528bn (US$lbn)
lousing and restruc
to local industri al
linistry of Economic
nse (ivID) Indust ri al
Council and the
strial Coope ra tion.
ishington' s ev ide nt
litary hardware to
al shift in Taiwan' s
mphasises self-rcl i
ecided in Septe m
n package to help
'Bs with new radar,
iment.
pressure, the White
nsideration' to se11
late in 2012 noth
of the programme
irc raft because it is
I threats from Chi
sts, limited qualita
WBs, and the small
n range of Chinese
should spend else
. all ing that it could
lor ts, denied by the
Ing Taiwan could
1 branch, Aerospace
n (AIDC) , is mean
de. It hopes it can
n international F-16
NTS4.5bn for other
expenses (1.42%)
I
NTS155.5 bn for
NTS86.5bn for
military personnel,
investments
/ (49%1
(273%) -,
Total
NT$317.3bn
(US$10.72bn)
I
NTS70.8bn for
operations, (22.3%)
Note: The personnelli gure notedhere relates to the activecomponent.
Figure 20 Taiwan: 2012 Defence Budget
Composition
Ther e ha s also been par ticular emphasis on dual
use techn ology. The MND's regul ations on indust rial
cooperati on, amended in November 2010, mean that
the military is now expe cted to increase techn ology
transfer to the private sec tor and increase coopera
tion with aca de mic ins titut ions . Most of Taiwan' s
advanced weapons systems are US in origi n. Despi te
the lack of forma l diplomat ic ties, Taiwanese F-16A/B
pi lots train at Luke air force base in Arizona and on
the P-}C in Florida, Since 2008, procur ements fro m
the US ha ve include d six PAC-3 systems (the first four
are scheduled for 2014- 2015). In conjunc tion wi th
Taiwan's indigenous Tien KUlig II (TK-2), these will
improve Taiwan's BMD capacity.
The ai r force is set to decommission 56 Mirage
2000 and 45 F-5 fighters by 2020, leaving a mi x of
F-16A/Bs and F-CK-1 Ching KilO Indigenous Defence
Fighters. Alternatives to the F-16C/D remain limited.
However, Aerospace Industri al Development
Corporation (AIDC), which man ufactured the Ching
KIlO, is involved in a mi d-life update for the aircraft,
inclu ding the integ ration of Tien Chien II Sky Sword
air- to-air missiles and TC- IIA anti-radia tion missiles
(un de r development at CSISl).
The army continues to focus on counter ing an
amphibious attack on Taiwan and defending offshore
islands. During peacetime, it spe ar heads major
humanitarian relief efforts and anti-terrorism opera
tions. The army signalled its intention to procu re
sur plus US Abrams tan ks as excess defence articles to
add firepower along coa stal areas, thoug h critics said
Asia 275
that, given the Abrams' size, Taiwa n should ins tead
bu y medium-weight wheeled armoured vehicles or
the M1CX)A6 Paladin self-propelled howitzer.
The navy has benefitted from a shift towards
an asymmetric strategy to counter Chi na, focusing
on ligh t, low- signature fas t-a ttack missile boa ts
for littoral defence. Sinc e 2010, 31 KWIIlX Hila VI 70
tonne fast- attack boa ts equipped wi th Hsiung Fe/lg
II (HF-2) anti -ship missi les from manufacturer
CSIST have been deployed in th ree squad rons. From
2011, the navy also began upgrad ing its .')00 tonne
lin n Chiang-class patrol boats which ar c d ue to take
four Hsiung Feng III (HF-3 ) ramj et -powered super
son ic anti-ship miss iles, touted as Taiwan's carrier
kill e r. A new 450 tonne fas t-attack corvette being
developed under the Hsun Hai programme wi ll be
fitted with HF-2 and HF-3 lau nchers. In early 2012,
reports emerged that Taiwan could, wi th foreign
engineering he lp, emba rk on a domes tic programme
fo r medium-sized submarines. At p resen t, the navy
onl y has two combat-ready Hai LUllg submarines.
