In 2021 it was confirmed that a year earlier Vietnam had backed away from a full T-54/55 tank upgrade offered by Israel. The issue was apparently the cost, which was not disclosed. It is known that these thorough Israeli upgrades can cost up to four million dollars. This is what Turkey paid per vehicle to have many of its older American M-60 tanks upgraded. Similar upgrades to T-55s apparently cost at least half that, or more if additional features are added. The proposed Israeli upgrade of the T-55 included a new fire control system for a larger 105mm cannon as well as several different protection upgrades plus a new engine and some mechanical improvements.
Vietnam is one of the few countries that still keeps a lot (about 1,200) T-55 tanks in active service. These include 350 Chinese Type 59s, an upgraded copy of the T-55. China produced about 10,000 of them between 1958 and 1985. The T-54/55/59 tanks account for over 80 percent of the Vietnam tank force, not counting some equally old Russian light tanks.
In 2009 Vietnam brought in Israel to help upgrade their T-55s. Israel has been upgrading Russia tanks for decades, first for itself, using Russian tanks captured from Arab armies defeated in several wars. Later Israel offered those upgrades to foreign users of older Russian tanks. When Vietnam approached Israel, it was on the basis of an upgrade Israel had done for Slovenia. This model, called the T-55S1 and Israel proposed a further upgrade of that for Vietnam called the T-54M3.
The 40-ton T-55 is a 1955 upgrade of the T-54, which entered service in 1947 as the ultimate development of the World War II T-34. This tank was armed with a 100mm gun, as well as a 14.5mm and two 7.62mm machine-guns. Over 90,000 were produced, which was even more than the T-34, before production ended in the 1980s. The crew of four is not well protected from anti-tank weapons, and the 100mm gun is largely useless against modern tanks. But against civilians, the T-55 has proved to be effective and upgraded T-55s can be effective against foes that do not have the most modern tanks.
Vietnam is proceeding with the T-55M3 effort, but doing it without all the proposed Israeli upgrade features. Vietnam has already procured ERA (Explosive Reactive Armor) for its T-54s as well as a Spanish fire control system. This includes a laser rangefinder and a thermal (senses heat) sight for the gunner along with upgrades to the engine controls and a powered turret. Vietnam is apparently not replacing the original 100mm gun or the engine. This is still a substantial upgrade as the Vietnamese have maintained their T-54/55/59 tanks well, acquired modern anti-tank ammo for the 100mm main gun, and provide their crews with lots of opportunities to develop their gunnery skills. Vietnam’s main potential foe is China which, like Russia, depends on upgraded Cold War T-72 tanks. These upgraded T-72s are formidable and the more Chinese models are considered superior to the best Russia or India (which buys modern Russian tanks) have.
Vietnam still buys a lot of military equipment from Israel, as does India. Israel is a reliable supplier of combat proven and world-class military equipment, but some of it, like T-55 upgrades, cost more than Vietnam can afford.