Vietnam Defence and Security Report Q2 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. Vietnam is also developing stronger ties with other regional powers. In Q108 India sought to strengthen military and diplomatic ties with Vietnam as part of its 'Look East' strategy, which is an attempt by India to usher in a period of closer relations with key states in South East Asia. Vietnam will have to manage its bilateral ties with India carefully as the former's decisions will no doubt be closely watch by China. Despite Vietnam consolidating its regional and international security identity, it can ill afford to alienate such an important ally as China.

In 2007, the Vietnamese government announced plans to reform the financial dealings of the Vietnam People's Army (VPA). The move towards a professionalised force focusing on conventional armed force duties is the result of it strengthening ties with other regional armed forces. The move is part of the government's larger policy to consolidate all state-owned enterprises. In Q108 Vietnam decreed that all military-owned defence industries will be managed by the government by the end of 2012. The change in ownership is part of the Defence Industry Ordinance, which dictates that the role of the indigenous defence industry is to support economic and social development as well as the defence of Vietnam.

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.