Hanwha Aero President Criticizes: "Export Contracts Worth 4 Trillion Won Each Are Flooding In, But Financial Support Increases Only 2 Trillion Won Annually"

Shin Hyun-woo Presents at Forum Hosted by the National Academy of Engineering of Korea
"A Control Tower Needed to Support Export Finance System"

Shin Hyun-woo, president of Hanwha Aerospace, criticized the government for needing to accelerate the expansion of export finance support funds. The government plans to increase export finance support by 2 trillion won annually over the next five years, but he bluntly stated that this is still insufficient for South Korea's defense industry to fully enjoy a boom.

On the 25th, Shin attended a forum hosted by the National Academy of Engineering of Korea (NAEK) at EL Tower in Seocho-gu, Seoul, and said, "The government says it will increase export finance support by 2 trillion won annually for five years," adding, "We have to proceed with multiple export contracts simultaneously, so I am concerned whether increasing by 2 trillion won each year will be effective."

On the 25th, Shin Hyun-woo, President of Hanwha Aerospace, is giving a keynote presentation at the 272nd NAEK Forum hosted by the National Academy of Engineering of Korea, held at EL Tower in Seocho-gu, Seoul.
[Photo by Choi Seo-yoon]

Earlier, the ruling and opposition parties passed an amendment to the Export-Import Bank Act in the National Assembly to raise the statutory capital limit of the Export-Import Bank from 15 trillion won to 25 trillion won to support a $2.7 billion (about 3.6 trillion won) export contract with Poland. The plan is to gradually increase the limit by 2 trillion won annually over five years, totaling 10 trillion won. In 2022, the Export-Import Bank and Korea Trade Insurance Corporation, both official export credit agencies (ECAs), supported 70% (12 trillion won) of the total $12.4 billion (about 17 trillion won) export contracts Korean defense companies signed with Poland through export financing. This measure was taken because financial support reached its limit, delaying additional contracts worth about 40 trillion won by defense companies.

However, he said, "I am not trying to criticize the government for why it is only this much," and added, "Until now, we had only exported about 3 trillion won, but recently, unit exports have become 2 to 4 trillion won ($2 to $3 billion), so neither our government nor financial institutions had prior experience supporting this scale, and the conditions were not prepared."

Shin proposed creating a control tower within the Export-Import Bank to support export finance systems to strengthen defense support. He said, "Countries like Poland and other European nations purchase weapons in large quantities, so they thoroughly request loan finance support from countries exporting weapons," and added, "A control tower should be established at the Export-Import Bank so that the personnel in charge can consistently handle export finance-related tasks without hesitation."

He continued, "A tool should be prepared so that commercial banks and policy banks can act as one team and actively engage in export finance support." In France, the ECA institution is responsible for evaluating the creditworthiness of export partner countries and setting credit limits for each case.

On the 25th, Shin Hyun-woo, President of Hanwha Aerospace, is giving a presentation on the topic of 'Export Finance and Defense Export Support Measures.'
[Photo by Choi Seo-yoon]

Shin also said, "In the long term, we need to introduce a Korean version of Foreign Military Financing (FMF)." FMF is a program by the U.S. Department of State that supports allied countries with part of the defense budget tax. It provides financial support through grants or loans so foreign governments can purchase U.S.-made weapons. Shin said, "If we create a system at the government level to fund countries that can be our allies, companies will be able to aggressively secure orders without limitations."

Shin also emphasized that personnel from the Agency for Defense Development should work together with companies. He said, "The Agency for Defense Development possesses world-class system technology that companies do not have," and added, "If companies build up the technology in their minds, South Korea's defense technology can definitely rank within the world's top five."