Vietnam Defence & Security Report Q1 2008

Vietnam is in the process of re-integrating into the international community, and as such much of its internal political and social structures have undergone change. Vietnam is also forging a role for itself in regional strategic and security developments, particularly with traditional allies. In Q407, Vietnam hosted a visit from North Korean officials, keen to learn from Vietnam's successful doi moi economic programme. Should the visit to Vietnam be successful, it is likely that the country may play a more significant strategic role in coaxing North Korea from its reclusive existence in Asia Pacific strategic relations.

In 2007, the Vietnamese government announced plans to reform the financial dealings of the Vietnam People's Army (VPA). The move to reform the private business enterprises of the Vietnamese armed forces is the result of it strengthening ties with other regional armed forces, which has kick-started the move towards a professionalised force focusing on conventional armed force duties. The move is part of the government's larger policy to consolidate all state-owned enterprises under the control of one umbrella group, and then to sell the stakes off to private investors to generate a steady revenue for the state for the next 10-20 years. Vietnam's defence spending continues to hover above US$3bn, but much of this money is allocated to wages and quality of life improvements. In 2005 the defence budget was estimated at US$3.15bn and in 2006 US$3.43bn. The 2007 budget is estimated at US$3.5bn.

Vietnam's local defence industry is smaller than that of its neighbours, including Thailand and Singapore, and thus the local defence industry faces stiff regional competition. Encouragingly, in Q207 the International Traffic in Armed Regulations amendment enabled the US to embark on examining two-way trade with Vietnam on non-lethal defence systems. In the long run this may provide Vietnam with additional export opportunities in the sale of small arms and light weapons.