Work is ongoing to gi ve them Harpoon missile capa
bil ity.
In late 2010, a senior de fence official confirmed
rumours that CSIST was developing a longer-range
HF-2E LACM to provi de cou ntcrforce capability.
The US denied assis ting wi th the programme .
Was hi ngton' s adherence to the Mis sile Technology
Co ntrol Regime has del aye d efforts by C51ST to
exte nd the range of its missiles and minia tu rise
warheads,
VIETNAM
Vietnam' s de fence priorities have changed over
the past five years to reflect its growing ma ritime
economy, territorial claims in the South China Sea,
other regional states' military modernisation and
emerging mi litary technologies. The December
2009 Defence White Paper adv ocated incremental
mo dernisation. Current priorities were outline d in
January 2011 at the Commu nis t Party' s eleventh
na tiona l congress. The political report delivered by
the secretary-gener al ide ntifie d armed-for ces and
defence-industry modernisation as key nati onal
objectives.
Its force-modernisation programme has led the
military to star t developing cap acity to conduct oper
ation s in Vietnam's maritime domain. In September
2009, Vietnam began transferring air-force asset s
and personnel to the navy' s 1St Regional Command,
276 THE MILITARY BALANCE 2013
headquarter ed at the northern port city of Haiphong.
This is the first s tep towards creating a naval air ann
in all five of Vietnam' s naval commands. In 2012,
SU-27/Su- 30S star ted flying reconnaissance missi ons
ove r the South China Sea. (see map opposite).
Strategic rel ations
Vietnam's parti cipation in inte rnati onal defence
cooperation has increased since the mid-zooos in
pursu it of its foreign po licy aim of ' multilater al
ising and di versifying' its extern al re lations . In 2010,
Vietnam rai sed its stra tegic dia log ues with both
China and the Uni ted States to vice-minister ial level.
In September 2011, Vietnam and the US held their
second Defence Policy Dialogu e and signed an MoU
on cooperation in low-key areas such as sea rch and
resc ue (SAR) and HA/ DR. Vietnam has also ag ree d to
conduc t minor passage repairs on US Mi litary Sealift
Command (MSC) ves sels. The most recent repairs
were conduc ted in the commercial po rt facilities at
Cam Ranh Bay. Vietna m makes a dist inction bet ween
official goodwill visi ts by naval warships, which a rc
restricted to one per coun try per year, and commer
cial repairs. The MSC vessels are not warships and
three have been serviced in Cam Ranh Bay (as well as
two other vessels in two different ports).
In August 2011, at the seco nd China-Viet nam
Stra tegi c Defence and Secu ri ty Dialogue. it was
agree d tha t milita ry exch anges wo uld be increased
an d a hotline es tablished bet ween the two defe nce
minis tries. Chi na agreed to sha re its experiences in
UN pea cekee pi ng . Chi na and Viet nam commenced
biannual joint naval pat rol s in the Gu lf of Tonkin in
April 2006. In recent yea rs these join t patrol s have
included SAR exe rcises . The thirteen th joint pat rol ,
in June 2012, included communica tions and anti
piracy d rills . The I' LA Navy resumed po rt visits to
Vietnam in November 2008 after a 17-year ga p. The
Vietnam People' s Army (VPA) Navy made its first
port call to China in Ju ne 2009 and revisited in June
2011. On J September 2012, both si des held their
six th defence and security consu ltations at vice
minist erial level.
Marine Police
Altho ug h Chi na and Vietna m mi ght see m to have
separated their Sou th China Sea di spute from wider
bil ateral relation s, cha llenges remain in ma naging
these si mme ring tensi ons. Use of paramilitary forces
is one way that st at es seek to exer t influ en ce, while
simultaneo us ly seeking to ma nage esca lation. In
IISS
CHI NA
Gulfof Tonkin
THAILAND
Gulfof Thailand South China Sea
Map 10 Vietnam's Su-27/Su-30 bases
Vietnam' s case, its Marine Police has confronted
Chinese ma rine surveillance vessels in di spu ted
areas . Th e Marine Pol ice ope ra tes under the direction
of the defence mi ni st ry and plays a rol e in national
defen ce in coo pera tion with the navy.
