[🇧🇩] Ship Building Industry in Bangladesh

[Bilal9]

I will insert the article in Marine Policy Journal by DongKeun Lee which assesses (citing the South Korean example) on what steps small nations can undertake policy and govt.-investment-wise to compete and improve their position as shipbuilding nations and ship-exporters.

Most Bangladeshi movers and shakers (shipping ministry govt. nokars i.e. policymakers) have little clue in how to grow the shipbuilding sector in Bangladesh again, which was a maritime power of repute from time immemorial. This is a huge labor-value-addition sector and could be the next apparel miracle.

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Influences behind the development of South Korea’s shipbuilding industry from the 1960s to the 2000s​

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Abstract​

From the 1960s to the 2000s, the Republic of Korea (ROK) witnessed the rapid development of its shipbuilding industry, establishing itself as one of the world’s largest shipbuilders. This article seeks to answer the question of what drove the rapid development of South Korea’s shipbuilding industry. It accomplishes this by examining both classical sea power theory and the unique South Korean shipbuilding development model of the 1960s to the 2000s. Drawing from primary sources obtained from the ROK Presidential Archive and secondary sources, including newspapers and scholarly articles, this paper concludes that a combination of classic drivers of sea power development – including maritime commerce and threats – and the unique South Korean model, characterised by government subsidies and investments in both commercial shipbuilding and warship construction, contributed significantly to the development of South Korea’s shipbuilding industry. Finally, by learning from South Korea’s experience, developing and middle power countries looking to establish their shipbuilding industry should consider subsidising the industry in its early stages and contributing to a healthy ecosystem by investing in both commercial and warship construction.

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Keywords​

Sea-Power
Ship-building
Chaebol
South-Korea

1. Introduction​

As a country located on a peninsula surrounded on three sides by water, the Republic of Korea (ROK) heavily relies on seaborne trade. South Korea’s economic dependence on maritime trade is more pronounced than that of other states located on peninsulas, such as Italy, due to the division between North and South Korea. As the Democratic People’s Republic of Korea (DPRK) blocks the land-based trade routes of the ROK, South Korea now has become a de facto island country that does not have access to land trade routes.
Despite its geopolitical circumstances that are favourable to sea power development, the history of South Korean shipbuilding is relatively short. Right after the establishment of the republic, the Korean Peninsula was divided into two different countries. North Korea even initiated the Korean War in 1950 and, the largest security threat to Seoul has always been Pyongyang since then. Such a security environment led to the neglect of South Korean sea power development. In fact, the major security threat from North Korea was ground-based, so the ROK did not have a strong incentive to prioritise sea power development over land power development [1]. Indeed, South Korea experienced the influence of sea power during the Korean War, notably due to the operations of the United Nations Command (UNC) naval forces, including the Battle of Inchon. However, this did not lead the government to consider sea power as an important element of power for South Korea, as most studies of the Korean War were written based on ground battles. Some even argued that the majority of the battles during the Korean War took place on the ground, and thus, air and sea power only played supportive roles [2]. These biased Korean analyses resulted from a lack of understanding of joint operations within the ROK Armed Forces during the Korean War. The majority of military decision-makers were army generals, and they considered the goal of the Korean War to be the reunification of the Korean Peninsula through land occupation [2]. Eventually, despite the critical role of sea power during the Korean War, the ROK ended up prioritising land power over sea power. Moreover, the South Korean economy was very poor after the Korean War and during the 1960s, foreign trade only accounted for 15 per cent of its GDP [3]. Thus, Seoul did not invest in its sea power, and relied on the United State (U.S.) to protect its sea lines of communication (SLOCs) [4].
However, the geopolitical environment of South Korea began to change during the 1970s, altering the dynamics of its shipbuilding industry. As South Korea strengthened its land borders to address North Korean military provocations, the DPRK sought to avoid direct clashes on land and increased limited military provocations in the waters, where South Korea had invested less in protection [5]. Consequently, South Korea recognised the need to invest in sea power to safeguard its maritime border. As a result, the country developed a greater interest in naval capabilities, leading to the establishment of an indigenous shipbuilding industry during this period. While South Korea could have chosen to purchase U.S. warships, Seoul decided to pursue the indigenisation of its shipbuilding industry due to both political and economic reasons. Despite its relatively short history, South Korea has now achieved full indigenisation in warship construction, with 100 per cent of the Republic of Korea Navy (ROKN) warships being built domestically [6] by internationally well-known chaebol enterprises such as Hanwha Ocean, Hyundai Heavy Industries, and Samsung Heavy Industries.1
The ROK has now become one of the emerging warship exporters based on these industries, and therefore, it is important to understand the nature of chaebol shipbuilders when understanding South Korea’s shipbuilding capability development. Interestingly, despite the increased strategic value of warship exports, the decisions behind the exports are often determined by commercial interests instead of strategic reasons. For instance, the Korean defence industry, Dae Sun Shipbuilding, exported an amphibious warship to the Tatmadaw in 2020 despite the humanitarian crisis in Myanmar [7]. Considering that the military junta in Myanmar is violating international norms, which South Korea respects as a liberal democratic country, the weapon exports to the Tatmadaw should have been regarded as a self-violation of national interest [8]. In fact, there was a testimony of a former Tatmadaw member regarding the use of a South Korea-exported warship during the civil war, which involved human rights violations [9]. Nonetheless, such geostrategic considerations do not often influence South Korea’s weapon exports, which shows that commercial interest is still a key driving factor of warship exports.
This makes South Korea a rare case study with an interesting relationship between the chaebols and national security. Indeed, there have been numerous other historical cases in which military threats were key driving factors for the development of shipbuilding capabilities in a short time period. Examples include Sparta before the Peloponnesian War during the 5th century BCE vis-à-vis the Athenian sea power and the Imperial German Navy during the late 19th to the early 20th centuries vis-à-vis the Royal Navy. However, the commercial shipbuilding business was not involved in these two cases, making the ROK an intriguing case study to investigate.
Why and how, then, did South Korea choose to develop its shipbuilding industry rather than purchasing advanced U.S. warships? This article aims to address this question by examining both primary sources, including South Korea’s presidential archival records, and secondary sources, such as scholarly and newspaper articles spanning from the 1960s to the 2000s. The starting point for this analysis is the 1960s, as this is when South Korea’s shipbuilding industry took its initial steps. The endpoint for South Korea’s shipbuilding industry development is set in the 2000s, as it marks the time when the industry began to demonstrate a sophisticated contemporary model. As briefly discussed earlier, geopolitical reasons played a pivotal role in propelling the growth of South Korea’s shipbuilding industry. Furthermore, distinctive government subsidies provided to chaebol enterprises have further contributed to the indigenisation of the industry. The article begins with a theoretical discussion of shipbuilding capabilities and sea power. It is followed by a chronological analysis of findings from primary and secondary sources in the subsequent sections. By offering insights into the research question, this article presents a potential model for indigenising the shipbuilding industry in developing and middle power countries that industrialised after the Second World War.

