Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 Report Price: US$ 1250 (Single User) Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 Summary “Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019” report offers the reader detailed analysis of the defense budget over the next five years. Alongside it 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. The report provides detailed analysis of the current industry size and growth expectations during 2015-2019, 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. Key Findings Pakistan’s total defense budget increased significantly over 2010-2014, with a CAGR of XX%; the country invested US$XX billion in the defense sector in 2010, and increased it to US$XX billion in 2014. This trend is expected to continue during the forecast period, due to the government’s well-defined military procurements plans, in a bid to fight terrorist attacks. Moreover, the nation’s long-standing territorial dispute with India indicates that the Pakistani defense strategy will largely correspond with India’s spending and development programs. The Pakistani defense budget is projected to increase from US$XX billion in 2015, to US$XX billion in 2019, at a CAGR of XX%. Pakistan is expected to allocate an average of XX% of its GDP to defense expenditure over the forecast period, despite its relatively small economy. Per capita defense expenditure is forecasted to increase from US$XX in 2014 to US$XX in 2019. Key Features and Benefits The report provides detailed analysis of the Pakistani defense industry during 2010–2019, including the factors that influence the military expenditure. It provides detailed expectations of growth rates and projected total expenditure. It provides the manufacturers with insights on market opportunities along with industry structure and dynamics prevalent in the country. In addition, the report focuses on the regulations governing the Pakistani defense industry and the potential market entry strategies with an expert analysis of the competitive structure. 2 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 1. Market Attractiveness and Emerging Opportunities 1.1. Defense Market Size Historical and Forecast 1.1.1. Pakistani annual defense expenditure to reach US$XX billion by 2019 The Pakistani defense budget grew from US$XX billion in 2010 to US$XX billion in 2014, at a CAGR of XX%. Territorial conflicts with neighboring countries and efforts to counter the increasing threat from terrorist groups remain the prime commitment of the government, and it is working out a well-defined military hardware procurement plan to support this aim. Between 2010 and 2014, the government added a range of advanced equipment to its fleet; including JF-17 Block 1 jets, F-16C/D fighters, Saab 2000 Erieye aircraft, Shaanxi ZDK-03 aircraft, Z-9C helicopters, Al-Zarrar and Al-Khalid armored vehicles, Zulfiquar class frigate, and Azmat class patrol boats. With the procurement of advanced weapons expected to continue over the forecast period, the defense expenditure is expected to reach US$XX billion by 2019, from US$XX billion in 2015, at a CAGR of XX%. The following table and figure show the Pakistani defense expenditure between 2010 and 2014: Table 1: Pakistani Defense Expenditure, 2010-2014 Year Defense expenditure (US$ bn) Defense growth percentage 2010 2011 2012 2013 2014 CAGR 2010-2014 Source: Ministry of Defense and SDI analysis © SDI Figure 1: Pakistani Defense Expenditure, 2010-2014 8 25% 7 20% 6 5 15% 4 3 10% 2 5% 1 Defense Defense budget (US$ Billion) 0 0% Defense Defense expenditure growth rate (%) 2010 2011 2012 2013 2014 Defense Expenditure (US$ bn) Defense Growth Percentage Source: Ministry of Defense and SDI analysis © SDI 3 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 The following table and figure show projected defense expenditure of Pakistan over the forecast period: Table 2: Pakistani Defense Expenditure, 2015-2019 Year Defense expenditure (US$ bn) Defense growth percentage 2015 2016 2017 2018 2019 CAGR 2015-2019 Source: Ministry of Defense and SDI analysis © SDI Figure 2: Pakistani Defense Expenditure, 2015-2019 12 12.0% 11.8% 10 11.6% 11.4% 8 11.2% 6 11.0% 10.8% 4 10.6% 10.4% 2 Defense Defense budget (US$ Billion) 10.2% 0 10.0% Defense Defense expenditure growth rate (%) 2015 2016 2017 2018 2019 Defence