The Indonesian Defense Sector - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015 by ICDResearch

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									The Indonesian Defense Sector -
Market Opportunities and Entry
Strategies, Analyses and Forecasts to
2015
Market Intelligence Report

Reference code: ICDDF0006MR10

Published: JULY 2010

www.icd-research.com

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© ICD Research. This report is a licensed product and is not to be photocopied
TABLE OF CONTENTS


LIST OF TABLES .......................................................................................................................... 8
LIST OF FIGURES ........................................................................................................................ 9
1 Introduction ......................................................................................................................... 11
1.1       About this Report ..........................................................................................................................11
1.2       Definitions .....................................................................................................................................11
1.3       Methodology..................................................................................................................................13
1.3.1 Secondary research ........................................................................................................................................... 13
1.3.2 Primary research................................................................................................................................................ 13
1.3.3 Conventions ....................................................................................................................................................... 14
1.4       ICD Research Terrorism Index .....................................................................................................14
1.5       About ICD Research Defense Intelligence Center ......................................................................14
2      Executive Summary ............................................................................................................ 15
3      Market Attractiveness and Emerging Opportunities ........................................................ 17
3.1       Defense Market Size - Historical and Forecast ...........................................................................17
3.1.1 Indonesian defense expenditure to increase at a CAGR of 12.85% during the forecast period ....................... 17
3.1.2 Natural disasters, indigenization, tensions with Malaysia, an accumulation of demand, and border security
      expected to fuel defense expenditure ................................................................................................................ 18
3.2       Analysis of Defense Budget Allocation .......................................................................................22
3.2.1 Capital expenditure share in defense budget to increase during the forecast period ....................................... 22
3.2.2 Army and navy to constitute majority of defense expenditure ........................................................................... 23
3.2.3 The Indonesian army receives the majority of country’s defense expenditure ................................................. 24
3.2.4 Naval expenditure to increase at a CAGR of 19.53% over the forecast period ................................................ 25
3.2.5 Air force expenditure to experience decreased growth ..................................................................................... 26
3.2.6 Research and development and other defense expenditure to reach US$2513 million by 2015 ..................... 27
3.3       Homeland Security Market Size and Forecast ............................................................................28
3.3.1 Homeland security market estimated to value US$2.82 billion in 2009 ............................................................ 28
3.3.2 Security and safety equipment imports to increase over the forecast period .................................................... 29
3.3.3 Cultural and ethnic issues will encourage investment in the procurement of homeland security equipment ... 30
3.4       Benchmarking with Key Global Markets .....................................................................................33
3.4.1 Over the forecast period Indonesia will maintain a limited presence in the international defense market ........ 33
3.4.2 Indonesian defense expenditure capability limited in comparison to that of developing countries ................... 34
3.4.3 Indonesian defense expenditure as a percentage of GDP among the lowest worldwide ................................. 35
3.4.4 Indonesia suffers from a moderate level of terrorist activity .............................................................................. 36
3.5       Market Opportunities: Key Trends and Growth Stimulators ......................................................39
3.5.1 Naval development will increase submarine demand ....................................................................................... 39
3.5.2 An increase in the procurement of military transport aircrafts to perform dual function .................................... 39
3.5.3 Demand for trainer and fighter aircrafts to grow in the near future.................................................................... 39
3.5.4 Procurement of unmanned aerial vehicles to provide strategic military capability ............................................ 40
3.5.5 Demand will increase for radar systems over the forecast period ..................................................................... 40

The Indonesian Defense Sector - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2015                                          Published August 2010
© ICD Research. This report is a licensed product and is not to be photocopied                                                                                       Page 2
TABLE OF CONTENTS


3.5.6 Sea border security concerns expected to drive demand for patrol boats and warships .................................. 41
4      Defense Procurement Market Dynamics ........................................................................... 42
4.1       Import Market Dynamics ...............................................................................................................43
4.1.1 Defense imports expected to grow significantly over the forecast period ......................................................... 43
4.1.2 Ships and aircrafts constitute majority of Indonesian defense imports ............................................................. 44
4.1.3 Russia is emerging as a significant defense trade partner ................................................................................ 45
4.2       Export Market Dynamics ..............................................................................................................46
4.2.1 Indonesia does not possess significant defense export capability .................................................................... 46
5      Industry Dynamics .............................................................................................................. 47
5.1       Five Forces Analysis.....................................................................................................................47
5.1.1 Bargaining power of supplier: low to high .......................................................................................................... 48
5.1.2 Bargaining power of buyer: high to low ............................................................................................................. 48
5.1.3 Barrier to entry: medium ...................................................................
								
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