Pakistani Defense Sector - Market Opportunities And Entry Strategies, Analyses And Forecasts To 2015

Summary

Summary

This report offers insights into the market opportunities and entry strategies adopted by foreign OEMs

(original equipment manufacturers) to gain a market share in the Pakistani defense industry. In

particular, it offers in-depth analysis of the following:

Market opportunity and attractiveness: detailed analysis of the current industry size and

growth expectations during 20102015, including highlights of the key growth stimulators. It also

benchmarks the industry against key global markets and provides detailed understanding of

emerging opportunities in specific areas.

Procurement dynamics: trend analysis of imports and exports, together with its implications and impact on the Pakistani defense industry.

Industry structure: five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.

Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing players have entered the market, including key contracts, alliances, and strategic initiatives.

Competitive landscape and strategic insights: analysis of competitive landscape of the defense industry in Pakistan. It provides an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Business environment and country risk: a range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and

availability, labor force, demographics, and political and social risk.

Scope

analysis of Defense industry market size from 2004 through 2009 and forecasts till 2015

analysis of defense budget allocation

Benchmarking with key global markets

Market opportunities

Defense procurement dynamics

Industry dynamics

Market entry strategy

Competitive landscape and strategic insights

Business environment and country risk

Reasons To Buy

Gain insight into Pakistani defense industry with current, historic and forecast market values

Get insight on market opportunity and attractiveness

Get insight on industry procurement dynamics

Gain insight on industry structure

Gain insight into the regulations governing the Pakistani defense industry and the potential market entry strategies with an expert analysis of the competitive structure

Identify top companies of the Pakistani defense industry along with profiles of all those companies

Key Highlights

The Pakistani defense industry, which valued US$6.3 billion in 2009, is expected to grow at a CAGR of 10.26% over the forecast period, to reach a value of US$10.4 billion by 2015. Indeed, the increased internal instability of the country following the onset of its participation in the international military campaign against terrorism, which is widely referred to as the war on terror, will continue to drive Pakistani defense expenditure during the next five years; while its long-standing territorial dispute with neighboring India means that the Pakistani defense strategy will largely correspond with the Indian spending and development program. Furthermore, Pakistan is expected to allocate 3% of its GDP for defense during the forecast period, despite its relatively small economy. However, while the country received an additional US$7.6 billion of military aid from the US for its contributions towards the war on terror during the review period, it is expected to receive aid of US$9 billion during the forecast period.

Moreover, Pakistan has been subjected to more than 5,000 terrorist attacks in the past five years, which have not only resulted in the death of many civilians, but have also adversely affected the economy, as several foreign companies have close operations within the country and new ones are reluctant to establish new business in the country. Consequently, the US has established a Pakistan counter-insurgency fund, worth US$1.2 billion annually (from 2011 onwards, currently it is US$700 million), to provide the Pakistani Armed Forces (PAF) with counter-insurgency training and related defense systems.

Keywords

Defense, Pakistan, Boeing, Howaldtswerke-Deutsche Werft, Raytheon, Lockheed Martin, Karachi Shipyard & Engineering Works, National Defense Complex, National Engineering and Scientific Commission, Pakistan Aeronautical Complex, Pakistan Ordnance Factories, Military Vehicle Research & Development Establishment, National Radio Telecommunication Corporation, Pakistan Space and Upper Atmosphere Research Commission, Air Weapons Complex, Daudsons Armory, Directorate General Munitions Production (DGMP), Heavy Industries Taxila, The Heavy Mechanical Complex, SATUMA, , , , , , , , , ,

Table of Contents :

1 Introduction

1.1 About this Report

1.2 Definitions

1.3 Methodology

1.3.1 Secondary research

1.3.2 Primary research

1.3.3 Conventions

1.4 ICD Research Terrorism Index

1.5 About ICD Research Defense Intelligence Center

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities

3.1 Defense Market Size and Forecast

3.1.1 Pakistani annual defense expenditure to reach US$10.4 billion by 2015

3.1.2 Hostile neighborhood, internal instability and the war on terror expected to drive defense expenditure

3.2 Analysis of Defense Budget Allocation

3.2.1 Capital expenditure share expected to be maintained at an average of 28% during the forecast period

3.2.2 Army receives the largest share of the defense budget to prevent internal instability

3.2.3 The countrys defense expenditure as a percentage of GDP declined over the review period

3.3 Homeland Security Market Size and Forecast

3.3.1 Pakistan is at a significant risk from external and internal threats

3.3.2 PCCF and PSS likely to drive homeland security expenditure

3.4 Benchmarking with Key Global Markets

3.4.1 Pakistani defense expenditure expected to increase at a CAGR of 10.26% during the forecast period

3.4.2 Pakistan ranks thirty sixth in global defense spend

3.4.3 Pakistans defense expenditure expected to reach 3% of GDP by 2015

3.4.4 Pakistan is one of the most terror prone countries in the world

3.5 Market Opportunities: Key Trends and Growth Stimulators

3.5.1 Indigenous submarine development set to drive naval defense procurements

3.5.2 Development of indigenous UAV and aerial refueling aircraft, and refurbishment of existing systems expected to drive air force defense procurement

