APAC Defense Procurement Dynamics                                                Neil Dave, Consulting Analyst            ...
Focus Points               Overview of defense budgets and                      spending in APAC.                   Foreca...
APAC Defense Budget – Overview•   In recent years, several countries in the APAC region have been witnessing a rise in    ...
APAC Defense Budget – Overview • Geographic Scope: This briefing will be discussed on 10 countries in the APAC region, nam...
Defense Budgets: Forecasts and Trends•   The APAC defense budget reached    USD 151.45 billion in 2012.                   ...
Defense Budgets: By Countries in APAC•   Japan, South Korea and Australia    collectively contribute to 76% of APAC       ...
Defense Budgets by Country: Japan                                                        Japan: Defense Budget by Expendit...
Defense Budgets by Country: South Korea                                                                 South Korea: Defen...
Defense Budgets by Country: Australia                                                                 Australia: Defense B...
Defense Budgets by Country: Singapore                                                                Singapore: Defense Bu...
Defense Budgets by Country: Indonesia                                                             Indonesia: Defense Budge...
Conclusion : Key Takeaways          Focus of procurement in the APAC region will be on land vehicles, MBTs (Main      1   ...
Next StepsDevelop Your Visionary and Innovative Skills       Growth Partnership Service                      Share your gr...
Your Feedback is Important to Us          What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive St...
Follow Frost & Sullivan on Facebook, LinkedIn,SlideShare, and Twitter            http://www.facebook.com/FrostandSullivan ...
Today’s Presenter                Neil Dave, Consulting Analyst                Frost & Sullivan  Neil is a consulting analy...
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APAC Defense Procurement Dynamics

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Frost & Sullivan Analyst Briefing on APAC Defense Procurement Dynamics

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APAC Defense Procurement Dynamics

