South Korean defense companies will now be required to obtain government approval before appointing foreign nationals or dual citizens to executive positions or roles that involve handling sensitive defense technologies, according to sources familiar with the matter.
This new regulation stems from revisions to the Defense Acquisition Program Act and the Defense Industry Technology Protection Act, which recently received approval at a Cabinet meeting.
The move is motivated by growing concerns that the appointment of foreign executives within local defense firms could elevate the risk of defense technology leaks. The appointment of American Michael Coulter as global defense CEO at Hanwha Aerospace in December 2024 has further highlighted these concerns.
“As South Korea’s defense exports experience significant growth, the defense industry is expanding rapidly,” stated an official from a local defense firm, who requested anonymity. “With companies becoming increasingly active in overseas markets, the appointment of foreign executives is also expected to rise. This new legislation is intended to alleviate concerns surrounding potential leaks of crucial defense technologies.”
Under the revised Defense Acquisition Program Act, defense firms are now mandated to seek prior approval from the head of the Defense Acquisition Program Administration (DAPA) before appointing foreign nationals or dual citizens to executive roles or employing them in positions that involve handling defense technologies.
The DAPA chief is responsible for assessing the potential impact on defense technology protection. The agency is then required to notify the company of its approval or rejection decision within 60 days of receiving the application.
The related revision to the Defense Industry Technology Protection Act also stipulates that defense firms must establish and implement comprehensive management plans when appointing foreign or dual-national executives or hiring them for technology-related positions.
These management plans must include specific details regarding the types and scope of defense technologies that may be accessed, security control measures, access restrictions related to these technologies, and other requirements specified by DAPA.
DAPA will conduct regular inspections to ensure that the management plans are properly implemented and has the authority to order corrective actions in the event of any violations.
The revised laws are scheduled to take effect in September, following a six-month grace period.
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