2. Sea power and shipbuilding capability​

Without a doubt, the history of the shipbuilding industry is closely linked to the development of sea power in a country. Several scholars argue that sea power is a crucial element of national power that protects and promotes a country’s maritime commerce [10], [11], [12]. Naval capability is often considered a key indicator of sea power since navies play a vital role in defending a state’s maritime trade. Therefore, shipbuilding capability, which contributes to naval capability as well as maritime commerce capabilities, must be recognised as an essential aspect of sea power [12], [13]. In fact, major shipbuilding industries are typically found in countries with competitive naval capabilities as well as maritime trade.
Daniel Todd and Michael Lindberg conducted an in-depth study on the symbiosis between navies and shipbuilding industries. They argued that shipbuilding industries are heavily influenced by the demands of navies. In their work, they investigated both the supply side (shipbuilders) and the demand side (navies). They concluded that countries with strong navies typically have well-developed shipbuilding industries to meet naval demands [14]. According to Todd and Lindberg, navies can be classified into ten different hierarchies based on three elements: force structure (types, size, and the number of ships and aircraft), sustainability (ability to maintain naval forces on station), and flexibility (ability to perform missions in multiple geographical areas). These three elements are crucial as navies are often deployed beyond their territorial waters to protect maritime commerce. Therefore, Todd and Lindberg’s classification aligns with the conventional definition of sea power [15]. Additionally, they introduced the ‘World Naval Shipbuilding Capability Hierarchy’ to measure shipbuilding capabilities. This hierarchy consists of six ranks, with two important indicators being the percentage of domestically built warships and domestic design capabilities. Todd and Lindberg’s classifications show that naval hierarchy and shipbuilding hierarchy are aligned, indicating the close interconnection between shipbuilding industries and a state’s sea power [16].
Table 1. Todd and Lindberg’s Naval Hierarchy (updated based on current data and building on Kirchberger’s update in 2012 and Grove’s work in 2014) [15], [17], [18].

Rank	Examples	Inventories	Definition
1	US	All larger ship types in high numbers	Global-reach Power-projection
2	France, UK and China1)	CVN, other aviation-capable ships, many SSN/SSK, and many support ships	Limited Global-Reach power-projection
3	India, Russia, Italy and Japan2)	CVL, other aviation-capable ships, submarines, and enough support ships	Multi/Extra-regional Power-projection
4	South Korea3), Australia, Canada and Taiwan	Aviation-capable ships (DD, FF), submarines, and some support ships	Regional Power-projection
5	Singapore, Sweden and Saudi Arabia	Only smaller ships (FF, Corvettes), no underway replenishment	Regional Offshore Coastal Defence
6	North Korea, Vietnam and UAE	Only smaller ships (Corvettes, FAC)	Inshore Coastal Defence
7	Ireland, Iceland and Uruguay	Lightly armed OPV, PB and PC for coast guard type duties	Regional Offshore Constabulary
8	Bahamas, Senegal and Sri Lanka	Only Patrol Boats and Patrol Craft	Inshore Constabulary
9	Azerbaijan, Cambodia and Laos	Patrol Craft	Inland Waterway
10	Fiji, Palau and Solomon Islands	Often only 1 or 2 craft	Token Navies

Notes: 1) China was group four in 2012, but Grove assessed it as group two in 2014. 2) Japan was group four in 2012, but Grove assessed it as group three in 2014. 3) Grove assessed South Korea as group three, but the author categorises it as group four. See further discussion below.
Eric Grove suggested a different naval hierarchy in 2014 research based on his updating of Michael Morris’ original work in 1987. Unlike Todd and Lindberg, who classified naval hierarchy into ten different levels, Grove categorised navies into nine rungs, but the criteria for typology were quite similar. Like Todd and Lindberg, Grove also regarded the navy’s ‘force projection’ capability as a key measurement of naval hierarchy, meaning that he believed the navy’s primary role is to be deployed overseas to achieve national interests, including protecting maritime commerce [17]. This is not fundamentally different from the conventional definition of sea power, which implies that the measurement of naval hierarchy by Todd and Lindberg, and Grove are very similar. However, unfortunately, Grove did not include the analysis of shipbuilding in his work. Therefore, for the assessment of shipbuilding hierarchy, this article mostly relies on Todd and Lindberg’s system of classification. Still, for the naval hierarchy measurement, this article considers both assessments by Todd and Lindberg, and Grove.
Table 2. Todd and Lindberg’s Shipbuilding Capability Hierarchy (updated based on current data) [19].

