thayer vietnam military modernisation

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Background Briefing:

Vietnam: Military Modernisation

Carlyle A. Thayer

October 12, 2012

Vietnams long-standing defence policy, known as all peoples national

defence, involves integrating its regular conventional forces with several millionreserves, urban-based self-defence forces and rural militia, collectively known as

the Vietnam Peoples Armed Forces. Vietnams regular conventional forces,

including the army, air defence-air force, navy and border guard, are known

collectively as the Vietnam Peoples Army (VPA). The armed forces have

responsibility for national defence, internal security and contributing to national

socio-economic development (including, for example, natural disaster relief).

Over the last five years defence priorities have altered to take into account the

growth of Vietnams maritime economy, territorial disputes in the South China

Sea, the modernisation of other regional armed forces, and emerging militarytechnologies. Vietnams most recent Defence White Paper, issued in December

2009, emphasised gradual modernisation of the regular armed forces. Current

defence priorities were outlined in January 2011 at the eleventh national

congress of the Vietnam Communist Party (VCP). The Political Report, delivered

by the party Secretary General, identified modernisation of the armed forces and

defence industry as one of the five key national objectives for the next five years

(then 2011-2015). According to this report, the major challenges affecting

national defence responsibilities in the new environment included: war using

hi-tech weaponry, disputes over maritime sovereignty, terrorism, and hi-techand transnational crimes. In order to meet these challenges the Political Report

gave priority to ensuring that the armed forces incrementally have access to

modern equipment with priority being given to the navy, air force, security,

intelligence, and mobile police forces. Speaking on the sidelines of the party

congress, General Phung Quang Thanh, Minister of National Defence, included

electronic and technical reconnaissance among the priorities for defence

intelligence while head of the VPAs General Political Department (Tong Cuc

Chinh Tri), Lt. Gen. Ngo Xuan Lich, specified armaments, ammunition and

technical means in his address to congress .

Thayer ConsultancyABN # 65 648 097 123


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Capability improvements

Vietnams force modernisation programme has increased pace in recent years.

Russia remains Vietnams main provider of advanced military equipment and

technology. Since 2008, the Vietnamese navy has taken delivery of two Gepard-

class guided missile frigates and four Svetlyak-class fast patrol boats. The navyalso procured some 400 Kh-35 Uran/SS-N-25 anti-ship missiles while the army

received 40 Yakhont/SS-N-26. VPA air-defences force took delivery of two

batteries of S-300PMU-1 surface-to-air systems, 200 9M311/SA-19 Grison surface

to air missiles, four Kolchnya air defence search radars and three VERA passive

radio locators. In 2010-12, the air force acquired twenty Su-30MK2V combat

aircraft armed with Kh-59MK anti-ship cruise missiles; it also procured 100 R-73

(AA-11 Archer) short-range air-to-air missiles. The army took delivery of two

batteries of the K-300P Bastion coastal defence missiles as well as Extended

Range Artillery Munitions; comparable in size, according to manufacturer IsraelAerospace Industries in 2005 to the M270 Multiple Launch Rocket System

(MLRS).

Notable future acquisitions include six Kilo-class conventional fast attack

submarines (SSK) and four Dutch Sigma-class corvettes. The first Kilo was

launched in Russia on 28 August 2012 and delivery was expected by the end of

2012. The Kilos will likely be armed with heavy torpedoes (53-56 or TEST 76) and

anti-ship missiles (3M-54E or 3M-54E1). In July 2011, Russian industry sources

confirmed that Vietnam will take delivery of the Novator Klub-S (SS-N-27) anti-

ship cruise missile, an advanced capability with a range of around 300km; the Sdesignation indicates a submarine-launched version. Vietnams Defence

Minister said in August 2011 that he expects to deploy a modern submarine fleet

by 2016-2017.

This force modernisation programme has led the VPA to begin developing a

capacity to conduct military operations in Vietnams extensive maritime domain.

