The Malaysian Defense Sector Market Opportunities And Entry Strategies --- Aarkstore Enterprise

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 Malaysia 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 Malaysia 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 Malaysia. 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 Malaysia 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 Malaysia defense industry and the potential market entry strategies with an expert analysis of the competitive structure

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

Key Highlights

Malaysian military expenditure recorded a CAGR of 6.62% during the review period, and is expected to grow at a CAGR of 8.65% during the forecast period, to reach US$5.4 billion by 2015. The countrys defense expenditure is anticipated to continue to increase, due its geographical location in an unstable region, its involvement with Singapore in competitive arms procurement, a strained relationship with Indonesia and its involvement in peacekeeping missions. Furthermore, in order to compensate for historically low levels of defense expenditure, the country is expected to allocate increased levels of investment to the defense sector in order to modernize its armed forces.

In 2009, capital expenditure accounted for 22% of the total defense budget, while revenue expenditure accounted for 78%. However, during 201215, the capital expenditure share of the total defense budget is expected to increase to an average of 24%, due to anticipated improvements in the Malaysian economy, which will in turn enable the government to undertake acquisitions of modern defense equipment during the same period.

Keywords

Defense, Malaysia, AgustaWestland Malaysia Sdn Bhd, SME Ordnance Sdn Bhd , SME Aerospace Sdn Bhd, Aircraft Inspection Repair & Overhaul Depot (AIROD) Sdn Bhd, Boustead Naval Shipyard, Zetro Aerospace Corporation Sdn Bhd, Sapura Thales Electronics Sdn Bhd, DRB Hicom Defence Technologies Sdn Bhd, MMC Defence Sdn Bhd, Composite Technology Research Malaysia Sdn Bhd, Labuan Shipyard & Engineering Sdn Bhd, D Aquarian (M) Sdn Bhd

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 Intelligence Terrorism Index

1.5 About ICD Research Defense Intelligence Center

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities

3.1 Defense Industry Size - Review and Forecast

3.1.1 Malaysian defense expenditure expected to grow at a CAGR of 8.65% during the forecast period

3.1.2 Defense expenditure will be driven by an unstable location, competitive arms acquisitions, a strained relationship with Indonesia, peacekeeping missions and historically low levels of expenditure

3.2 Analysis of Defense Budget Allocation

3.2.1 Share of capital expenditure expected to marginally increase during the forecast period

3.2.2 Defense expenditure is closely correlated to Malaysian economic growth

3.3 Homeland Security Market Size and Forecast

3.3.1 The countrys homeland security market is expected to increase at a CAGR of 8.62% during the forecast period

3.3.2 Homeland security expenditure anticipated to be driven by religious tensions and criminal activity

3.4 Benchmarking with Key Global Markets

3.4.1 Malaysian defense expenditure expected to remain low in comparison with global military expenditure

3.4.2 On a global scale, Malaysian defense expenditure is comparatively low

3.4.3 Malaysia ranked twelfth among top arms importing countries during 200509

3.4.4 Military expenditure as a percentage of GDP expected to decline to reduce overall budget deficit

3.4.5 Malaysia faces moderate terror threat

3.5 Market Opportunities: Key Trends and Growth Stimulators

3.5.1 Demand for maritime defense equipment expected to increase

3.5.2 Air defense systems will experience a surge in demand

3.5.3 Demand for armored vehicles predicted to increase

3.5.4 Demand is expected to increase for technology that caters to border security

4 Defense Procurement Market Dynamics

4.1 Import Market Dynamics

4.1.1 Lack of domestic defense capabilities to drive imports

4.1.2 Defense imports significantly increased in 2009

4.1.3 Russia and European countries emerge as significant arms suppliers

4.1.4 Ships and aircrafts constitute the majority of Malaysian defense imports

4.2 Export Market Dynamics

4.2.1 Malaysia has limited export capabilities

5 Industry Dynamics

5.1 Five Forces Analysis

5.1.1 Bargaining power of supplier: low to high

5.1.2 Bargaining power of buyer: high to low

5.1.3 Barrier to entry: medium

5.1.4 Intensity of rivalry: medium to high

5.1.5 Threat of substitution: high

6 Market Entry Strategy

6.1 Market Regulation

6.1.1 Government encourages offsets in order to develop the domestic defense industry

6.2 Market Entry Route

6.2.1 Partnerships with domestic defense firms or the establishment of a wholly owned subsidiary constitute preferred entry routes

