- Convert from the offset-trade system to industrial cooperation system
- Introduction of the value point system for foreign companies

-> Step-by-step implementation in the second half of 2018 starting with the amendment of defense program-related laws and regulations

Defense Acquisition Program Administration (DAPA) announced its full-scale overhaul plan of the offset system, which has remained almost unchanged for the last 37 years since its introduction in 1982, to a system focused on promoting the greater exports of parts, job creation and fostering of defense industries. The plan was resolved as part of the defense procurement meeting held on June 25, 2018.

Offset means the receipt of technology transfer, manufacturing/export of parts, logistics support,etc. in consideration for the purchase of weapons, etc. overseas. While offset has greatly contributed to the advancement and improvement of the defense/aerospace industry and defense technology in Korea, DAPA decided to turn its attention to increasing the export of parts in order to facilitate growth of Korean defense companies and create jobs. DAPA also recognized that many states and leading aerospace and defense companies applied stricter standards and barriers in connection with defense technology transfer and offset programs which ultimately limited DAPA’s ability to secure core defense technologies.

1. Four key elements of the system improvement

A. Conversion of the ‘offset’ concept
B. Change of the focus and name of the policy
C. Introduction of a value point system
D. Introduction of the industrial cooperation quota system for procurement of international weapons systems

2. Expected benefits

A. Increase of manufacturing/export of parts from the current 30% level to 80% B. Promote working relationships with Small and Medium-sized Enterprises (SMEs)

3. Shin & Kim’s competence to provide defense-related advice

 

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