Economic Effects of Korean Helicopter Program Estimated at 13 Trillion Won

An analysis regarding the Korean Helicopter Program (KHP), which will replace worn out military helicopters, said that it was expected to bring about 13.875 trillion won worth of spreading effects but that the helicopter’s prospects for export were not that bright.

According to a report titled, “The KHP’s Profitability Analysis” released by the Korea Industrial Development Institute, the program requires a total budget of 9. 103 trillion won, including 1.311 trillion won for research and development, 4.157 trillion won for production, and 3.635 trillion won for operation and maintenance for the next 30 years. So far, the project has been estimated to cost roughly 5 trillion won.

The economic spreading effect that the KHP will bring about to industry is estimated to be 13.876 trillion won, including 6.889 trillion won worth of production-induced values, 2.325 trillion won worth of added values, and 4.661 trillion won worth of technology-induced values. As a result, the KHP will create an economic effect worth 4.772 trillion won except the originally injected 9.103 trillion won.

The Ministry of National Defense currently plans to produce 245 KHP helicopters, but it was pointed out that the number of helicopters should increase to 311, about 50 more than currently planned, in order to break even point in case development costs increase. On the other hand, the prospects for export are not so promising.

According to the Teal Group, a U.S. aviation management consulting firm, the international market for helicopters equivalent to the KHP can absorb 141 to 214 helicopters, while the market for military helicopters can absorb 77 to 150.

A person from the army said, “A contention has been developing that it is more desirable to maximize technology transfer by directly purchasing related technologies rather than to develop KHP helicopters by spending grandiose budget amounts while the international market for helicopters has been shrinking.”

Sang-Ho Yun ysh1005@donga.com