In peacet ime, the Ma rine Police has respon sib ility
for enfor cing maritime law as well as prot ecting
Vietnam sovereignty and sovereign jurisd iction.
Twenty -five of its 35 sh ips are in the 120-4 0 tonne
range. Vietna m's Song TIm shipbuilding company
and the Da me n Group from the Nethe rlands ha ve
cons tructed ten Offshor e Pat rol Vessels (OPVs) in
the 1,2(X)-2,500 tonne ran ge. Moves to increase all
weather OPVs in the 2,000 tonne range will boost
capabilit ies, as will pl an s to expand the Marine
Pol ice's naval-aviati on ele me nt. Th e first of three
CASf\ -2'I2-400 maritim e-patrol aircraft wa s received
in August 2012.
Defence econor
Vietnam's 2009 I
ground by releasir
from 2005-08. It v
merit resol ved to a
budget. In practic
exceede d this bene
2.25'1" of GOP allo
from 2009-12. Stroi
has ena bled increa
to VND5 5.1tr ( U S
ag ain to VND70ti
inc rements averag
However, Vietn
ra tes of inflation a
because of excessi
curr ency devalu ati
and exchange rate
diture onl y rose I
to 164 1,. in 2012, '
governmen t's suo
Measures to curb
economic growth I
projected to drop tc
if this will modera
increases. But defe
mil itary ou tlays as
s pe n d ing rose fror
while defen ce exp
rose from 2.24'Yc, to
ea ting that defence
growth between 20
Still , Vietnam]
o pa que and the co
breakdown. One I
that defencc-budg
th e chairman of tlj
Committee. Meml

the total figure bu'
tions. According tG
mini ster can appro!
ex tra budgetary rei
able these request.
th e lack of transpa
ex pendi ture could I
- - -TISsl
CH INA
Oa Nang II
C29 Regt - SlI30MK2
TNAM'
-- -
Ph nRang I
C25Regt -
.tl I
South China se I
I

ases
has confro nted
;els in d isputed
ider the direction
1 role' in n nti ona!
V.
AJ S responsibilit y
ell JS protect ing
jurisd ictio n.
he 12(}-400 tonne
uilding company
'letherlands ha ve
'esseIs (OI'Vs) in
!5 to increase all
range w ill boos t
Jand the Ma rine
11(' first of th ree
.raft was receiv ed
Defence economics
Vietna m's 2009 Defence 'Wh ite Paper broke new
ground by releasing figur es on tota l defence budgets
fro m 2005-DS. It was als o reported that the gOVl'rn
merit resol ved to allocate 1.8'i{, of COP to the defence
budget. In practice, the official defen ce budget has
exceeded th is benchmark eve ry year, with an average
2.25% of C DI' alloca ted to defence for the fou r years
from 20(>9-12. Strong economic growth in recent years
has ena bled increased outl ays on defence, w hich rose
to VND55.1tr (lIS$2.67bn) in 2()"11, befo re increasin g
'lgai n to VND70tr (US$3'33bn) in 2012 - no minal
increments ave raging 25.6% ann ua lly.
Howeve r, Vietna m expe rienced one of the highest
rates of infla tion across Asi a in 2011 (18.7/.,), in part
beca use of excessive credit growth and a seri es of
currency devaluations. Thus, a t cons tant 2010 pr ices
and exc hange rat es, Vietnamese rCdI defence expen
dit ure only rose by 2.7% in 2011, before growing
to r6.9' i{, in 2012, although in part this refle cted the
govern mlc' nt's success in brin ging down in fl ati on.