In September 2009, Vietnam began transferring air force assets and personnel to

the navys 1st Regional Command headquartered at the northern port city of

Haiphong. This is the first step towards creating a naval air arm in all five of

Vietnams naval commands. In June 2011, Vietnam conducted widely publicized

live-firing joint exercises off its central coast involving naval warships, coastal

artillery and air force fighter-bombers. In 2012, Vietnam commenced

reconnaissance patrols by Su-27/Su-30 aircraft over the South China Sea.

However, Vietnams procurement of big ticket items such as the Su-30s and

Kilo-class submarines has substantial implications for defence funding, as well

as training and maintenance regimes. Purchase contracts invariably include

provisions for training, service and technology transfer. For example, in 2009

when Vietnams purchase of the Kilo-class submarines was first announced, thecost was put at between US$300 and US$350 per unit or US$1.8-US$2.1 billion in


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total. The cost has now risen to US$3.2billion to include armaments and Russian

construction of a submarine service and maintenance facility at Cam Ranh Bay.

Vietnamese naval ratings were sent for training to St. Petersburg, where the

Kilos are being constructed.

International defence relations

Vietnams participation in international defence cooperation has increased since

the mid-2000s in pursuit of its foreign policy aim of multilateralising and

diversifying its external relations and becoming a reliable partner to all.

Priorities in defence cooperation are to exchange military delegations, exchange

experience and information, cooperate in professional military education and

training, and cooperate in humanitarian assistance.

Vietnam has signed a wide number of and Memoranda of Understanding

(MOU) and Defence Cooperation Agreements (DCA) with foreign states. Thesecooperation agreements indicate that Vietnam is seeking assistance, services and

equipment acquisitions in six major areas: the storage, maintenance and

upgrading of existing military equipment; modernisation of platforms and

equipment for the army, navy and air force; modernisation of Vietnams defence

industry; maritime logistics capacity in the South China Sea; mitigating the

effects of natural disasters, notably flooding and storm damage , and search and

rescue at sea; and finally training for future involvement in UN-endorsed

peacekeeping operations.

Its closest defence ties are with fellow members of the Association of SoutheastAsian Nations. Starting in 2008 the Vietnamese navy made its first port visits to

Malaysia and Thailand. Vietnam currently conducts joint coordinated naval

patrols with Cambodia, Malaysia and Thailand. In March 2012 Vietnam and the

Philippines agreed to start coordinated patrols, also under discussion between

Vietnam and Indonesia. But priority is given to strategic dialogues with key

interlocutors, include Australia, China, France, India, Japan, Russia and the US.

In 2010, Vietnam raised its strategic dialogues with both China and the United

States to vice ministerial level. In September 2011, Vietnam and the US held their

second Defence Policy Dialogue. The two sides signed an MOU identifying fivepriorities, though these were in the low-key areas of: regular high-level

dialogues between defence ministries; maritime security; search and rescue;

studying and exchanging experiences on UN peacekeeping; and humanitarian

assistance and disaster relief. The US commenced port calls in 2003 and, in 2010,

US naval ship calls were widened to include joint naval activities with Vietnam

involving the exchange of non-combat skills. Vietnam has also agreed to conduct

minor passage repairs on U.S. Military Sealift Command (MSC) vessels. The

most recent repairs were conducted in the commercial port facilities at Cam

Ranh Bay. Vietnam makes a distinction between official good will naval warshipvisits, which are restricted to one per country per year and commercial repairs.


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The MSC vessels are not warships and three have been serviced in Cam Ranh

Bay (and 2 other vessels in two different ports). Otherwise, port visits are

restricted to Hanoi, Da Nang and Ho Chi Minh City.

In August 2011 at the second China-Vietnam Strategic Defence and Security

Dialogue, it was agreed that military exchanges would be increased and a hotline established between the two defence ministries. China agreed to share its

experiences in UN peacekeeping. In April 2006, China and Vietnam commenced

biannual joint naval patrols in the Gulf of Tonkin. In recent years the joint

patrols have included search and rescue exercises. The thirteenth joint patrol,

which was conducted in June 2012, included day and night signalling exercises

and an anti-piracy drill. The PLA Navy resumed port visits to Vietnam in

November 2008 after a hiatus of seventeen years. PLAN ships now visit

annually. The VPA Navy made its first port call to China in June 2009 and

revisited in June 2011. On September 3, 2012 both sides held their sixth defenceand security consultations at vice ministerial level. The two sides agreed to

continue high-level visits, strengthen dialogue and consultation, promote

cooperation in the fields of personnel training border exchanges, navy and

multilateral security issues.