  1. 1. APAC Defense Procurement Dynamics Neil Dave, Consulting Analyst Aerospace & Defense 13th December 2012© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Focus Points Overview of defense budgets and spending in APAC. Forecasts and trends of defense budgets in APAC region and globally. Country-wise break-up of defense spending in APAC. Procurement and defense spending trends by APAC countries. Conclusion and key takeaways. 2
  3. 3. APAC Defense Budget – Overview• In recent years, several countries in the APAC region have been witnessing a rise in defense spending.• This is due to the increasing economic development along with rising geo-political instabilities in the region which have driven countries to modernize their defense forces.• Countries such as Australia, New Zealand, Indonesia and Malaysia in particular have been recently engaging in new military procurement and replacement programs.• Countries like Japan and South Korea are likely to engage in procurement of better ground-based and mounted weapon systems in the near future.• Other major procurement programs in the APAC region include procurement of armored vehicles, ships and aircraft along with others.• However, the procurement of UAVs (Unmanned Aerial Vehicles) by many nations is expected to be a major contributor to the increased defense spending in the region. 3
  4. 4. APAC Defense Budget – Overview • Geographic Scope: This briefing will be discussed on 10 countries in the APAC region, namely; Malaysia, Singapore, Indonesia, Thailand, Vietnam, Philippines, Japan, South Korea, Australia and New Zealand. • However, countries that will be discussed in depth are Japan, South Korea, Australia, Singapore and Indonesia.Source: Frost & Sullivan analysis. Note: Marked in blue are countries that will be discussed. 4
  5. 5. Defense Budgets: Forecasts and Trends• The APAC defense budget reached USD 151.45 billion in 2012. Defense Spending: 2008 - 2012 2500• This is an increase of 4% from 2011 and close to 8% of global spending in 2012. Defense Expenditure (Billions of USD) 2000• This budget is expected to reach close to USD 207.84 billion by 2020. 1500• This increased spending is being driven 1000 by replacement of aging equipment.• Most of the rise in spending is expected 500 to be driven by Indonesia, S Korea, Australia and Japan. 0 2008 2009 2010 2011 2012 World 1,473 1,560 1,630 1,738 1,850• These four countries are expected to APAC 116.79 119.47 132.27 145.60 151.45 collectively contribute 80% of total defense spending by 2020. Source: Frost & Sullivan analysis. 5
  6. 6. Defense Budgets: By Countries in APAC• Japan, South Korea and Australia collectively contribute to 76% of APAC Defense Budgets by Countries in APAC - 2012 defense budgets in 2012. New Zealand, Malaysia, 3% 2% Singapore, 6%• Japan alone contributes to 39% of the total defense budget in APAC. However, a Indonesia, 5% slowdown is expected. Thailand, 4% Australia, 17% Vietnam, 2%• On second place is South Korea with 20% Philippines, 2% of defense budget in APAC. This is being driven by modernization of military and newer weapon systems. South Korea, 20%• On third place is Australia, with about 17% Japan, 39% of APAC defense budget. Spending will be driven by procurement of military aircraft, ground vehicles and ships. Source: Frost & Sullivan analysis. 6
  7. 7. Defense Budgets by Country: Japan Japan: Defense Budget by Expenditure Type (2012)• Japan contributes to the highest market share in defense spending. Operations &• Spending is driven by investment in technological 21.85, 37% Maintenance 26.58, 45% improvement in armed forces. Procurement Personnel Costs• Lesser procurement budget is due to financial 10.63, 18% constraints and reliance on US forces. Japan: Defense Budget by Organization (2012)Major Procurement Programs• Army: Ground Vehicles and missile defense systems 10.04, 17% Army 21.85, 37% Navy• Navy: Mainly submarines 13.58, 23% Air Force Others• Air Force: Several fighter jets 13.58, 23% Source: Frost & Sullivan analysis. 7
  8. 8. Defense Budgets by Country: South Korea South Korea: Defense Budget by Expenditure Type (2012)• South Korea has the 2nd highest defense spending in APAC having about 20% of market share. Operations &• China’s increasing military power and the decreasing Maintenance 8.69, 28% influence of US forces is set to drive spending. 12.72, 41% Procurement Personnel Costs 9.62, 31%• Procurement makes up about 31% of the country’s defense budget. South Korea: Defense Budget byMajor Procurement Programs Organization (2012)• Army: Tactical ground missile & weapon systems. 5.58, 18% Army 13.65, 44% Navy• Navy: Mainly submarines. 5.58, 18% Air Force Others• Air Force: Fighter and stealth fighter jets. 6.20, 20% Source: Frost & Sullivan analysis. 8
  9. 9. Defense Budgets by Country: Australia Australia: Defense Budget by Expenditure• Australia is the3rd highest defense spending country Type (2012) in the region with close to 17% in market share. 0.80, 3% Operations & Maintenance• Spending will be driven by a need to replace obsolete 9.81, 37% Procurement military vehicles and equipment. 9.01, 34% Personnel Costs• Procurement makes up about 26% of Australia’s Others 6.89, 26% defense budget. Australia: Defense Budget by Organization (2012)Major Procurement Programs 0.80, 3%• Army: Unprotected and armoured ground vehicles. Army 9.01, 34% 9.81, 37% Navy• Navy: Mainly frigate ships Air Force Others• Air Force: Fighter jets, bombers and transport aircraft. 6.89, 26% Source: Frost & Sullivan analysis. 9
  10. 10. Defense Budgets by Country: Singapore Singapore: Defense Budget by Expenditure• Singapore contributes to about 6% of the total APAC Type (2012) defense budget in 2012. 0.19, 2% Operations & Maintenance• Spending is being driven technological advancement Procurement of existing equipment. 3.70, 38% 4.86, 50% Personnel Costs• The country has only 10% of spending on Others procurement. 0.97, 10% Singapore: Defense Budget by Organization (2012)Major Procurement Programs 0.49, 5%• Army: Light Armoured Vehicles Army 2.43, 25% 4.28, 44% Navy• Navy: Stealth frigates and landing platform dock ships. Airforce Others 2.53, 26%• Air Force: UAVs, stealth aircraft, refuelling tankers, missiles. Source: Frost & Sullivan analysis. 10
  11. 11. Defense Budgets by Country: Indonesia Indonesia: Defense Budget by Expenditure• Indonesia contributes to about 5% of the total APAC Type (2012) defense budget in 2012. Operations &• Geopolitical tensions and replacement of aging 1.61, 23% Maintenance equipment will drive procurement spending. 3.01, 43% Procurement 2.38, 34% Personnel Costs• The country has a healthy 34% of spending on procurement. Indonesia: Defense Budget by Organization (2012)Major Procurement Programs• Army: Battle tanks and armoured vehicles. Army 2.31, 33% 2.73, 39% Navy• Navy: Mainly submarines Air Force 0.84, Others 12% 1.12, 16%• Air Force: Fighter jets and heavy transport aircraft. Source: Frost & Sullivan analysis. 11
  12. 12. Conclusion : Key Takeaways Focus of procurement in the APAC region will be on land vehicles, MBTs (Main 1 Battle Tanks), anti-aircraft and anti-tank weapon systems and artillery. Most of the ground vehicles procured will consist of light-weight vehicles as a result 2 of the region’s combat strategy of agility as opposed to size & strength. Indonesia is expected to drastically increase its defense spending in the next few 3 years and is expected to be a major driver for the increased spending in APAC. Gradual withdrawal of US presence and support will cause countries like Japan and 4 South Korea to increase spending from 2017 onwards. Overall, technological advancements and the need to replace aging equipment will 5 drive defense spending in the APAC region in the future. 12
  13. 13. Next StepsDevelop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunitiesTo get a complimentary market insight on this topic, please email toapacfrost@frost.com 13
  14. 14. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by “Rating” this presentation. 14
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  16. 16. Today’s Presenter Neil Dave, Consulting Analyst Frost & Sullivan Neil is a consulting analyst with the Aerospace and Defense practice at Frost & Sullivan. He works with clients on market strategy, best practices, opportunity analysis and competitive intelligence analysis across various sectors in the Aerospace & Defense Industry as well as other industries which include ICT, Healthcare and Electronics & Security. For any other enquiries, email us: asiapacific@frost.com 16

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