Aerospace & Defense Exporter Alert, Aug. 2025

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MARKET OF THE MONTH: VIETNAM

Vietnam’s defense budget was $8.36 billion in 2024 and is projected to grow by 7.9% to $9 billion, according to a 2025 BMI industry report. Over the medium-term forecast period to 2029, Vietnam’s defense expenditure will increase by an average of 5.9% per year and reach $11.33 billion by 2029.

Domain awareness and maritime security are key areas of focus for Vietnam’s defense procurement and activities. This encompasses air force, air defense, surface, and subsurface capabilities. Defense equipment suppliers and subcontractors can expect increased demand for naval combatants, aerial defense, and systems that support command, control, communications, computers, cyber, intelligence, surveillance, and reconnaissance (C5ISR) capabilities.

Vietnam Defense Policy and International Engagement

According to the Vietnam Defense White Paper in 2019, Vietnam maintains a non-aligned policy known as the “four no’s”, which entails no military alliances; no siding with one country against another; no foreign military bases and no use of Vietnamese territory to oppose other countries; and no use of force or threat of the use of force in international relations. However, Vietnam’s military does maintain some flexibility in its international engagements, depending on its various national security interests.

The strategy also demonstrates Vietnam’s steadfast stance on territorial sovereignty and maintaining regional stability. Central to Vietnam’s military modernization efforts is a diversification of Vietnam’s international defense partnerships. Vietnam is seeking to reduce its reliance on Russia, which has historically served as its primary supplier of defense equipment, and is actively seeking new partners, modern equipment and solutions, and training.

Leading Sub-Sectors

Although the majority of Vietnam’s armed forces require modernization of ageing equipment, the Vietnam People’s Navy will continue to receive the lion’s share of investment.

Maritime Capabilities
Vietnam has demonstrated interest in developing and equipping its naval forces with maritime anti-access/area denial (A2/AD) and surveillance capabilities through the purchase of submarines, coastal high-speed patrol vessels, stealth frigates, and anti-submarine warfare capabilities, as well as anti-ship ballistic missiles and other coastal capabilities that serve both law enforcement and military purposes.

The Vietnam Coast Guard (VCG) also receives great attention and investment from the Vietnamese government’s modernization efforts. Instead of building large naval ships, Vietnam has prioritized equipping the VCG with high-speed, mobile, large patrol ships capable of operating offshore for long hours and under harsh weather. In addition, aircraft that can provide wide surveillance in the maritime domain are also a priority.

Air Force
Vietnam has been enhancing its air force capabilities since 2011. Fighter aircraft, transport aircraft, unmanned aircraft systems (UASs), anti-submarine and surveillance aircraft, and electronic warfare aircraft are considered essential to modernize and strengthen Vietnam’s air force. Currently, most of Vietnam’s military aircraft are from Russia, Poland, France, or the Czech Republic. Therefore, U.S. suppliers seeking to enter the market will need to invest resources to educate and familiarize Ministry of National Defense (MND) officials and end-users with offerings related to aircraft, training, technical assistance, and equipment maintenance.

Information Communications Technology and Electronic Warfare 
Military information communication and electronic warfare solutions are among the top priorities in Vietnam’s military modernization plan. Given the vital role of information communication systems in maintaining real-time, effective, and secure communications during military operations, Vietnam is allocating resources to develop and import high-tech equipment for this subsector. With the growing importance of electronic warfare in modern conflict, MND is also taking steps to equip its military force with state-of-art products and solutions, especially upgrading its C5ISR capabilities.

Opportunities

Since the United States formally announced the lifting of the ban on arms sales to Vietnam in May 2016, U.S. firms have seen growing interest in U.S. technologies, equipment, and expertise.  

U.S. defense products have a long-standing reputation for offering cutting-edge technology, high precision, and durability. U.S. defense and security suppliers are competitive in areas that require tailored or high-performing technology, including maritime domain awareness, aerial defense, anti-access/area denial capabilities, surveillance equipment, C5ISR, and electronic warfare solutions. A full-package approach emphasizing an effective sustainment program and follow-on technical assistance would pay dividends in the long run and pave the way for future procurements.

Events

Vietnam International Defense Expo: In December 2022, the Ministry of National Defense organized its inaugural Vietnam International Defense Expo, offering an excellent opportunity for foreign OEMs, system integrators, assemblers, and service providers to introduce state-of-the-art equipment, weapons, and technologies to the Vietnam market. The three-day event was attended by 170 companies from 30 countries.

In its second rendition, Vietnam International Defense Expo 2024 offered Vietnam a chance to share its defense requirements and attract global attention, amid its continued military diversification efforts. The expo hosted the first-ever U.S. pavilion, with U.S. firms of all sizes participating to display their equipment and explore collaboration opportunities with Vietnamese end users.

The next Vietnam International Defense Expo is expected to be held in Hanoi in December 2026. The event will be another great opportunity for U.S. companies to showcase strategic technologies and products in this growing market.
 

Resources

• Vietnam Ministry of National Defense
• Vietnam Ministry of Public Security
• People’s Army Newspaper
• BMI – A Fitch Solutions Company

For more information about the Vietnamese Defense and Security industry, please contact:

Nhung Nguyen
Aerospace & Defense Commercial Specialist
U.S. Embassy – Hanoi, Vietnam

Nga Hoang
Aerospace & Defense Commercial Specialist
U.S. Embassy – Ho Chi Minh City, Vietnam

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