3.5.3 Demand for various types of helicopters to increase to counter terrorism

4 Defense Procurement Market Dynamics

4.1 Import Market Dynamics

4.1.1 Counterinsurgency and territorial dispute with India expected to increase defense imports

4.1.2 US and China were the leading suppliers of arms to Pakistan in the review period

4.2 Export Market Dynamics

4.2.1 DEPO expected to increase defense exports

5 Industry Dynamics

5.1 Five Forces Analysis

5.1.1 Bargaining power of supplier: low

5.1.2 Bargaining power of buyer: high

5.1.3 Barrier to entry: medium to high

5.1.4 Intensity of rivalry: low to medium

5.1.5 Threat of substitution: medium

6 Market Entry Strategy

6.1 Market Regulation

6.1.1 Defense procurements to follow the public procurement policy

6.2 Market Entry Route

6.2.1 Foreign firms enter the Pakistani defense industry through joint-ventures or government-to-government deals

6.3 Key Challenges

6.3.1 Bureaucracy and lack of transparency in Pakistani defense

6.3.2 Unstable political system coupled with internal instability discourages foreign participation

7 Competitive Landscape and Strategic Insights

7.1 Competitive Landscape Overview

7.1.1 Foreign suppliers manufacture defense systems overseas and deliver to Pakistan

7.1.2 Growing domestic defense sector is predominantly state run

7.2 Key Foreign Companies

7.2.1 Boeing: overview

7.2.2 Boeing: products and services

7.2.3 Boeing: recent announcements and strategic initiatives

7.2.4 Boeing: alliances

7.2.5 Boeing: recent contract wins

7.2.6 Boeing: financial analysis

7.2.7 Howaldtswerke-Deutsche Werft: overview

7.2.8 Howaldtswerke-Deutsche Werft: products and services

7.2.9 Howaldtswerke-Deutsche Werft: recent announcements and strategic initiatives

7.2.10 Howaldtswerke-Deutsche Werft: alliances

7.2.11 Howaldtswerke-Deutsche Werft: recent contract wins

7.2.12 Howaldtswerke-Deutsche Werft: financial analysis

7.2.13 Raytheon: overview

7.2.14 Raytheon: products and services

7.2.15 Raytheon: recent announcements and strategic initiatives

7.2.16 Raytheon: alliances

7.2.17 Raytheon: recent contract wins

7.2.18 Raytheon: financial analysis

7.2.19 Lockheed Martin: overview

7.2.20 Lockheed Martin: products and services

7.2.21 Lockheed Martin: recent announcements and strategic initiatives

7.2.22 Lockheed Martin: alliances

7.2.23 Lockheed Martin: recent contract wins

7.2.24 Lockheed Martin: financial analysis

7.3 Key Domestic Companies

7.3.1 Karachi Shipyard & Engineering Works: overview

7.3.2 Karachi Shipyard & Engineering Works: products and services

7.3.3 Karachi Shipyard & Engineering Works: recent announcements and strategic initiatives

7.3.4 Karachi Shipyard & Engineering Works: alliances

7.3.5 Karachi Shipyard & Engineering Works: recent contract wins

7.3.6 Karachi Shipyard & Engineering Works: financial analysis

7.3.7 National Defense Complex: overview

7.3.8 National Defense Complex: products and services

7.3.9 National Defense Complex: recent announcements and strategic initiatives

7.3.10 National Defense Complex: alliances

7.3.11 National Defense Complex: recent contract wins

7.3.12 National Defense Complex: financial analysis

7.3.13 National Engineering and Scientific Commission: overview

7.3.14 National Engineering and Scientific Commission: products and services

7.3.15 National Engineering and Scientific Commission: recent announcements and strategic initiatives

7.3.16 National Engineering and Scientific Commission: alliances

7.3.17 National Engineering and Scientific Commission: recent contract wins

7.3.18 National Engineering and Scientific Commission: financial analysis

7.3.19 Pakistan Aeronautical Complex: overview

7.3.20 Pakistan Aeronautical Complex: products and services

7.3.21 Pakistan Aeronautical Complex: recent announcements and strategic initiatives

7.3.22 Pakistan Aeronautical Complex: alliances

7.3.23 Pakistan Aeronautical Complex: recent contract wins

7.3.24 Pakistan Aeronautical Complex: financial analysis

7.3.25 Pakistan Ordnance Factories: overview

7.3.26 Pakistan Ordnance Factories: products and services

7.3.27 Pakistan Ordnance Factories: recent announcements and strategic initiatives