Marine Police

Though the above might indicate that China and Vietnam seem to have

compartmentalised their territorial dispute in the South China Sea from wider

bilateral relations, it is clear that there are challenges in managing the simmering

tensions between the two over their disputes around the Spratley Islands, theParacels and Johnston Reef. One way that states party to these disputes seek to

exert influence, while simultaneously seeking to manage escalation, is by using

paramilitary forces instead of regular armed forces. In Vietnams case, its Marine

Police (Canh Sat Bien) has confronted China Marine Surveillance vessels

particularly in these areas of overlapping sovereignty claims. The Marine Police

was formally established as an independent unit in March 1998 under an

ordinance adopted by the National Assembly. This ordinance places the Marine

Police under the direction of the Ministry of National Defence and assigns the

Marine Police a role in national defence in cooperation with the navy.

In peacetime the Marine Police has responsibility to enforce marine law in

Vietnams internal waters, territorial waters, exclusive economic zone and

continental shelf. They are tasked with countering smuggling, drug and human

trafficking, piracy and armed robbery against ships and tackling marine

pollution. The Marine Police are also responsible for protecting Vietnam

sovereignty and sovereign jurisdiction, maritime law enforcement, marine

assistance to vessels in distress, and search and rescue. Their equipment

inventory consists of thirty-five ships, of which twenty-five fall in the 120-400

tonne range. Vietnams Song Thu shipbuilding company and the Damen Group


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from the Netherlands have constructed ten Offshore Patrol Vessels in the 1,200-

2,500 tonne range. Moves increase the number salvage of ships and all-weather

OPVs in the 2,000 ton range will boost Marine Police capabilities, as will plans to

expand the Marine Polices naval aviation element. The Marine Police received

the first of three CASA-212-400 maritime patrol aircraft in August 2012.TheMarine Police OPVs are deployed in the South China Sea and have taken the

initiative to confront China Marine Surveillance vessels particularly in areas of

overlapping claims.

Defence economics and industry

Vietnams 2009 Defence White Paper broke new ground when it released figures

on the total defence budget between 2005-2008. At the same time, it was

reported that the government had resolved to allocate 1.8% of Gross Domestic

Product (GDP) to the defence budget though it has, as Table One below

indicates, exceeded this figure every year with an average of 2.64% of GDP for

the five years from 2008-2012.The defence budget is tied to national economic

growth. Over the last decade, defence spending as a percentage of GDP peaked

at US$5 billion in 2007 and then fell to US$2.5 billion in 2010 due to the effects of

the global financial crisis. Defence spending recovered in 2011 with an 8.5% real

increase over 2010. The defence budget is expected to rise to US$3.3bn in 2012.

This trend is also reflected in the percentage of nominal government expenditure

on defence (see Table One)

Table One Vietnams Defence Budget, 2008-2012

Defence Budget 2008 2009 2010 2011 2012

etnamese dong (trillion) 47.3 50.0 44.4 55.1 70.

.S. dollars (billion) 3.2 3.2 2.5 2.7 3.3

rcentage of GDP 3.2 3.0 2.2 2.3 2.5

Nominal Government

penditure

11.4 9.0 7.0 7.7 -

Source: Australia, Defence Intelligence Organisation, Defence Economic Trends in the Asia-Pacific

2011, DIO Reference Aid 11-2, p. 15 and Vietnam Announces a 2012 Defence Budget of VND70

trillion (3.3 billion USD), Defense Studies, November 23, 2011.

Vietnam does not provide a detailed breakdown of its defence budget. A

member of a Vietnamese National Assembly delegation that visited the

Pentagon in August 2008 to study its budget procedures informed his hosts that

defence budget details are only provided to the chairman of the National

Defence and Security Committee. Members of the committee vote up or down

on the total figure and do not examine detailed allocations. One defence analyst

was told by defence ministry sources, when visiting Hanoi, that the Defence

Minister could approach the prime minister with special extra budgetary

requests and if the funds were available these requests would be approved.


