Even with the spending decrease, a 7.9% increase in defense spending is still a significant increase:

South Korea is slowing down its defense spending. Next year, the defense budget will be $25 billion, which is up 7.9 percent from this year. A larger increase was expected, and some cuts will have to be made. Thus development of the new Korea Attack Helicopter (KAH) and KF-X jet fighter has been cut back. Delayed, not dropped. The new budget also slows the purchase of high end items like military space satellites, new electronic warfare gear and mine-clearing helicopters.One reason the budget is still rising is that South Korea has, over the last two decades, developed its own defense industries, so that most weapons are now produced domestically. This includes warplanes and warships, the two most high tech, and high cost, types of weapons. The South Koreans were willing to pay more for some of these weapons, because of the high development costs, in order to have weapons they could export. Thus work on some new weapons is being slowed, but not stopped, because eventually, many of these systems will, it is hoped, find foreign customers.  [Strategy Page]

Korea’s attempts at developing its domestic defense industry has actually been going really well in recent years with the export of weapon systems such as the XK-2 tank and the K9/K10 Thunder among a host of other new defense technologies being developed by South Korea.