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What is offset?

Offset stands for a conditional trade that if DAPA purchases weapons or equipment from foreign contractors, it is possible to request trade-offs such as manufacturing & export of weapon system parts, transfer of technologies, and etc. Offset program shall be launched, in principle, when main contract amount of a unit acquistion program is not less than ten (10) million U.S dollars. The offset ratio can be decided based on two cases, 50 percent or above of estimated main contract amount for program with competing sources, and 10 percent or more of the estimated main contract amount for programs without competing sources.

Available field for offset

  • 1) Securing of the technology necessary for projects for the improvement of defense capability
  • 2) Securing of logistic support capability for the purchase of weapons systems
  • 3) Participation in the development and manufacture of weapons systems manufactured in the country of the contracting party
  • 4) The export of munitions, such as defense materials, etc
  • 5) Securing of maintenance materials for the weapons systems from the country of the contracting party
  • 6) Implementation of matters prescribed by Presidential Decree, such as export linkages for commodities other than munitions
  • 7) Among foreign investment pursuant to subparagraph 4 of Article 2(1) of the Foreign Investment Promotion Act, attracting foreign investment which establishes a new corporation solely
        by a Foreign Contractor or jointly with a domestic company (excluding foreign-capital invested company, the same hereafter) to improve the competitiveness of the domestic defence
        industry (hereinafter referred to as the “Offset Foreign Investment”)
    ※ In this case, 6) and 7) shall be limited to cases where the conditions under any of 1) through 5) are satisfied.

The types of offset

The types of offset
Direct offset Technology transfer, manufacturing and export, etc. of the offset program directly related to equipment or goods to be acquired
Indirect offset Technology transfer, manufacturing and export activities, etc. that are not directly pertaining to the equipment or goods to be acquired
The types of offset
Defense offset R&D technologies for weapons systems, participation in the manufacturing weapon system parts, logistic supports, the export of munitions, and etc.
Commercial offset The export of commercial products, industrial cooperation, and etc.

Korea Defense Industry Association(KDIA)

KDIA is doing following businesses in order to improve and develop competitiveness of Korean defense industry through offset.
First, in the every offset program launched by DAPA, KDIA collects wish-lists(proposals) of Korean defense industries who want to cooperate with foreign companies and submits them to DAPA.
Secondly, KDIA is consistently pursuing consultation meeting and networking event between Korean industries and foreign companies. Discussing offset issues continuously with foreign
companies and other related organizations, KDIA hears the voices about their difficulties to implement offset obligation in Korea.
Third, KDIA notifies Korean defense industries of qualifications and requirements what foreign companies needed for selecting KIPs.
Furthermore, KDIA has established and operated K-offset website which contains the information of Korean defense industries to help foreign companies search Korean companies for
cooperation.

What is K-OFFSET?

As a revised offset policy, such as banking policy, and industrial cooperation quota system, has been or will be implemented, KDIA established web-based database called 'K-offset' which
includes detailed information of Korean defense companies. Foreign companies can search the information of Korean companies and select them as a KIPs via K-offset. In addition, K-offset supports Korean companies to identify requirements needed to be a partnership with foreign companies.

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CONTACT US

Korea Defense Industry Association(KDIA)
Tel +82-2-3270-6083~4
Fax +82-2-716-1132
E-mail offset@kdia.or.kr
Website URL www.kdia.or.kr
Address 13F, SungWoo B/D Dohwa-dong, 49 Mapodaero, Mapo-gu, Seoul, Korea