6.2.2 Defense exhibitions provide straightforward entry route for foreign OEMs

6.3 Key Challenges

6.3.1 Limited defense budget discourages investors from market entry

6.3.2 Corruption and lack of transparency deter defense sector growth

6.3.3 Project delays restrict investors

6.3.4 Local representatives limit the growth of the domestic defense industry

7 Competitive Landscape and Strategic Insights

7.1 Competitive Landscape Overview

7.2 Key Foreign Companies

7.2.1 AgustaWestland Malaysia Sdn Bhd: overview

7.2.2 AgustaWestland Malaysia Sdn Bhd: products and services

7.2.3 AgustaWestland Malaysia Sdn Bhd: recent announcements and strategic initiatives

7.2.4 AgustaWestland Malaysia Sdn Bhd: alliances

7.2.5 AgustaWestland Malaysia Sdn Bhd: recent contract wins

7.2.6 AgustaWestland Malaysia Sdn Bhd: financial analysis

7.3 Key Public Sector Companies

7.3.1 SME Ordnance Sdn Bhd: overview

7.3.2 SME Ordnance Sdn Bhd: products and services

7.3.3 SME Ordnance Sdn Bhd: recent announcements and strategic initiatives

7.3.4 SME Ordnance Sdn Bhd: alliances

7.3.5 SME Ordnance Sdn Bhd: recent contract wins

7.3.6 SME Ordnance Sdn Bhd: financial analysis

7.3.7 SME Aerospace Sdn Bhd: overview

7.3.8 SME Aerospace Sdn Bhd: products and services

7.3.9 SME Aerospace Sdn Bhd: recent announcements and strategic initiatives

7.3.10 SME Aerospace Sdn Bhd: alliances

7.3.11 SME Aerospace Sdn Bhd: recent contract wins

7.3.12 SME Aerospace Sdn Bhd: financial analysis

7.3.13 AIROD Sdn Bhd: overview

7.3.14 AIROD Sdn Bhd: products and services

7.3.15 AIROD Sdn Bhd: recent announcements and strategic initiatives

7.3.16 AIROD Sdn Bhd: alliances

7.3.17 AIROD Sdn Bhd: recent contract wins

7.3.18 AIROD Sdn Bhd: financial analysis

7.4 Key Private Sector Companies

7.4.1 Boustead Naval Shipyard: overview

7.4.2 Boustead Naval Shipyard: products and services

7.4.3 Boustead Naval Shipyard: recent announcements and strategic initiatives

7.4.4 Boustead Naval Shipyard: alliances

7.4.5 Boustead Naval Shipyard: recent contract wins

7.4.6 Boustead Naval Shipyard: financial analysis

7.4.7 Zetro Aerospace Corporation Sdn Bhd: overview

7.4.8 Zetro Aerospace Corporation Sdn Bhd: products and services

7.4.9 Zetro Aerospace Corporation Sdn Bhd: recent announcements and strategic initiatives

7.4.10 Zetro Aerospace Corporation Sdn Bhd: alliances

7.4.11 Zetro Aerospace Corporation Sdn Bhd: recent contract wins

7.4.12 Zetro Aerospace Corporation Sdn Bhd: financial analysis

7.4.13 Sapura Thales Electronics Sdn Bhd: overview

7.4.14 Sapura Thales Electronics Sdn Bhd: products and services

7.4.15 Sapura Thales Electronics Sdn Bhd: recent announcements and strategic initiatives

7.4.16 Sapura Thales Electronics Sdn Bhd: alliances

7.4.17 Sapura Thales Electronics Sdn Bhd: recent contract wins

7.4.18 Sapura Thales Electronics Sdn Bhd: financial analysis

7.4.19 DRB Hicom Defence Technologies Sdn Bhd: overview

7.4.20 DRB Hicom Defence Technologies Sdn Bhd: products and services

7.4.21 DRB Hicom Defence Technologies Sdn Bhd: recent announcements and strategic initiatives

7.4.22 DRB HICOM Defence Technologies Sdn Bhd: alliances

7.4.23 DRB Hicom Defence Technologies Sdn Bhd: recent contract wins

7.4.24 DRB HICOM Defence Technologies Sdn Bhd: financial analysis

7.4.25 MMC Defence Sdn Bhd: overview

7.4.26 MMC Defence Sdn Bhd: products and services

7.4.27 MMC Defence Sdn Bhd: recent announcements and strategic initiatives

7.4.28 MMC Defence Sdn Bhd: alliances

7.4.29 MMC Defence Sdn Bhd: recent contract wins