Rank	Examples	Percentage of Domestically Built Combatant Ships	Maximum Tonnage Capability	Design Capability
1	China, France, Russia, UK, US, South Korea1) and Japan1)	100	10,000+	Full
2	Germany, India, Italy and Spain	70+	3000–10,000+	Full/Limited Foreign Assistance
3	Netherlands, Norway and Sweden	75+	3000–9999	Full
4	Canada2) and Australia	30–50	3000–9999	Developing Still Dependent on Foreign Assistance
5	Indonesia, Singapore and Thailand	40	< 1000	Very Limited
6	Philippines, Myanmar and Sri Lanka	0	< 500	None or Very Limited

1) South Korea and Japan used to be group two in 1996
2) Canada was group three in 1996
According to Todd and Lindberg’s classifications, South Korea was ranked fourth out of ten in terms of naval hierarchy, indicating that the ROKN was a regional navy with limited power projection capabilities. In terms of shipbuilding capability hierarchies, South Korea was ranked second out of six, indicating that more than 70 per cent of warships were built domestically [19]. Considering their book was published in 1996, how have South Korean naval and shipbuilding capabilities changed since then? Following their classifications, the naval capability hierarchy remains the same. In 2012, Kirchberger updated the naval hierarchy table but, South Korea remained in group four of the table [18]. However, according to Grove’s assessment in 2014, the ROKN has risen to group three, as he believed that its Aegis system-equipped destroyers, large submarine flotilla, amphibious, and replenishment forces play an important role in supporting South Korea’s limited global power projection [20]. Nonetheless, even as of 2023, the ROKN does not possess nuclear-powered submarines, which Grove believed to be an important element of sea power to support forward-deployment missions [21]. South Korea’s major submarine fleets are still conventional submarines, which have limited capabilities in terms of global deployment. Moreover, the Republic of Korea Ship (ROKS) Dokdo, which is an 18,800-tonne amphibious assault ship in terms of fully loaded displacement, has demonstrated that the ROKN has a limited forward-deployment capability. When the ROK decided to deploy the UN peacekeepers in response to the 2010 Haiti Earthquake, ROKS Dokdo was considered to be an asset for deployment. However, its deployment was cancelled since it could not pass the Panama Canal due to its size [22]. This shows that although the ROKN now possesses better assets compared to the 2012 and 2014 assessments, its function is still limited in terms of extra-regional power projection, which means that it needs to be categorised as group four.
However, there has been advancement in the shipbuilding capability hierarchy compared to 1996. South Korean warships are now entirely built and designed domestically, resulting in the advancement of the South Korean shipbuilding capability hierarchy from group two to group one. Within the group two countries, which includes Germany, India, Italy, Japan, South Korea, and Spain, only South Korea and Japan have advanced their shipbuilding capabilities to reach group one. This makes the South Korean shipbuilding industry a unique case study, considering that shipbuilding is highly technological and labour-intensive, making it challenging to expand the industry’s size.
Indeed, Japan has also successfully advanced its shipbuilding capability hierarchy to the first group, and some can argue that the Japanese case is as unique as the Korean shipbuilding case. However, there are other factors that make the South Korean case more intriguing compared to the Japanese case. The history of South Korean shipbuilding is relatively shorter compared to other major shipbuilding countries, and South Korea is a late industrialised middle power country with limited resources and population. Most major shipbuilding countries, including China, the U.S., Russia, and Japan, either have a long history of shipbuilding due to early industrialisation during the 18th and 19th centuries or substantial resources such as manpower and a strong economy to allocate to the shipbuilding industry. South Korea stands as an exception in both cases and is perhaps the only successful country that possesses a high level of shipbuilding capability without those factors. In fact, some countries that fall into a similar category as South Korea, such as Saudi Arabia and Australia, do not have sufficient shipbuilding capabilities to fully meet the demands of their navies because, for late industrialised countries without sufficient manpower, it is not economically rational to build indigenous shipbuilding industries as the initial costs of investing in shipbuilding industries can result in soaring expenditures [23].

3. South Korea and shipbuilding​

Then what were the key driving factors behind the development of South Korean industries? The majority of previous literature has answered this question by pointing to government subsidies that protected South Korean shipbuilding from foreign competitors. Most of these studies asserted that South Korea’s military dictator, Park Chung-hee, who served as the country’s president from 1963 to 1979, heavily subsidised the so-called chaebol companies to boost the national economy, and shipbuilding was among them [24], [25]. However, most of the earlier literature relied solely on secondary sources in English to support their arguments, potentially leading to incomplete analyses. Furthermore, while these analyses recognised that Park’s decision was a key driver in the emergence of South Korea’s shipbuilding industry, they did not deeply investigate the intentions behind Park’s decision. Thus, this article seeks to address this gap by analysing first-hand sources obtained from South Korea’s presidential archives. Given that the archive was established in 2007 and there is limited research regarding South Korea’s shipbuilding conducted using records from the presidential archive, this article is expected to make a valuable contribution to the ongoing debate on how developing and middle power countries can nurture their indigenous shipbuilding capabilities.
It is also essential to consider the classic driving factors of sea power development, such as the maritime threats and maritime commerce interests in the South Korean context. As briefly mentioned earlier, sea-based North Korean military provocations escalated during the 1970s, coinciding with South Korea’s increased reliance on maritime trade [5]. Consequently, the ROK’s decision to develop sea power in the 1970s was logical. This aspect will also be explored through an examination of President Park’s records.
Another unique feature of the South Korean shipbuilding industry stems from the joint construction of civilian ships and warships. In most advanced industrial countries, warship building and commercial shipbuilding are typically separate endeavours [26]. For example, although the U.S., the UK, and Russia are known for their domestic warship construction, these countries do not possess competitive commercial shipbuilding industries. However, in South Korea, major warship builders such as Hanwha Ocean and Hyundai Heavy Industries are involved in the construction of tankers and cargo ships as well. Japan follows a similar approach, with warship builders like IHI Corporation and Mitsubishi Heavy Industries also engaged in the production of commercial vessels. Nevertheless, as mentioned earlier, given South Korea’s late industrialisation, it is unique to maintain such a large-scale presence in both commercial and warship construction. The impact of commercial shipbuilding on the ecosystem of South Korean shipbuilding industries will be discussed in detail in the findings section as well.

