Vietnam Defence and Security Report Q4 2008

Vietnam's large and famously battletested army, strategic location and dynamic economy mean that it has the capacity to be a major regional player in terms of security and (if, for the time being, in low technology areas) defence production. Unlike most of its (near) neighbours, Vietnam does not have to contend with actual or potential internal conflict that stems from ethnic or religious disputes.

There is competition with China (and, to a certain extent, other countries) over 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. That said, Vietnam is in discussions with the US in regard to two way trade on nonlethal defence systems, which will provide longterm export opportunities in small arms and light weapons.