7.4.30 MMC Defence Sdn Bhd: financial analysis

7.4.31 Composite Technology Research Malaysia Sdn Bhd: overview

7.4.32 Composite Technology Research Malaysia Sdn Bhd: products and services

7.4.33 Composite Technology Research Malaysia Sdn Bhd: recent announcements and strategic initiatives

7.4.34 Composite Technology Research Malaysia Sdn Bhd: alliances

7.4.35 Composite Technology Research Malaysia Sdn Bhd: recent contract wins

7.4.36 Composite Technology Research Malaysia Sdn Bhd: financial analysis

7.4.37 Labuan Shipyard & Engineering Sdn Bhd: overview

7.4.38 Labuan Shipyard & Engineering Sdn Bhd: products and services

7.4.39 Labuan Shipyard & Engineering Sdn Bhd: recent announcements and strategic initiatives

7.4.40 Labuan Shipyard & Engineering Sdn Bhd: alliances

7.4.41 Labuan Shipyard & Engineering Sdn Bhd: recent contract wins

7.4.42 Labuan Shipyard & Engineering Sdn Bhd: financial analysis

7.4.43 D Aquarian Sdn Bhd: overview

7.4.44 D Aquarian Sdn Bhd: products and services

7.4.45 D Aquarian Sdn Bhd: recent announcements and strategic initiatives

7.4.46 D Aquarian Sdn Bhd: alliances

7.4.47 D Aquarian Sdn Bhd: recent contract wins

7.4.48 D Aquarian Sdn Bhd: financial analysis

8 Business Environment and Country Risk

8.1 Business Confidence

8.1.1 Business Confidence Index

8.1.2 Market Capitalization Trend The Bursa Malaysia Stock Exchange Malaysia

8.1.3 FDI Inflows

8.1.4 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 Net Output at Current Prices (Malaysian ringgit)

8.2.7 Agriculture Net Output at Current Prices (US Dollar)

8.2.8 Agriculture Net Output at Current Prices as Percentage of GDP

8.2.9 Manufacturing Net Output at Current Prices (Malaysian ringgit)

8.2.10 Manufacturing Net Output at Current Prices (US Dollar)

8.2.11 Manufacturing Net Output-Current Prices as Percentage of GDP

8.2.12 Mining, Manufacturing, and Utilities Net Output at Current Prices (Malaysian ringgit)

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

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

8.2.15 Construction Net Output at Current Prices, (Malaysian ringgit)

8.2.16 Construction Construction Net Output at Current Prices (US Dollar)

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

8.2.18 Crude Steel Production

8.2.19 Crude Oil Consumption

8.2.20 Inflation Rate

8.2.21 Fiscal Balance 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 Annual Average Exchange Rate US$--MYR

8.2.29 End of the Period Exchange Rate US$ -- MYR

8.2.30 Debt Service Ratio

8.3 Infrastructure Quality and Availability

8.3.1 Total Airports and Ports

8.3.2 Railways and highways

8.3.3 Passenger Vehicle Production Volume

8.3.4 Commercial Vehicle Production Volume

8.3.5 Automotive Components Export Trend

8.3.6 Automotive Products Import Trend

8.3.7 Passenger Car Penetration

8.3.8 Total Installed Capacity for electricity generation

8.3.9 Installed Capacity for the generation of Conventional thermal electricity

8.3.10 Electricity production

8.3.11 Installed Capacity for the generation of hydro-electricity

8.3.12 Installed Capacity for Renewable Electricity Generation

8.3.13 Electricity Consumption

8.3.14 Electricity Exports

8.3.15 Healthcare Expenditure

8.3.16 Healthcare Expenditure as a percentage of GDP

8.3.17 Healthcare Expenditure Per Capita

8.3.18 Research and Development expenditure as a percentage of GDP

8.3.19 Total Internet Subscribers

8.3.20 Broadband Internet Subscribers

8.3.21 Personal Computer penetration

8.3.22 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 Percentage of Population