4. Commercial shipbuilding – 1960s​

The primary driving factors behind South Korea’s shipbuilding industry in the 1960s were the growth of commercial shipping and significant subsidies under the Park Chung-hee government. It’s worth noting that the focus during this period was on developing commercial shipbuilding rather than constructing warships. In 1962, President Park introduced the Five-year Economic Plan, a pivotal shift that transformed South Korea’s economy into an export-oriented one. This plan set ambitious goals, aiming to quadruple South Korean exports within five years [27]. President Park’s economic transformation plan proved successful. By 1967, South Korea’s trade accounted for 29 per cent of the country’s GDP, representing a 10 per cent increase compared to 1962 [3]. Recognising the importance of shipbuilding capabilities to support this surge in exports, President Park’s government took further action. In 1967, it implemented the ‘Shipbuilding Industry Promotion Law’ to bolster South Korea’s shipbuilding sector, providing the rationale for substantial subsidies to the shipbuilding industry. Articles 4 and 5 of the law empowered the government to subsidise the domestic shipbuilding industry and provide loans to the industry as needed [28].
Operating under the provisions of this law, the ROK government provided funding to several companies, including both state-owned and private enterprises. An example of a state-owned company was the Korea Shipbuilding Corporation, and a privately owned company was Hyundai Heavy Industries [29]. These shipbuilding firms played a crucial role in the shipbuilding industry during the 1960s. With government support, these companies initiated the transformation of South Korea’s shipbuilding industry, transitioning it to steel shipbuilding [30]. Prior to this period, South Korea’s shipbuilding industry primarily focused on wooden ships. This government subsidy marked the beginning of South Korea’s acquisition of indigenous shipbuilding capabilities, which extended to the construction of warships. Notably, the Korea Shipbuilding Corporation later evolved into HJ Shipbuilding & Construction Co., Ltd. and Hanwha Ocean, key South Korean warship builders today.
President Park’s interests in shipbuilding industries are also visible in a number of speeches that he gave. In August 1967, during the commissioning ceremony of the first 6000 tonnes size tanker of South Korea, he said:
As the ROK is surrounded by water, the development of the shipbuilding industry is a very important project… The enlargement of ship size is an immediate task for us to minimise the outflow of foreign currency… [In the future], the Korea Shipbuilding Corporation will be able to build up to 10,000 tonnes size ships [31].
This speech shows the reason that South Korea decided to develop a domestic shipbuilding industry instead of purchasing foreign tankers. Fundamentally, the goal of the South Korean government during the 1960s was to increase the revenue from the foreign trade and thus, it was not ideal for the ROK to import foreign tankers. This is emphasised in President Park’s speech which emphasised the outflow of the foreign currency. In addition to his speech in 1967, President Park made another speech in 1968 which also emphasised the importance of shipbuilding in South Korea’s export-oriented economy.
When an economy grows, transport issues inevitably follow. There are various ways to transport goods, including railways, roads, and aircraft, but ships play the most significant role in terms of exports as they can transport the largest amount of goods [32].
This again shows that the intention behind President Park’s shipbuilding industry subsidy was economic development, and the increased trade boosted the shipbuilding industry of the ROK during the 1960s. This is an example that shows that classical sea power theory, which argues that maritime commerce drives shipbuilding, [10], [11], [12] can also explain South Korea’s shipbuilding industry development.
Why then did not South Korean shipbuilding contribute to warship construction during the 1960s? This can be explained by the military threats that South Korea faced during that decade. Throughout the 1960s, the majority of military clashes between South Korea and North Korea occurred on land, rather than at sea. While North Korea initiated 298 land skirmishes during the 1960s, maritime skirmishes occurred only 22 times. Therefore, land-based conflicts were the major threats faced by South Korea during this period [33]. Consequently, the government primarily focused on protecting its land borders rather than investing in warships. Furthermore, there were no substantial threats to South Korean SLOCs during the 1960s. The Soviet Navy and the People’s Liberation Army Navy had limited capabilities to interfere with South Korea’s SLOCs, and the U.S. Navy, which protected South Korea’s SLOCs, was far superior to them. As a result, the South Korean government did not have incentives to build warships and instead concentrated on commercial shipbuilding during the 1960s but this changed following a few maritime clashes during the late 1960s.

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[Bilal9]

Article Cont'd (Part 2)

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5. Early warship building – the 1970s to 1980s​