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Because of the lack of transparency, informed observers estimate that Vietnams

defence expenditure could be double the officially published figures.

The 2009 Defence White Paper noted that the major portion of the defence

budget was spent on ensuring decent living conditions for uniformed and

civilian defence personnel and supporting the operations of defence industryand maintaining [] VPA readiness. The White Paper also noted the budget

included defence requirements in general and for the acquisition of equipment

and weapons for the armed forces in particular.

According to the Defence White Paper, priorities for Vietnams defence industry

include the maintenance, manufacture, improvement and upgrading of weapons

and equipment. The Defence Cooperation Agreements noted above contain

general clauses on bilateral defence industry cooperation in five priority areas:

promotion of defence research and technology transfer; co-production of

weapons, maintenance, upgrading and repair; technical support; and personnel

training.

Russia is Vietnams main defence industry partner. Moscow and Hanoi have

entered into co-production of patrol boats from pre-assembled components.

Vietnam has approached Russia and India for assistance in co-producing anti-

ship cruise missiles and the repair and maintenance of naval vessels, and is

seeking the transfer of Russian technology to help maintain its fleet of Su-30

aircraft and Kilo-class submarines. That said, Hanoi does not rely solely defence

industrial ties on Moscow. It is also expected to co-produce twoSigma

-class

corvettes in-country with the assistance of the Dutch Damen Group. Also,

Vietnam has supported a Malaysian proposal to promote defence industry

cooperation among ASEAN members. Vietnam has separately discussed co-

producing, with Indonesia, fixed wing transports, maritime surveillance aircraft

and multirole helicopters and various military equipment with the Philippines.

Vietnam has also south assistance from Singapore to develop its capacity to store

ordnance underground.

The 2011 Political Report listed objectives for the next five years including to

further push the development of defence and security technology industry andto strengthen scientific research in military and security capable of defeating hi-

tech wars from enemy forces. In 2011-12, three important defence industry

accomplishments occurred. First, Hong Ha defence shipbuilding company

successfully launched Vietnams first indigenously constructed naval vessels, a

54-metre 400 ton fast patrol boat (Project TT400TP) and, in October 2011, a 72-

metre troop transport vessel. The patrol boat was based on a Russian designs

and constructed by Vietnamese engineers who had been sent abroad to study

shipbuilding Second, it was the announcement in February 2012 that Vietnam

and Russia would co-produce a modified Uran (Switchblade) anti-ship missile inVietnam. The modifications could enable Vietnam to fit the missile to aircraft,


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helicopters, ships and coastal batteries. The third development was the

announcement, in June 2012, that the Military Institute of Technology had

mastered the production of a key oxidizing ingredient for fuel used by

Vietnams R-17E (Scud) missile force.

Suggested citation: Carlyle A. Thayer, Vietnam: Military Modernisation, ThayerConsultancy Background Brief, April, , 2013.

Thayer Consultancy Background Briefs are archived at Scribd.com


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NTS4 .5bn for otherexpenses (1.42%)I NTS155.5 bn forNTS86.5bn for military personnel,investments / (49%1(273%) -,

TotalNT$317.3bn(US$10.72bn)

INTS70.8bn foroperations, (22.3%)

Note:The personnelli gure notedhere relates to the activecomponent.

Figure 20 Taiwan: 2012 Defence BudgetCompositionTh ere ha s also been particular emphasis on du al

use technology. The MND's regulations on ind ust rialcooperation , amended in November 2010, mean thatthe military is now expected to increase technologytransfer to the private sec tor and increase cooperation with aca de mic ins titut ions . Most of Taiwan'sadva nced weapons systems are US in origin . Despi tethe lack o f formal dip lomat ic ties , Taiwanese F-16A/Bpilots train at Luke air fo rce base in Arizona and onthe P-}C in Florida , Since 2008, p rocurements fro mthe US ha ve include d six PAC-3 system s (the first fourare scheduled for 2014- 2015). In con junction wi thTaiwan' s indigenous Tien KUlig II (TK-2), these w illimprove Taiwan's BMD capacity.

