Companies in the defense industry are blaming government regulations for their falling revenues and profits for last year.
So the government is meeting industry heads today to hear them out.
Choi Si-young reports.
According to a report by the Korea Defense Industry Association on Friday,
the ninety-three companies responsible for delivering military equipment to the government recorded total sales of around 11.5 billion U.S. dollars in 2017, down roughly 14 percent from the previous year.
This is the first revenue drop since the association began to collect data in 1983.
Those companies also saw their profits tumble to around 50 million dollars last year, down from an average of 4-hundred million dollars between 2014 and 2016.
While decreasing exports, worsening profitability in the shipbuilding industry and increasing R&D costs have all been cited as reasons for the fall in profits, the industry group says government regulations have added to their misery.
One regulation they mentioned was deferment compensation, which is compensation given when companies don't deliver contracted equipment on time. The firms claim that the government regulations are too tight given that delayed delivery is commonplace when manufacturing sophisticated military equipment.
The companies also complained about punishments for production cost manipulation, which they say contain little flexibility for unintended errors.
The defense minister and head of the Defense Acquisition Program Administration are meeting with the heads of those companies on Friday morning to hear their concerns.
Choi Si-young, Arirang News.