7.3.28 Pakistan Ordnance Factories: alliances

7.3.29 Pakistan Ordnance Factories: recent contract wins

7.3.30 Pakistan Ordnance Factories: financial analysis

7.3.31 Military Vehicle Research & Development Establishment: overview

7.3.32 Military Vehicle Research & Development Establishment: products and services

7.3.33 Military Vehicle Research & Development Establishment: recent announcements and strategic initiatives

7.3.34 Military Vehicle Research & Development Establishment: alliances

7.3.35 Military Vehicle Research & Development Establishment: recent contract wins

7.3.36 Military Vehicle Research & Development Establishment: financial analysis

7.3.37 National Radio Telecommunication Corporation: overview

7.3.38 National Radio Telecommunication Corporation: products and services

7.3.39 National Radio Telecommunication Corporation: recent announcements and strategic initiatives

7.3.40 National Radio Telecommunication Corporation: alliances

7.3.41 National Radio Telecommunication Corporation: recent contract wins

7.3.42 National Radio Telecommunication Corporation: financial analysis

7.3.43 Pakistan Space and Upper Atmosphere Research Commission: overview

7.3.44 Pakistan Space and Upper Atmosphere Research Commission: products and services

7.3.45 Pakistan Space and Upper Atmosphere Research Commission: recent announcements and strategic initiatives

7.3.46 Pakistan Space and Upper Atmosphere Research Commission: alliances

7.3.47 Pakistan Space and Upper Atmosphere Research Commission: recent contract wins

7.3.48 Pakistan Space and Upper Atmosphere Research Commission: financial analysis

7.3.49 Air Weapons Complex: overview

7.3.50 Air Weapons Complex: products and services

7.3.51 Air Weapons Complex: recent announcements and strategic initiatives

7.3.52 Air Weapons Complex: alliances

7.3.53 Air Weapons Complex: recent contract wins

7.3.54 Air Weapons Complex: financial analysis

7.3.55 Daudsons Armory: overview

7.3.56 Daudsons Armory: products and services

7.3.57 Daudsons Armory: recent announcements and strategic initiatives

7.3.58 Daudsons Armory: alliances

7.3.59 Daudsons Armory: recent contract wins

7.3.60 Daudsons Armory: financial analysis

7.3.61 Directorate General Munitions Production (DGMP): overview

7.3.62 Directorate General Munitions Production: products and services

7.3.63 Directorate General Munitions Production: recent announcements and strategic initiatives

7.3.64 Directorate General Munitions Production: alliances

7.3.65 Directorate General Munitions Production: recent contract wins

7.3.66 Directorate General Munitions Production: financial analysis

7.3.67 Heavy Industries Taxila: overview

7.3.68 Heavy Industries Taxila: products and services

7.3.69 Heavy Industries Taxila: recent announcements and strategic initiatives

7.3.70 Heavy Industries Taxila: alliances

7.3.71 Heavy Industries Taxila: recent contract wins

7.3.72 Heavy Industries Taxila: financial analysis

7.3.73 The Heavy Mechanical Complex: overview

7.3.74 The Heavy Mechanical Complex: products and services

7.3.75 The Heavy Mechanical Complex: recent announcements and strategic initiatives

7.3.76 The Heavy Mechanical Complex: alliances

7.3.77 The Heavy Mechanical Complex: recent contract wins

7.3.78 The Heavy Mechanical Complex: financial analysis

7.3.79 SATUMA: overview

7.3.80 SATUMA: products and services

7.3.81 SATUMA: recent announcements and strategic initiatives

7.3.82 SATUMA: alliances

7.3.83 SATUMA: recent contract wins

7.3.84 SATUMA: financial analysis

8 Business Environment and Country Risk

8.1 Business Confidence

8.1.1 Market Capitalization Trend Karachi Stock Exchange, Pakistan

8.1.2 FDI Inflows by Sector

8.1.3 Deployment of Credit by Sector

8.2 Economic Performance

8.2.1 GDP at Constant Prices

8.2.2 GDP per Capita at Constant Prices

8.2.3 GDP at Current Prices

8.2.4 GDP Per Capita at Current Prices

8.2.5 GDP Split by Key Segments

8.2.6 Agriculture Agriculture Net Output Value at Current Prices (Local Currency)

8.2.7 Agriculture Agriculture Net Output Value at Current Prices (US Dollar)

8.2.8 Agriculture Agriculture Net Output at Current Prices as Percentage of GDP