The ai r force is se t to decom m ission 56 Mirage2000 and 45 F-5 fighters by 2020, leaving a mix ofF-16A/Bs and F-CK-1 Ching KilO Ind igenous DefenceFighters. Alternatives to the F-16C/D remain limited .Ho wever, Aerospace Industri al Developm en tCorporation (AIDC), which manufactured the ChingKIlO , is involved in a mid-life update for the aircraft,inclu d ing the integ ration of Tien Chien II Sky Swordair- to-air missiles and TC- IIA an ti-radia tion missiles(unde r development at CSISl) .

The a rmy continues to focus on coun ter ing anam phibious attack on Taiwan and defending offshoreislands. During peacetime, it spe arheads majorhumanitarian relief efforts and anti-te rrorism operations. The army signa lled its intention to procu resurplus US Abrams tan ks as excess defence articles toadd firepowe r along coa sta l areas, thoug h critics said

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that, given the A brams' size , Taiwa n shou ld insteadbu y medium-weigh t whee led armoured vehicles orthe M1CX)A6 Paladin self-propelled howitzer.

The n avy has benefitted from a shift towa rdsan asymmetric stra tegy to coun ter China, focusingon ligh t, low-signature fas t-attack missile boatsfor littora l defence . Sinc e 2010, 31 KWIIlX Hila VI 70tonne fast- attack boats equipped wi th Hsiung Fe/lgII (H F-2) anti -ship missi les from manufacturerCSIST have been deployed in th ree squadrons. From2011, the navy also began upg rad ing its .)00 tonnelinn Chiang-class patrol boats wh ich ar c d ue to ta kefour Hsiung Feng III (HF-3 ) ramjet -powered superson ic anti-ship m issiles, touted as Taiwan's carrierkill er. A new 450 tonne fas t-attack corvette beingdeveloped under the Hsun Hai programme will befitted with HF-2 and HF-3 lau nchers . In early 2012,reports emerged that Taiwan could, wi th foreignengineering he lp , emba rk on a dom es tic programmefo r medium -sized submarines . At p resen t, the navyonl y has two combat-ready Hai LUllg submarines.Work is ongoing to give them Harpoon missile capabil ity.

In la te 2010, a senior de fence official confirmedru mours that CSIST was developing a longer-rangeHF-2E LACM to provide cou ntcrforce capability .The US denied assis ting wi th the prog ramme.Was hing ton 's adherence to the Mis sile TechnologyCo ntrol Regime has delayed efforts by C51ST toexte nd the range of its missiles and m inia tu risewarheads,VIETNAMVietnam's de fence p riorities have changed overthe pa st five years to reflect its growing ma ritim eeconomy, territorial claims in the South China Sea,other regional states' military modernisation andemerging mi litary technologies. The December2009 Defence White Paper adv ocated incrementalmo dernisation. Current priorities were outlined inJan uary 2011 at the Commu nis t Party's eleventhna tional congress . The political repor t delivered bythe secretary-general ide ntifie d armed-forces anddefence-industry modernisation as key nationalobjectives.

Its force-modernisation programme has led themilitary to start developing cap acity to conduct op era tions in Vietnam's maritime domain . In September2009, Vietnam began transferring air-force assetsan d personne l to the navy's 1St Regional Command,


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276 THE MILITARY BALANCE 2013

headquartered at th e nor thern port city of Haiphong.This is the first s tep tow ards crea ting a naval air annin all five of Vietnam's naval comman ds. In 2012,SU-27/Su-30S star ted flying reconnaissance m issionsove r the Sou th China Sea . (see map o ppos ite) .

