President Lee Jae-myung established an institutional framework during his state visit to the Philippines on June 3 to support Korean defense companies' active participation in the Philippine military's 49 trillion won modernization program.
With both nations agreeing to expand Korean companies' role in naval force enhancement projects including submarine acquisition, analysts assess this trip will mark a watershed moment in penetrating the Southeast Asian defense market.
President Lee held a summit with President Ferdinand Romualdez Marcos Jr. at Malacañang Palace in Manila, with Korean defense exports as a key agenda item. Through a revised "Implementing Arrangement for Procurement of Specific Defense Articles," the two sides agreed to expand the scope of companies eligible for sole-source contracts and broaden cooperation to include maintenance, repair, and operations (MRO) as well as follow-on logistics support. This establishes a structure encompassing long-term operation and support systems beyond simple weapons sales.
The "Horizon Project" approved by President Marcos is a Philippine military modernization plan investing approximately 49 trillion won through 2035, with naval force enhancement as its core focus. As territorial disputes with China intensify in the South China Sea, the need for submarine acquisition has grown, and legislative amendments are being pursued to accelerate project completion. Analysts suggest the revised arrangement's expanded path for sole-source contracts over competitive bidding significantly increases Korean companies' chances of winning submarine contracts.
The two nations reportedly built consensus on defense cooperation needs during the APEC Summit held in Gyeongju, North Gyeongsang Province last October. This summit, occurring just four months later, carries significant meaning as it translated that consensus into concrete institutional arrangements. The state visit also carries symbolic weight, coinciding with the 77th anniversary of diplomatic relations.
The Philippines was the first Southeast Asian nation to establish diplomatic ties with Korea and is a traditional ally that dispatched the largest Asian contingent to the Korean War. This historical bond and security cooperation experience serves as a foundation of trust for expanding defense cooperation. President Marcos directly mentioned the "South China Sea" during the joint press statement, emphasizing that "both leaders shared the need to uphold principles of international law including in the maritime domain," underscoring the importance of defense and security cooperation.
Industry observers view Korea's submarine proposal as competitive. Hanwha Ocean has proposed a comprehensive package deal including the 3,000-ton Dosan Ahn Chang-ho class (KSS-III) submarine. Advantages cited include fast delivery, relatively flexible technology transfer conditions, and an integrated support model covering personnel training and maintenance. With expanded sole-source contract scope, analysts suggest Korea can gain favorable positioning against competitors including France's Naval Group Scorpène class and Spain's Navantia S-80 class.
"We agreed to strengthen cooperation in strategic industrial sectors including infrastructure and defense," President Lee said at the joint press statement. "We will support Korean defense companies' active participation in Philippine military modernization while expanding cooperation in new growth areas including shipbuilding, nuclear power, supply chains, artificial intelligence, and digital technologies."
Beyond defense, the two nations signed multiple memoranda of understanding covering digital, cultural, veterans affairs, and police cooperation, as well as trade, investment, economic cooperation, and AI utilization in intellectual property. On shipbuilding cooperation, President Lee emphasized synergies for joint growth, stating, "The cooperation potential between the world's second and fourth largest shipbuilding nations by vessel construction volume is limitless." He highlighted that both nations are "optimal partners and future key partners" for new nuclear power projects and critical minerals cooperation.
Both leaders also addressed recent Middle East developments in their joint statement. President Lee stated, "We hope stability and peace in the Middle East will be restored swiftly," adding, "I thank President Marcos for supporting the Korean government's efforts to resume dialogue for peace and stability on the Korean Peninsula."
On June 4, President Lee will visit the Korean War Memorial to lay a wreath and meet surviving veterans and their descendants. He will then attend the Korea-Philippines Business Forum to discuss expanding defense, nuclear power, and critical minerals cooperation while encouraging business leaders from both nations. The state visit will conclude with a luncheon with Korean residents in the Philippines.