South Korea's defense budget to top W70tr for first time

South Korea's defense budget will surpass 70 trillion won ($51 billion) for the first time next year, as the government moves to strengthen autonomous defense capabilities and restructure the military around advanced technology amid a rapidly shifting security environment and a shrinking pool of military-age personnel. The production budget for the KF-21 Boramae fighter jet more than doubled from this year's allocation, and a new budget line for nuclear-powered submarine development was created.

The government on Tuesday submitted to the National Assembly a proposed 2027 defense budget of 73.28 trillion won, an 8.2 percent increase from the previous year.

The force operations budget was set at 50.04 trillion won, up 5.9 percent from the previous year. Within that figure, logistics and cooperation costs rose by about 1 trillion won from last year to 8.02 trillion won, while the defense AI budget increased by 200 billion won to 361 billion won.

The Ministry of National Defense said it plans to transition to a more efficient military personnel structure — one in which active-duty troops focus on combat missions while reserve forces and civilian capabilities are more actively utilized — as a preemptive response to the declining pool of military-age recruits.

The standing reserve force will be expanded from 3,700 to 7,000 troops to address the personnel shortfall, and the foundation for stably deploying trained reserve forces even in peacetime will be reinforced.

Reserve training compensation will also be raised, new high-tech mobilization training centers will be built, and medical support using civilian healthcare personnel during training will be introduced, improving both training conditions and financial compensation for reservists.

The short-service incentive bonus for noncommissioned officers will be raised from 10 million won to 12 million won. A new matched savings program will also be introduced, offering up to 300,000 won per month for three years to newly commissioned NCOs on short-term service contracts.

Officer and NCO housing and compensation will also be improved so that service members can serve with pride. A 5.9 percent basic pay improvement rate will be applied to second and first lieutenants and to staff and junior sergeants, raising the monthly pay for a junior sergeant at the first pay step to around 3 million won.

The military's AI transformation will also accelerate. The Defense Ministry plans to upgrade the AI-based surveillance system at general outpost lines, strengthen security systems at key facilities, and introduce new unmanned ground surveillance sensors — enhancing border and perimeter security capabilities using AI and unmanned systems.

Explosive ordnance disposal robots and autonomous underwater mine-detection vehicles will be fielded on schedule. The military will continue expanding its unmanned combat capabilities — including research and development of combat unmanned surface vessels and multi-legged walking robots — to carry out dangerous missions in place of troops.

The defense capability improvement budget was set at 22.71 trillion won, up 13.8 percent from the previous year. The KF-21 production budget was allocated 3.3 trillion won, an increase of 1.9 trillion won from this year. A new 100 billion won budget line was created to begin development of a nuclear-powered submarine, with a target launch date in the mid-2030s.

To build the essential equipment and weapons systems needed for the transfer of wartime operational control, 134.8 billion won was allocated for 24 types of special forces infiltration equipment — 13 for high-altitude insertion and 11 for underwater infiltration. An additional 550.4 billion won was set aside to secure the minimum required stockpile of unguided 230-millimeter Chunmoo multiple-launch rocket rounds for counter-artillery operations.

Alongside this, the military will strengthen its multi-layered drone defense architecture to make drones a primary combat tool and to counter a wide range of drone threats. Research and development of drone swarms will begin, and the military will expand its drone arsenal — including medium-range loitering munitions, squad-level small anti-personnel loitering munitions and small attack drones — for reconnaissance, surveillance and a variety of other missions.

The government will also actively support small and mid-sized companies and venture firms with strong technology in entering and growing within the defense industry. Support for defense innovation companies will be expanded so that civilian technologies can be applied to defense, and technology development and export support will be broadened for high-potential firms, reinforcing a virtuous cycle in the defense ecosystem running from technology development to demonstration, military adoption and exports.

The Defense Ministry said it will improve combined operational command capabilities by upgrading air-ground communications radios for Korea-led combined defense operations and building a new wartime military intelligence distribution system for combined component commands. It added that it plans to field a medium-altitude reconnaissance unmanned aerial vehicle and a long-range surface-to-air guided missile system ahead of schedule to strengthen the military's ability to counter North Korea's nuclear and missile threats.

The military manpower administration budget was set at 524.9 billion won, up 1.4 percent from the previous year, with personnel costs rising by 9.3 billion won. The government plans to expand citizen-friendly services, including making it easier for those subject to military service obligations to fulfill their duties through AI and digital technology.

The administrative work for reserve force mobilization training, currently split between the Defense Ministry and the Military Manpower Administration, will be consolidated under the Military Manpower Administration in stages, and an integrated management system will be built for more efficient operations. The government also plans to strengthen support for overseas Koreans fulfilling their military service obligations by covering airfare for those returning to Korea for induction or call-up.