The security environment in South Korea underwent rapid shifts during the 1970s for the following reasons: (1) increased North Korean threats from the maritime domain, (2) South Korea’s doubt in the U.S.’s commitment to the Korean Peninsula’s maritime security and (3) the continued government subsidies to the shipbuilding industries. Trade continuously increased from the 1970s to the 1980s, but it was not a primary factor in warship construction. In fact, the ROK Defence White Papers of 1967 and 1968, which reflected South Korea’s security environment, did not emphasise the need to protect SLOCs. The 1967 White Paper mentioned that the “protection of major sea routes” was one of the missions of the ROKN, but it did not necessarily imply the protection of SLOCs and did not provide a detailed plan for this [34]. The 1968 Defence White Paper did not even include the protection of sea routes as one of the ROKN’s missions [35]. This demonstrates that the idea of using the navy as a means to protect SLOCs did not exist in South Korea’s defence strategy from the late 1960s to the 1970s. This implies that increased trade, a key driving factor for the South Korean shipbuilding industry, did not contribute to warship construction during the 1970s and 1980s.
Instead of commercial reasons, security concerns were the driving force behind the development of South Korea’s shipbuilding capabilities during this time period. In particular, the increased North Korean threat in maritime areas has been a primary factor behind South Korea’s demand for improved naval capabilities. The DPRK increased its maritime military provocations in the late 1960s, building on its enhanced naval capabilities and influenced by the Vietnam War. As mentioned earlier, due to significant North Korean provocations along the land border, South Korea heavily invested in its ground forces. However, due to budget constraints, Seoul could not allocate the same level of resources to its naval forces. Moreover, because of the Vietnam War, the ROKN allocated more resources to amphibious and maritime transportation capabilities to support the ground forces deployed to Vietnam. In contrast, the DPRK increased its investments in assets capable of directly targeting South Korean surface assets, such as submarines and coastal artillery. Consequently, Pyongyang gained naval superiority in the late 1960s, resulting in several critical naval incidents [36], [37].
Along with North Korea’s enhanced naval capabilities, South Korea has started to doubt the U.S. commitment to the Korean Peninsula, particularly in the maritime domain. Especially, different interpretations of the Northern Limit Line (NLL) between South Korea and North Korea have been a key driving factor of this suspicion. The NLL is a maritime line drawn by U.S. General Mark Clark in 1953 after the armistice of the Korean War to limit the maritime operations of both South Korean and North Korean forces. However, there is no clear legal definition of this line, which means that interpretations vary depending on each party. For instance, South Korea regards it as a de facto maritime border between South and North Korea. Consequently, the crossing of this line has been seen as a violation of the armistice treaty by Seoul [38]. Meanwhile, the U.S. does not consider the line a maritime border between South and North Korea. As a result, Washington classifies conflicts in the NLL as incidents in international waters and does not regard them as violations of the armistice treaty [39]. Pyongyang was aware of this difference and, therefore, chose maritime provocations as a more convenient option to minimise U.S. involvement.
The two significant cases that showed the increased North Korean maritime threats and disparity between South Korean and the U.S. maritime security concerns during the late 1960s were (1) the sinking of ROKS Dangpo in 1967, and (2) the capture of United States Ship (USS) Pueblo in 1968. ROKS Dangpo was a ROKN patrol craft that had seen service in the USN before being transferred to South Korea. The sinking of ROKS Dangpo occurred in January 1967 when South Korean fishing boats crossed the NLL. ROKS Dangpo pursued the fishing boats to prevent further movement. Unfortunately, without warning shots, North Korean coastal artillery struck ROKS Dangpo, resulting in the deaths of 39 ROKN sailors in action [40]. Following the sinking of ROKS Dangpo, Admiral Kim Young-kwan, the Chief of Naval Operations of the ROKN, visited the U.S. 7th Fleet and Commander, Naval Forces Korea to discuss a response to the incident. However, the U.S. was opposed to retaliation due to the potential for escalation. Instead of retaliating against North Korea, the USN persuaded Admiral Kim to pursue diplomatic actions in coordination with the UNC on the Korean Peninsula. Nevertheless, the UNC criticised the South Korean side due to the NLL infiltration, highlighting a clear divergence in security concerns between the South Korean government and the U.S. in the maritime domain [41].
The capture of the USS Pueblo occurred in January 1968, a year after the sinking of ROKS Dangpo. USS Pueblo was a U.S. intelligence ship that operated near the Korean Peninsula for intelligence collection purposes, rather than combat. Unfortunately, USS Pueblo was not fully equipped with weapon systems, and the North Korean Navy, with enhanced capabilities, easily captured it. Not only did North Korean Navy patrol boats contribute to the capture of USS Pueblo, but MiG-21 fighter jets were also involved in this operation. This shows that there was a clear naval capabilities gap between Pyongyang and Seoul. What was even more shocking than the incident itself was the response of the U.S. government to it, which deeply unsettled South Korean leadership. Similar to the sinking of ROKS Dangpo, South Korean leaders, including President Park, sought to retaliate against North Korea, but their request was rejected by the U.S. government [42]. This was an especially critical time for the U.S. government due to the upcoming November 1968 election. The United States was already heavily involved in the Vietnam War, while the general U.S. public was against the use of military force in Asia [43]. Ultimately, the U.S. pursued a diplomatic approach with North Korea to secure the return of the captured sailors of USS Pueblo. This further heightened the concerns of South Korean leadership regarding U.S. commitment to the security of the Korean Peninsula.
The two events above eventually led South Korea to consider self-armament of naval assets and the Nixon Doctrine has become a driver of indigenous warship building option for South Korea. The Nixon Doctrine was President Richard Nixon’s foreign policy towards Asia, which was announced in July 1969. In it, President Nixon emphasised Asian countries taking responsibility for their own security, which heightened South Korea’s security concerns [44]. After the announcement of this doctrine, the U.S. Military Assistance Program to South Korea transitioned to Foreign Military Sales. Consequently, U.S. military assets were no longer available at lower prices. The South Korean government had to consider the development of its own warship building [45].
South Korea’s indigenous warship-building plan commenced in the early 1970s following the implementation of the ‘Patrol Boat Acquisition and Domestic Building Policy’. The ROKN itself was primarily responsible for this development plan. The primary focus of the South Korean government during this period in terms of warship development was on creating small-sized, multi-purpose gunboats. South Korea’s main goal at this time was to deter North Korean infiltrations across the NLL, particularly by Pyongyang’s rapid boats. As a result, large-sized warships, such as frigates and destroyers, were not the main focus of this development initiative [46]. One of the first Korean-built ships delivered to the ROKN was the ROKS Haksaeng. ROKS Haksaeng was approximately 75 tonnes in size, classified as a patrol killer, and had a speed of 40 knots. This vessel was specifically designed to counter small-sized but fast North Korean gunboats, which were the primary naval assets initiating skirmishes along the NLL [47]. While the design of the Haksaeng class was managed by the ROKN, the construction of the ship was a separate matter, requiring the support of the shipbuilding industry. The Korea Shipbuilding Corporation, previously mentioned in the discussion of the 1960s commercial shipbuilding section, was chosen as the shipbuilder for the Haksaeng class, as there were no other shipbuilders in South Korea capable of constructing steel ships, except for the Korea Shipbuilding Corporation. This serves as an example illustrating how South Korea’s commercial shipbuilding technology from the 1960s transitioned into warship-building capabilities during the 1970s.
While the government led the warship building efforts, it concurrently invested in expanding shipbuilding infrastructure. The South Korean government subsidised shipyards during this period, some of which are still in use today, including Okpo Shipyard and Ulsan Shipyard. During this time, the construction of Okpo Shipyard was proceeded by the Korea Shipbuilding Corporation and Ulsan Shipyard was built by Hyundai Heavy Industries, which were continuously subsidised by the government even after the 1960s. President Park’s interest in the defence industries is evident in a number of primary sources. According to the South Korean government’s 1973 New Year inspection tour report, the development of the defence industry was highlighted as one of the priorities of the Ministry of National Defense. More specifically, the document stated:
The development of the defence industry has now become a key priority for national security. I suspect that the U.S. military assistance programme will be halted once South Korea completes the 5-year military equipment development plan, with the exception of certain specialised equipment. This implies that U.S. military assistance will be completely suspended around 1980. We have only seven to eight years remaining. During this time, we must continue to advance our defence industry while developing technology and capabilities [48].
This clearly shows that the suspicion towards U.S. security commitment to the Korean Peninsula played an important role of South Korea’s defence industry development during the 1970s. Furthermore, both defence industry and shipbuilding capability development were regarded as key agendas of the Park administration. According to the speech:
I will continue to expand our shipyards… By 1981, South Korea aims to be ranked among the top ten shipbuilders in the world… We will further advance the defence industry development plan to enable us to acquire significant assets and equipment domestically [49].
President Park, motivated by suspicion of U.S. security commitment, implemented the Yulgok project, which aimed to subsidise domestic defence industries. As a part of the project, Hyundai Heavy Industries received subsidies to build the first domestic South Korean destroyers between 1978 and 1980. Considering that the first South Korean warship delivered to the ROKN in 1972 was a small patrol boat, the rapid progress within six to eight years was quite remarkable.
Furthermore, a state-owned enterprise, the Korea Shipbuilding Corporation, began the process of privatisation during this period, and Okpo Shipyard was acquired by another chaebol enterprise, Daewoo, in 1978. During the privatisation of the shipyard, the government chose Daewoo over Hyundai Heavy Industries, which had already received government subsidies throughout the 1960s to 1970s, as Hyundai Heavy Industries did not wish to acquire an additional shipyard. As part of the deal, the government provided significant benefits to Daewoo, including extra subsidies and tax exemptions [50]. This demonstrates that even the privatisation process of the shipbuilding industry was influenced by the government’s decision. In 2023, this company was acquired by the Hanwha Group and is now known as Hanwha Ocean, one of the major shipbuilders in South Korea. Overall, the development of the shipbuilding industry in South Korea during the 1970s was influenced by the increasing North Korean maritime threat, concerns about U.S. commitment to the Korean Peninsula, and ongoing government subsidies. This trend continued into the 1980s when the South Korean government was still under military dictatorship.

