Korea to offer $5 bn insurance for defense exports

South Korea will provide more than 7 trillion won ($5 billion) in insurance this year for domestic defense companies' exports as the country aims to join the ranks of the world’s four largest countries in terms of defense systems exports. the Ministry of Trade, Industry and Energy (MOTIE) said on Wednesday.

“To ensure (Korean) companies fulfill the defense orders received from Poland and other countries without delay, (the government) will strengthen financial support to defense companies, including expanding trade insurance coverage to more than 7 trillion won this year,” the ministry said in a statement.

The announcement came after it unveiled measures aimed at nurturing domestic defense companies.

The government will lead this year's investment of 400 billion won, about $300 million, in defense and military parts manufacturers with cutting-edge technologies in the five sectors of aerospace, artificial intelligence, manned and unmanned aerial vehicles, semiconductors and robotics.

South Korea will also form the country’s first defense industry-dedicated fund to raise at least 36 billion won within the year to finance R&D and business growth in the sector.

To that end, the country will provide the industry with government-wide support in collaboration with the academia and private sector, as well as state-run agencies, including the Ministry of National Defense, the Ministry of SMEs and Startups, the Export-Import Bank of Korea and the Korea Defense Industry Association.

The government will also help the industry foster more than 2,000 talents annually and train them.

South Korea has emerged as a leading exporter of defense systems over the past few years, clinching a string of several billion-dollar export deals for fighter jets, armored vehicles and missile interceptors from Poland, Australia, Egypt and the Middle East.

LIG Nex1 Co. signed a $3.2 billion contract with the Saudi Ministry of Defense in November of last year to deliver its missile interceptor system.

Hanwha Aerospace Co. won a $2.4 billion armored vehicle supply deal to Australia in December.

Write to Sul-Gi Lee at surugi@hankyung.com

Yeonhee Kim edited this article.