Measures to curb infla tion have sta rted to constrain
eco no mic g ro w th (w hich fe ll to 5.9% in 2()J1 and is
projected to drop to 5.1% in 2012). It remai ns to be see n
if this will moderate Vietnam' s defence expe nditure
increases. But defence spe ndi ng has been prio ri tised :
military ou tlays as a per cen tage of total government
spending rose fro m 6.HS% in 2010 to 7.72% in 2012,
whi le defen ce ex pendi ture as a pe rcent age of COP
ros e fro m 2.24% to 2.42% over the sa me per iod (ind i
cating that defence-sp end ing growth exceeded COP
growth bet ween 2010 and 2(12).
Still, Vietna m' s budget ary practices remain
Opil quc and the country docs not provide a budget
br eakdown. One Vietna mese official has indicated
that defence-budget details are only p rovided to
the' chairman of the National Defen ce and Secu r.ity
Committee . Me mb er s of the committee vote on
the total figure but do not exami ne detailed alloca
tions. Accord ing to informed obse rvers, the defence
mini ste r can approach the prime minist er with specia l
ext ra budgetar y reques ts, and if the funds were ava il
able these requ -s ts would be approved . Because of
the lack of tra ns parency, it is es timated that defence
expe nd iture could be d ouble the off icial fig ures.
Asi a 277
Procurement and industry
Ru ssia remains Vietnam' s main provider of ad va nced
milita ry eq uip ment an d technology, and since 200S
the navy has taken del ivery of two Ccpard-class
guided mi ssile frigates (of four ordered) and some
400 Kh- 35 Urall/SS-N -25 anti -shi p missiles. The VPA' s
air-defences force took del ivery of two S-30oPMU -1
batteries, 200 9M311/SA-19 Grison mi ss iles and four
Kolcllll!!11 air-defence search ra dars. In 201()- 12, the ai r
force acq uired 20 SU-30MK2V comba t ai rcraft a rmed
wi th Kh-59MK anti -sh ip cruise missiles. The na vy
recei ved two batt eries of the K-300P Bastiun (SS-C-5
Stooge) coas tal defence missile system.
Not able fu tu re acquisi tion s include six Kilo
clas s attack su bmarine s and four Du tch Siglllil-class
corvettes . The first Kilo was lau nched in Russi a on 2S
August 2012, an d delive ry was expected by the end
of 2012. Th e Kilos will like ly be armed wi th heavy
tor ped oes (53-56 or TFST 76) and anti-shi p missiles.
The Kilo is ca pable of usin g the Nova tor Klub fam ily
of missil es, includ ing the 3M54E (SS-N-27 Sizzler).
W he n the Kilo purchase was first announced, the tot al
cos t wa s es timated by foreign analysts at U $1.8bn
$2.1bn . This has now risen to USS3.2bn to include
armament s and Russi an const ruction of a se rvice and
mainten ance facili ty at Cam Ranh B'lY.
Vietnam has al so approached Russia and india
for assi stance in producing anti-shi p cru ise missiles
and the repair and maint en an ce of na val vesse ls, and
is seekin g the t rans fer of Russian technology to help
maintain its SU-30S and Kilo-clas s submarines.
Hanoi is a lso expected to p roduce' two of its
upcoming Sigma-class corvettes in- count ry with
the assistance of the Du tch Damen Crou p. Between
2011-12, the Hon g Ha shi pbui ldi ng comp'l ny
launched Vietnam ' s first indigeno usly con stru cted
naval vesse ls: a 54m, 400 tonne fast pa tro l boat
(Project TT400TP) and a 72m t roop transport vessel.
In Feb rua ry 2012, it was announced that Viet na m and
Russia would joi ntly prod uce a modified Uran an ti
ship mi ssile in Vietnam, while in [un e 2012, it was
announced that the Military Insti tu te of Tech nology
had ma stered the production of a key oxid ising ingre
d ient for fuel used by Vietna m' s R-17[: (Scud) missile
force.