6. The end of the Cold War and sustained shipbuilding – the 1990s-2000s​

The 1990s marked a significant shift in South Korea’s shipbuilding industry due to two key reasons. Firstly, the military dictatorship came to an end in 1988 following South Korea’s first democratic election. Secondly, the collapse of the Soviet Union in 1991 had a profound impact on the security environment of the Korean Peninsula. These two factors meant that the subsidies previously granted to chaebol companies under the military dictatorship were no longer available, and North Korea lost the security reassurance provided by the Soviet Union. In fact, the Shipbuilding Industry Promotion Law, which had justified the ROK government’s subsidies to chaebol shipbuilders, had already been abolished in 1986 [28]. Consequently, unconditional funds from the government were no longer available for the shipbuilding industry. Furthermore, South Korea had surpassed North Korea in both military and economic capabilities, which might have led to decreased interest in maintaining warship construction. In fact, many countries reduced their active investments in the shipbuilding industry due to the collapse of the Soviet Union. For example, major shipbuilders in Australia and Canada ceased operations in the 1990s due in part to the diminished maritime threat posed by Moscow [51].
Nevertheless, the South Korean shipbuilding industry thrived during the 1990s without substantial government subsidies. This was possible because shipbuilding companies no longer relied on them, due to the strength of the commercial shipbuilding ecosystem that had grown up. As a result, South Korea’s shipbuilding industry continued to expand throughout the 1990s, and by 2000, the ROK had become the largest commercial shipbuilder in the world. In terms of export value, this accounted for 4.8 per cent of the country’s manufacturing exports, which amounted to around 8.2 billion USD as of 2000 [52]. This meant that South Korea’s shipbuilding industries could survive without warship demands from the government.
Meanwhile, North Korean military threats from the maritime sector continued to drive South Korea’s warship construction. Despite South Korea surpassing North Korea’s military capabilities as of 1976, Pyongyang continued military provocations [5]. Due to gaps in conventional military capabilities, North Korean military provocations since the late 1970s were largely limited to asymmetric operations, such as infiltrations of special forces crossing the NLL. Furthermore, while the number of land-based skirmishes decreased, sea-based skirmishes actually increased during the 1990s and 2000s. Between the 1960s and 1980s, North Korea engaged in a total of 61 sea-based military provocations. However, during the 1990s, this number increased to 107 times, and by the 2000s, it had risen to 180 times [33].
Three critical cases during this time period were (1) the North Korean Infiltration of Gangneung in 1996, (2) the First Battle of Yeonpyeong in 1999, and (3) the Second Battle of Yeonpyeong in 2002. The first case demonstrated North Korea’s submarine operation capabilities, while the second and third cases revealed the necessity of continuous development of surface warfare capabilities. In September 1996, North Korean special operations forces infiltrated the South Korean city of Gangneung, located on the east coast of the ROK, using a submarine. Their goal was to assassinate President Kim Young-sam, but the ROKN could not detect the North Korean submarine until it crossed the NLL and before the North Korean Special Forces had landed [53]. Although the North Korean infiltrated forces were captured and killed, South Korea was only able to detect them because the North Korean submarine was wrecked due to adverse weather conditions. This incident clearly highlighted the ROKN’s limited anti-submarine warfare (ASW) capabilities, leading to further development of ASW capable warships.
The First and Second Battles of Yeonpyeong took place in 1999 and 2002. The Battles of Yeonpyeong held significant importance in South Korea’s threat perception as they marked the first direct naval skirmishes between the two Koreas since the 1970s, occurring near the NLL in the Yellow Sea. In the First Battle of Yeonpyeong, the ROKN successfully defeated the North Korean Navy without any casualties, but the ROKN lost six sailors during the Second Battle of Yeonpyeong [54]. As a result of the direct naval clashes near the NLL, the ROKN saw an increased demand for better patrol boats, leading to the development of new patrol craft [55].
Apart from these cases, there were other threats that prompted the ongoing development of advanced ROKN warships, including North Korea’s nuclear programme. North Korea’s nuclear development ultimately heightened the demand for anti-missile capabilities within the ROKN, which, in turn, led to the development of South Korea’s Aegis system-equipped destroyers. Continued maritime threats from North Korea contributed to South Korea’s demand for submarines as well.
All of these warships, including ASW-equipped destroyers and frigates, advanced patrol boats (now known as Patrol Killer Guided-Missile - PKG), Aegis system-equipped destroyers, and submarines were constructed by chaebol shipbuilders that grew during the government subsidies of the 1960s and 1970s. Three ASW-capable guided-missile frigates (FFGs), also known as the Incheon-class FFGs, were designed and built by Hyundai Heavy Industries. Seven advanced PKGs, also known as the Yoon Youngha-class PKGs, were designed and constructed by HJ Shipbuilding & Construction Co., Ltd., which originated from the Korea Shipbuilding Corporation. Aegis system-equipped guided-missile destroyers (DDGs) of the Sejong the Great-class DDGs were designed and constructed by Hyundai Heavy Industries and Daewoo (now known as Hanwha Ocean). Finally, ROKN submarines built during the 1990s and 2000s were all constructed by Hyundai Heavy Industries and Daewoo as well. Notably, all of these are companies that build commercial ships together with warships.