Expenditure (US$ bn) Defense expenditure growth % Source: Ministry of Defense and SDI analysis © SDI 4 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 1.2. Analysis of Defense Budget Allocation 1.2.1. Capital expenditure share to average XX% during the forecast period Pakistan’s capital expenditure share is expected to increase during the forecast period due to internal and external instability. Consequently, the share of capital expenditure as a percentage of overall defense expenditure is expected to increase from an average of XX% between 2010 and 2014 to XX% over the forecast period. Major procurements expected during the forecast period include armored vehicles, submarines, naval ships, and fighter jets. Research and development projects will also get a significant portion of the country’s capital expenditure. The following table and chart display Pakistan’s defense budget share of capital and revenue expenditure between 2010 and 2014: Table 3: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2010–2014 Year Capital Expenditure Share Revenue Expenditure Share 2010 2011 2012 2013 2014 Source: Ministry of Finance, Pakistan and SDI analysis © SDI Figure 3: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014 100% 90% 80% 70% 60% 50% 40% 30% 20% Defense Defense Budget Share (%) 10% 0% 2010 2011 2012 2013 2014 Capital Expenditure Revenue Expenditure Source: Ministry of Defense and SDI analysis © SDI 5 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 The following table and chart display Pakistan’s defense budget share of capital and revenue expenditure over the forecast period: Table 4: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2015–2019 Year Capital Expenditure Share Revenue Expenditure Share 2015 2016 2017 2018 2019 Source: Ministry of Finance, Pakistan and SDI analysis © SDI Figure 4: Pakistani Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2019 100% 90% 80% 70% 60% 50% 40% 30% 20% Defense Defense Budget Share (%) 10% 0% 2015 2016 2017 2018 2019 Capital Expenditure Revenue Expenditure Source: Ministry of Defense and SDI analysis © SDI 6 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 1.3. Homeland Security Market Size and Forecast 1.3.1. Allocation for police forms the major component of homeland security expenditure Under the heading of public order and safety, an amount of US$XX billion was assigned for homeland security purposes in 2014. The budget increased at a CAGR of XX% from US$XX billion in 2010. Expenditure on homeland security in Pakistan is driven by factors such as organized crime and cyber- attacks. A major portion of the budget, XX%, was allocated to the police, a trend expected to continue over the forecast period. The budget is projected to grow from US$XX billion in 2015 to reach US$XX billion in 2019, at an estimated CAGR of XX%. The Pakistani government is expected to equip law enforcement officers with state of the art surveillance and monitoring technologies in order to maintain a strict vigil along the country’s borders. The table and chart below show Pakistan’s homeland security expenditure between 2010 and 2014: Table 5: Pakistani Homeland Security Expenditure (US$ billion), 2010-2014 Homeland expenditure Year % Growth (US$ billion) 2010 2011 2012 2013 2014 Source: Ministry of Finance, Pakistan and SDI analysis © SDI Figure 5: Pakistani Homeland Security Expenditure (US$ billion), 2010-2014 1.0 60% 0.9 50% 0.8 0.7 40% 0.6 0.5 30% 0.4 20% (US$ Bn) (US$ 0.3 rate Growth (%) 0.2 10% 0.1 0.0 0% Homeland Security Expenditure 2010 2011 2012 2013 2014 Homeland Security Defense Expenditure (US$ Bn) Growth Rate (%) Source: Ministry of Finance, Pakistan and SDI analysis © SDI 7 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 2. Industry Dynamics - Porter’s Five Forces Analysis Figure 4: Industry Dynamics – Porter’s Five Forces Analysis Barrier to Entry Bargaining Power of Supplier Intensity of Rivalry Bargaining Power of Buyer Threat of Substitute Source: SDI analysis © SDI 8 Future of the Pakistani Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019 Report Methodology SDI’s dedicated research and analysis teams consist of experienced professionals with a background in industry research and consulting in the defense sector. The following research methodology is followed for all databases and reports: Secondary