8.2.9 Manufacturing Manufacturing Net Output at Current Prices (Local Currency)

8.2.10 Manufacturing Manufacturing Net Output at Current Prices (US Dollar)

8.2.11 Manufacturing Manufacturing Net Output-Current Prices as Percentage of GDP

8.2.12 Manufacturing Mining, Manufacturing, and Utilities at Current Prices (Local Currency)

8.2.13 Manufacturing Mining, Manufacturing, Utilities at Current Prices (US Dollars)

8.2.14 Manufacturing Mining, Manufacturing, Utilities at Current Prices, as Percentage of GDP

8.2.15 Construction Construction Net Output at Current Prices, (Local Currency)

8.2.16 Construction Construction Net Output-Current Prices

8.2.17 Construction Construction Net Output-Current Prices as a % of GDP

8.2.18 Industry - Crude Steel Production

8.2.19 Industry - Crude Oil Consumption

8.2.20 Inflation Rate

8.2.21 Fiscal Deficit as a Percentage of GDP

8.2.22 Trade Balance as a Percentage of GDP

8.2.23 Exports as a Percentage of GDP

8.2.24 Imports as a Percentage of GDP

8.2.25 Exports Growth

8.2.26 Imports Growth

8.2.27 External Debt as Percentage of GDP

8.2.28 Exchange Rate US$-PKR (Annual Average)

8.2.29 Exchange Rate US$-PKR (End of Fiscal)

8.2.30 Debt Service Ratio

8.3 Infrastructure Quality and Availability

8.3.1 Transport - Passenger Vehicle Production Volume

8.3.2 Transport - Commercial Vehicle Production Volume

8.3.3 Transport - Automotive Components Export Trend

8.3.4 Transport - Automotive Products Import Trend

8.3.5 Transport - Passenger Car Penetration

8.3.6 Utilities - Total Installed Capacity for Electricity Generation

8.3.7 Utilities - Installed Capacity for Conventional Thermal Electricity Generation

8.3.8 Utilities - Electricity Production

8.3.9 Utilities - Installed Capacity for Hydro-electricity Generation

8.3.10 Utilities - Installed Capacity for Renewable Electricity Generation

8.3.11 Utilities - Electric Power Consumption

8.3.12 Healthcare - Healthcare Expenditure

8.3.13 Healthcare - Healthcare Expenditure as % GDP

8.3.14 Healthcare - Healthcare Expenditure Per Capita

8.3.15 Technology R&D Expenditure as a percentage of GDP

8.3.16 Communication - Total Internet Subscribers

8.3.17 Communication - Broadband Internet Subscribers

8.3.18 Communication Mobile Phone Penetration Rate

8.4 Labor Force

8.4.1 Labor Force

8.4.2 Unemployment Rate

8.5 Demographics

8.5.1 Annual Disposable Income

8.5.2 Annual Per Capita Disposable Income

8.5.3 Annual Consumer Expenditure on Food

8.5.4 Annual Per Capita Consumer Expenditure on Food

8.5.5 Urban and Rural Population

8.5.6 Female as Percentage of Population

8.5.7 Male as Percentage of Population

8.5.8 Mean Age of Population

8.5.9 Median Age of Population

8.5.10 Population Density

8.5.11 Age Distribution Total Population

8.5.12 Age Distribution-Male Population

8.5.13 Age Distribution-Female Population

8.5.14 No. of Households

8.6 Political and Social Risk

8.6.1 Political Stability

8.6.2 Terrorism Index

8.6.3 Transparency Index

List of Tables

Table 1: ICD Research Terrorism Index

Table 2: Key Foreign Companies and Operations in the Pakistani Defense Sector

Table 3: Boeing - Recent Contract Wins

Table 4: Howaldtswerke-Deutsche Werft - Recent Contract Wins

Table 5: Raytheon - Recent Contract Wins

Table 6: Lockheed Martin - Recent Contract Wins

Table 7: Pakistan Ordnance Factories - Recent Contract Wins

Table 8: Pakistan Space and Upper Atmosphere Research Commission - Recent Contract Wins

Table 9: Air Weapons Complex - Alliances

Table 10: Directorate General Munitions Production - Recent Contract Wins

Table 11: Heavy Industries Taxila - Alliances

Table 12: Heavy Industries Taxila - Recent Contract Wins

Table 13: The Heavy Mechanical Complex - Alliances

Table 14: SATUMA - Recent Contract Wins

List of Figures

Figure 1: Pakistani Defense Market Size and Forecast (US$ Billion), 200415F

Figure 2: Pakistani Defense Expenditure Percentage Split between Revenue and Capital Expenditures (%), 200415F

Figure 3: Pakistani Defense Budget Allocation between Services (%), 2009

Figure 4: Pakistani Defense Expenditure as a Percentage of GDP (%), 2

by: Aarkstore Enterprise

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