7. Conclusion​

What have we learnt from South Korea’s shipbuilding history from the 1960s to the 2000s? First of all, the conventional logic of sea power acquisition can also be applied to explain the South Korean case. During the 1960s, the increasing maritime commerce initially drove South Korea’s demand for shipbuilding capabilities, and commercial shipbuilding companies began their businesses during this time. Secondly, military threats play a crucial role in warship construction. Even though South Korea’s maritime trade increased during the 1960s and drove the ROK to develop its commercial ships, it did not automatically translate into warship building capabilities because the threat posed by North Korea was limited during the 1960s.
Nevertheless, the heightened maritime threat presented by the DPRK in the late 1960s completely transformed the landscape of South Korean warship construction in the 1970s-1980s. During this period, South Korea’s commercial shipbuilding expertise transitioned into warship building capabilities. Notably, chaebol companies that had received government subsidies during the 1960s became key players in warship construction during the 1970s-1980s. This demonstrates that government subsidies can play a pivotal role in the early-stage development of the shipbuilding industry.
Following the end of the Cold War, unlike many Western countries that discontinued their shipbuilding industries due to the collapse of the Soviet Union, South Korean shipbuilding industries persevered. This can be attributed to two factors: a robust ecosystem sustained by ongoing commercial shipbuilding and persistent North Korean threats. Throughout the 1990s-2000s, South Korean shipbuilding industries continued to thrive, driven by increased demand for commercial ships. On the warship front, ongoing North Korean provocations led to heightened demand for the development of advanced warships.
While commercial interests and threats have previously been discussed as driving forces in shipbuilding industries, the South Korean case provides unique insights into the importance of investing in both commercial shipbuilding and government subsidies in the early stages. These lessons can be applied to other developing and middle power countries. Notably, the significance of domestic shipbuilding industries is growing in the Indo-Pacific region due to heightened strategic competition in the maritime domain. Consequently, several developing and middle power states have expressed interest in developing indigenous shipbuilding capabilities, but the starting point can be ambiguous. By following the South Korean example, policymakers should consider subsidising companies for both commercial ships and warship construction. It will be important to carefully time the withdrawal of government subsidies to these shipbuilders, ensuring they can sustain the firm’s economy without government support.
However, this approach may not be efficient for developed economies like Australia and Canada, where labour costs are high. In such cases, a viable option for government subsidies could involve building high-value commercial ships alongside warships. For instance, even in countries with expensive labour costs like Italy and Germany, the construction of cruise ships is a notable high-value industry. Italy’s Fincantieri, for example, not only builds cruise ships but also warships, showcasing that commercial shipbuilding can be sustained in developed economies. Another example would be the development of green energy commercial ships. Given the rapid climate change, ships using renewable energy sources are gaining prominence as a future high-value project. While the initial subsidies may be substantial, the long-term benefits of investing in the shipbuilding industry, especially in highly competitive maritime security environments, can outweigh the costs.

Author Statement​

The author declare that this manuscript is original, has not been published before and is not currently being considered for publication elsewhere.
The author confirm that the manuscript has been read and approved by myself and there are no other persons who satisfied the criteria for authorship but are not listed.

CRediT authorship contribution statement​

Dongkeun Lee: Writing – review & editing, Writing – original draft, Resources, Project administration, Methodology, Formal analysis, Conceptualization, Investigation.

Declaration of Competing Interest​

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgements​

The author would like to thank anonymous reviewers and Professor Douglas Guilfoyle for their insightful comments.

 

[Bilal9]

Bangladesh is a riverine country with some 800 rivers.