8.5.7 Male 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 Number of households

8.6 Political and Social Risk

8.6.1 Political Stability

8.6.2 Terrorism Index

8.6.3 Transparency Index

9 Appendix

9.1 Contact Us

9.2 About ICD Research

9.3 Disclaimer"

List of Tables

"Table 1: Top Ranking Countries by Arms Imports Value, 200509*

Table 2: ICD Research Intelligence Terrorism Index

Table 3: Malaysian Defense Offset Regulations

Table 4: Market Entry by Key Foreign Companies

Table 5: Malaysian Defense Industry Capability

Table 6: AgustaWestland Malaysia Sdn Bhd - Alliances

Table 7: AgustaWestland Malaysia Sdn Bhd - Recent Contract Wins

Table 8: SME Ordnance Sdn Bhd - Alliances

Table 9: SME Ordnance Sdn Bhd - Recent Contract Wins

Table 10: SME Aerospace Sdn Bhd - Recent Contract Wins

Table 11: AIROD Sdn. Bhd. - Alliances

Table 12: AIROD Sdn Bhd - Recent Contract Wins

Table 13: Boustead Naval Shipyard - Recent Contract Wins

Table 14: Zetro Aerospace Corporation Sdn Bhd - Alliances

Table 15: Sapura Thales Electronics Sdn Bhd - Alliances

Table 16: Sapura Thales Electronics Sdn Bhd - Recent Contract Wins

Table 17: DRB HICOM Defence Technologies Sdn Bhd - Alliances

Table 18: DRB HICOM Defence Technologies Sdn Bhd - Recent Contract Wins

Table 19: MMC Defence Sdn Bhd - Alliances

Table 20: Composite Technology Research Malaysia Sdn Bhd - Alliances

Table 21: Composite Technology Research Malaysia Sdn Bhd - Recent Contract Wins

Table 22: Labuan Shipyard & Engineering Sdn Bhd - Alliances

Table 23: D Aquarian Sdn Bhd - Recent Contract Wins"

List of Figures

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

Figure 2: Malaysian Defense Budget Split between Revenue and Capital Expenditure (%), 200415F

Figure 3: Malaysian Defense Expenditure vs. GDP Growth Rate (%), 200515F

Figure 4: Malaysian Defense Expenditure as a Percentage of GDP (%), 200415F

Figure 5: Malaysian Homeland Security Expenditure (US$ Billion), 200415F

Figure 6: ICD Research Intelligence Terrorism Heat Map

Figure 7: ICD Research Intelligence Terrorism Index

Figure 8: Benchmarking with Key Global Markets (%), - 200415

Figure 9: Defense Expenditure of the Largest Defense Spenders Globally (US$ Billion), 2009 and 2015F

Figure 10: Malaysian Defense Budget as a Percentage of GDP Compared to Leading Military Spenders, 2009

Figure 11: Malaysian Defense Import Trend (US$ Million), 200409

Figure 12: Malaysian Defense Imports (%), 200409

Figure 13: Malaysian Defense Imports (%), 200409

Figure 14: Industry Dynamics - Porters Five Forces Analysis

Figure 15: Malaysian Business Confidence Index, 2008-10

Figure 16: The Bursa Malaysia Stock Exchange (MYX) Market Capitalization(US$ Billion), 2003--09

Figure 17: Malaysian FDI Inflows(US$ Billion),2003--08

Figure 18: Malaysia Deployment of Credit by Sector(US$ Billion), 2003--09

Figure 19: Malaysian GDP Value at Constant Prices(US$ Billion), 2003--15F

Figure 20: Malaysian GDP Per Capita at Constant Prices(US$), 2003-15F

Figure 21: Malaysian GDP at Current Prices(US$ Billion), 2003--15F

Figure 22: Malaysian GDP Per Capita at Current Prices(US$), 2003--15F

Figure 23: Malaysian GDP Split by Key Segments (%), 2003 vs 2009

Figure 24: Malaysian Agriculture Net Output at Current Prices (MYR Billion), 2003-15F

Figure 25: Malaysian Agriculture Net Output at Current Prices (US$ Billion), 2003-15F

Figure 26: Malaysian Agriculture Net Output at Current Prices as a percentage of GDP (%), 2003-15F

Figure 27: Malaysian Manufacturing Net Output at Current Prices (MYR Billion), 2003-15F

Figure 28: Malaysian Manufacturing Net Output at Current Prices (US$ Billion), 2003-15F

Figure 29: Malaysian Manufacturing Net Output at Current Prices as a percent of GDP (%), 2003-15F

Figure 30: Malaysian Mining, Manufacturing and Utilities Net Output, at Current Prices (MYR Billion), 2003-15F

Figure 31: Malaysian Mining, Manufacturing and Utilities Output, at Current Prices (US$ Billion), 2

by: Aarkstore Enterprise

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