Strategic relationsVietnam 's p arti cip a tion in inte rnational defencecoopera tion has increased since the m id-zooos inpu rsu it of its fore ign po licy aim of ' multilateralising and di versifying' its ex terna l re lations . In 2010,Vietnam rai sed its stra tegic dia log ues with bothChina an d the United States to v ice-ministerial level.In Sep tember 2011, Vietnam an d the US held theirsecond Defence Po licy Dialogu e and signed an MoUon cooperation in low-key areas such as sea rch andresc ue (SAR) and HA /DR. Vietnam has a lso ag reed tocond uct m inor passage repairs on US Military SealiftCommand (MSC) ves se ls. The most recen t repairswe re cond ucted in the commercial po rt facilities a tCam Ranh Bay. Vie tna m makes a d ist inction betweenofficia l goodw ill visi ts by naval warships, which a rcrestricted to one per coun try pe r year, and com mercial repairs. The MSC vessels are no t warships andth ree have been serviced in Cam Ranh Bay (as well astwo other vessels in tw o differen t p orts).

In August 2011, at the seco nd Ch ina-VietnamStra tegic Defence and Security Dialogue. it wasagreed that milita ry exch anges wo u ld be in creasedan d a hotline es tablished bet ween th e tw o defe ncemin is tries. China agreed to sha re its experiences inUN pea cekee ping . China and Viet nam com mencedb iannu al joint naval pat rol s in th e Gu lf of Tonkin inApril 2006. In recen t yea rs these join t pa trols haveincluded SAR exe rcises . The thirteen th joint pat rol ,in Ju ne 2012, includ ed commu nications an d antip iracy d rills. The I'LA Navy resumed po rt visi ts toVietnam in Nove mber 2008 after a 17-year ga p. TheVietnam People' s Army (VPA) N avy made its firstpor t call to China in Ju ne 2009 and re visited in June2011. On J September 2012, both sides held theirsix th defence and security consu ltations at viceministerial level.Marine PoliceAltho ug h China and Vietna m might see m to havesepa rated their Sou th China Sea di spute fro m widerbilateral relation s, cha llenges re ma in in ma nag ingthese simmering tensi ons. Use of paramilitary forcesis one way that states seek to exert influ ence, whilesim ultaneo usly seek ing to ma nage esca lation. In

IISSCHINA

Gulfof Tonkin

THAILAND

Gulfof Tha iland SouthChina Sea

Map 10 Vietnam's Su-27/Su-30 basesVietnam's case, its Mar ine Police has confrontedChinese ma rin e surveillance vessels in di spu tedareas . Th e Marine Pol ice opera tes under the di rectionof the defence mi nistry and plays a role in nationaldefen ce in coo pera tion w ith the navy.In peacetime, the Ma rine Police has respon sib ilityfor enforcing maritime law as well as p rotectingVietnam so vereignty and sovereign jurisd iction.Twen ty -five of its 35 sh ips are in the 120-4 0 tonnerange. Vietna m 's Song TIm shipbuilding compan yand the Da me n Grou p fro m the Nethe rlands ha vecons tructed ten O ffshor e Pat rol Vessels (O PVs) inthe 1,2(X)-2,500 tonn e range. Moves to increase allweathe r O PVs in the 2,000 tonne range w ill boostcapabilities, as w ill plan s to expand the MarinePol ice's naval-aviation ele me nt. Th e first of threeCASf\ -2'I2-400 m aritim e-patrol a ircraft wa s receivedin August 2012.


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Defence economicsVietnam's 2009 Defence 'Wh ite Pape r broke newground by re leasing fig ures on tota l defen ce budgetsfrom 2005-DS. It was als o repor ted tha t the gOVl'rnmerit resolved to a llocate 1.8'i{ , of C OP to the defencebudget. In p ractice, the official defen ce budge t hasexceeded th is benchm ark eve ry year, with an averag e2.25% of C DI' a lloca ted to defence for the fou r yearsfrom 20(>9-12.Strong econom ic g row th in recen t yearshas enabled increa sed outlays on defence , which roseto VND55.1tr (lIS$2.67bn) in 2()"11, befo re increa sin g'lgai n to VN D70tr (US$3'33bn) in 2012 - nominalincremen ts averaging 25.6% ann ua lly.