Internal communication and heavy duty local transport for bulk agricultural goods used to be primarily by river routes in the days of yore and there were also maritime routes to Sri Lanka, Thailand and Indonesia and large shipping fleet with oversized vessels which were used to ply these marine routes.

Here are some of the local boat types, and when I find visual representations of Sea-going vessels, I will post them here as well. Sorry Bengali captions only. I know a bit about the different types of boats, so ask away if anyone has any questions.

 

[Krishna with Flute]

Well one could argue otherwise. Witness what happened in Korea as far as govt. policy help and investments in shipbuilding.

HYUNDAI (HHI Ulsan), DAEWOO (DSME), STX and SAMSUNG could not develop without massive investments.

Korea is a small place - smaller than even Bangladesh. Their shipbuilding sector however is many times larger than that of India, even today, even after Chinese exceeded their shipbuilding sector.

Size of a country is no factor if government subsidies are bolstered - which are a critical starting point for developing shipbuilding capabilities and what occurred in Korea.

In Ulsan, HHI yards are a sight to behold, I have been there a few times. The picture shows some 100,000 ton builds in progress.

View attachment 13851

Don't compare small countries like Korean, Israel, Japan etc. with BD. They have whole different working culture and ecosystem. They work on any such projects like national mission. Their education system to even social systems are build around their work. In Japan, whatever relations they have with their office colleagues. Here in India, in functions like marriages etc. , 3000 to 5000 invites is very common. We don't have that that culture in our society. India is able to do it because of the size of Nation and not because of any hyper efficiency.

 

[Bilal9]

Don't compare small countries like Korean, Israel, Japan etc. with BD. They have whole different working culture and ecosystem. They work on any such projects like national mission. Their education system to even social systems are build around their work. In Japan, whatever relations they have with their office colleagues. Here in India, in functions like marriages etc. , 3000 to 5000 invites is very common. We don't have that that culture in our society. India is able to do it because of the size of Nation and not because of any hyper efficiency.

So - talking about efficiency, how could Bangladesh achieve second place after China globally for apparel production while India could not? Indian economy is based on internal consumption, while that of Bangladesh economy is export based.

I'd argue that Bangladeshi entrepreneurs are more efficient than their Indian counterparts, given that they are involved with exports. That change has already occurred in Bangladesh. In fact I have traveled extensively in Korea and Bangladesh is at a situation where Korea was fifteen years ago. I was there at that time.

The only thing missing is policy and investments. Which could not happen because of Hasina.

Some of it still did, in spite of her acting on Indian Govt. behest.

 

[Krishna with Flute]

So - talking about efficiency, how could Bangladesh achieve second place after China globally for apparel production while India could not? Indian economy is based on internal consumption, while that of Bangladesh economy is export based.

I'd argue that Bangladeshi entrepreneurs are more efficient than their Indian counterparts, given that they are involved with exports. That change has already occurred in Bangladesh. In fact I have traveled extensively in Korea and Bangladesh is at a situation where Korea was fifteen years ago. I was there at that time.

The only thing missing is policy and investments. Which could not happen because of Hasina.

Some of it still did, in spite of her acting on Indian Govt. behest.

Apparel is a labor-oriented industry largely. It does not require high skill and next level of technological knowledge and evolved education systems and research facilities.

 

[Bilal9]

Apparel is a labor-oriented industry largely. It does not require high skill and next level of technological knowledge and evolved education systems and research facilities.

Low skill value addition is how you utilize and give jobs to your underclass so they can eat and clothe themselves for a change, which is barely possible in India.

What India has is trickle down (and mostly unequitable) development. Backoffice cannot feed the poor. It feeds middle and upper middle class people disproportionately.

What Bangladesh has is bottom up development starting with semi-skilled people. Apparel worker's kids are getting masters degrees and will come up in society. This has not and will not happen in India.

90% of the subcontinent's people are poor people. Asking them to code something is pointless.

They need to operate sewing machines or learn to weld or make motors. Those are sustainable livelihoods for the majority of people in our countries.

 

[Krishna with Flute]

Low skill value addition is how you utilize and give jobs to your underclass so they can eat and clothe themselves for a change, which is barely possible in India.

What India has is trickle down (and mostly unequitable) development. Backoffice cannot feed the poor. It feeds middle and upper middle class people disproportionately.

What Bangladesh has is bottom up development starting with semi-skilled people. Apparel worker's kids are getting masters degrees and will come up in society. This has not and will not happen in India.

90% of the subcontinent's people are poor people. Asking them to code something is pointless.

They need to operate sewing machines or learn to weld or make motors. Those are sustainable livelihoods for the majority of people in our countries.

India is developing in all sectors of economy mainly Agriculture, Manufactuing and services. However, due to very high level of education, we progressed disproportionally higher in services and skipped the usual path of development in which Agriculture is developed first, Industry in second place and services in last. This doesn't mean that we are not doing good in Industry. We are in all sectors. From high tech automobile to ship building, from defense to space and in nuclear energy.

 

[Bilal9]

The bulk of Bangladesh ships built locally are ~3000 to 4000 ton (DWT) bulkers and tankers.

Here are some built by yards near Dhaka (Meghna Ghat) and Chittagong.



This is one ship of a fleet of 50 plus. Owner is Mercantile Group and is used in Bangladesh in inland shipping purpose.

MERCANTILE-40, General Cargo Ship - Details and current position - IMO 9834234 - VesselFinder

Vessel MERCANTILE-40 (IMO 9834234) is a General Cargo Ship built in 2020 and currently sailing under the flag of Unknown.

www.vesselfinder.com

Sorry about the resolution of the videos, seems they all used low rez cellphones to record these events.

 

[Bilal9]

Low Rez video of Riverine Tanker launch for ROKNOOR Shipping Lines Ltd. in Bangladesh.
This was a local build at Delta Shipyard Chattogram in Bangladesh.
Design Consultant: Offshore and Marine Engineering Ltd., Samuda Chemicals Ltd.