Ho w eve r, Vietna m expe rienced one of the highestrates of infla tion across Asia in 2011 (18.7/.,), in par tbeca use of excessive cred it growth and a seri es ofcurrency devaluations. Th us, a t constant 2010 pr icesand exc ha nge rates, Vietnamese rCdI defence expenditu re only rose by 2.7% in 2011, before grow ingto r6.9' i{ , in 2012, a lthough in part this refle cte d thegove rn mlc'nt's success in bringing down in flation.Measures to cu rb infla tion have started to constraineco no mic gro w th (w hich fe ll to 5.9% in 2()J1 and isprojected to drop to 5.1% in 2012). It remains to be see nif this w ill m od erate Vietnam 's de fence expe nditureincreases. Bu t d efence spe nding has been prio ritised :military outlays as a per cen tage of total governmentspending rose fro m 6.HS% in 2010 to 7.72% in 2012,while defen ce ex pendi ture as a pe rcent age of C OPros e fro m 2.24% to 2.42% over the sa me period (ind ica ting that defence-sp ending grow th exceeded C OPgrow th between 2010 and 2(12).

Still, Vie tna m' s budgetary practices remainOpilquc and the cou ntry docs not p rovide a budge tbreakdown . One Vietna mese official has ind ica tedthat defence-budget de tails a re only p ro vided tothe' chairman of the Na tiona l Defen ce and Secu r.ityCommittee . Members of the com mittee vo te onthe total figu re bu t do not exami ne de tailed a llocations. Accord ing to informed obse rvers, the defenceministe r can app roach th e prime min iste r w ith specia lextra bud getary reques ts, a nd if the fun ds were ava ilable these requ -s ts would be ap p roved. Because ofthe lack of tra ns parency, it is es tim ated that defenceexpenditure cou ld be d oub le the off icial figures.

Asia 277

Procurement and industryRu ssia remains Vietnam's m ain provide r of ad vancedmilita ry eq uipment an d technology, and since 200Sthe navy has taken del ivery of two Ccpard-classgu ided missile frigates (of four ord ered) and some400 Kh-35 Urall/SS-N-25 anti -shi p missiles. The VPA'sair-defences force took del ivery of two S-30oPMU -1batteries, 200 9M311/SA-19 Grison mi ssiles and fourKolcllll !!1 a ir-defence search rad ars. In 201()- 12, the airforce acq uired 20 SU-30MK2V com bat ai rcraft a rm edwi th Kh-59MK anti -sh ip cruise m issiles. The na vyreceived tw o batteries of the K-300P Bastiun (SS-C-5Stooge) coas tal defence missile sys tem.

Not able fu tu re acqu isi tions include six Kilo-clas s a ttack su bmarines and four Du tch Siglllil-classcorve ttes . The first Kilo was lau nched in Russia on 2SAugust 2012, an d de live ry wa s expec ted by the endof 2012. Th e Kilos will like ly be armed wi th heavytor ped oes (53-56 or TFST 76) and ant i-sh i p m issiles.The Kilo is ca pable of using the Nova tor Klub fam ilyof m issiles, includin g the 3M54E (SS-N-27 Sizzler).W he n the Kilo purchase was first anno unced, the tot alcos t wa s es tim ated by foreig n ana lysts a t U $1.8bn$2.1bn . This has no w risen to USS3.2bn to includearm am ents and Ru ssian const ru ction of a se rv ice andmainten ance facility at Cam Ran h B'lY.

Vietn am has also approached Russia and in diafor assis tance in producing anti-ship cru ise missilesand the repair and maint en an ce of na va l vessels, andis seekin g the trans fer of Russian technology to helpm ain tain its SU-30S and Kilo-class submarines.

Hanoi is a lso expected to p roduce' two of itsupcom ing Sigma-class corvettes in-count ry withthe assistance of the Du tch Damen C rou p. Between2011-12, the Hong H a shi pbui lding comp'lnylaunched Vietnam s first indigeno usly con stru ctednaval vessels: a 54m , 400 tonn e fast pa tro l boat(Project TT400TP) and a 72m troop transpor t vesse l.In February 2012, it was announ ced that Vietna m andRu ssia wou ld jointly p roduce a mod ified Uran an tiship mi ssile in Vie tnam, while in [un e 2012, it wasannounced that the Military Insti tu te of Tech nologyh ad ma stered the production of a key oxid ising ingred ient fo r fuel used by Vietna m's R-17[: (Scud) missileforce.

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