Future of the Indonesia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

  • ID: 4328263
  • Report
  • Region: Indonesia
  • 108 Pages
  • Strategic Defence Intelligence
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FEATURED COMPANIES

  • Dok & Perkapalan
  • PAL Indonesia
  • PT Dahana
  • PT Dirgantara
  • PT Multiintegra
  • PT Pindad
  • MORE

Summary

Indonesia, the world’s sixteenth largest economy, is currently one of the most attractive defense markets in South Asia but recorded a CAGR of -0.22% during 2013-2017 to reach US$8.7 Billion in 2017. The was mainly attributed to the instability in exchange rates, which resulted in slight decline in defense spending in US dollars. However, over the forecast period, the country is anticipated to boost its defense spending primarily to replace ageing defense equipment and systems.

Indonesian defense market, is anticipated value US$10.1 Billion in 2018, is expected to grow at a CAGR of 14.38% during the forecast period to value US$17.2 Billion in 2022. The economy has been growing at an average rate of 2.72% historically, and this has fueled defense expenditure in the country. Furthermore, the growth in defense spending is also driven by the need to modernize the Indonesian armed forces under the Strategic Plan 2024.

The Indonesian MoD is expected to increase its capital expenditure from US$3.5 Billion in 2017 to US$7.6 Billion in 2022 in an effort to modernize its armed forces and support existing projects. Various procurements, which have led to the increase in capital budget allocation, include Sukhoi Su-30MK2s aircraft, Su-27 SKM, and Su-35 fighters, AS565 Panther anti-submarine warfare (ASW) helicopters, hang Bogo-class tactical submarines, two landing ship tanks (LSTs), AH-64 Apache Longbow gunship helicopters, and German Leopard tanks.

Homeland security is an area that has gained prominence in Indonesia over the last decade, with expenditure expected to increase from US$6.4 Billion in 2018 to US$9.6 Billion in 2022 at a CAGR of 10.46%. The increasing expenditure is stimulated by initiatives to counter the growing threat of terrorism, and to control piracy and illegal fishing, illegal immigration, drug smuggling, and criminal activities in the country. Furthermore, this is anticipated to result in increased demand for maritime surveillance and security equipment, cameras, airport security, biometric systems, and video-surveillance systems to mitigate security threats from internal and external sources.

Indonesian defense industry is one of the fastest-growing defense markets in South Asia and, historically, has relied on foreign OEMs (original equipment manufacturers) to strengthen its defense capabilities. The country observed an increase in arms imports in 2013 and 2014 due to its recent modernization plans and countries such as the UK, the US, Russia, and South Korea are major suppliers to the Indonesian defense industry. Aircraft accounted for 45.1% of Indonesia’s arms imports, followed by naval vessels, armored vehicles, missile systems, and air defense systems.

The report “Future of the Indonesia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022”  offers detailed analysis of Indonesia defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.
 
In particular, it provides an in-depth analysis of the following -

  • Indonesia defense industry market size and drivers: Detailed analysis of Indonesia defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget. It also details the key challenges faced by defense market participants within the country.
  • Porter’s Five Force analysis of Indonesia defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
  • Import and Export Dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years.
  • Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
  • Competitive landscape and strategic insights: Analysis of the competitive landscape of Indonesia defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Companies mentioned in this report: PT Dirgantara, PAL Indonesia, PT Pindad, Dok & Perkapalan, PT Dahana, PT Multiintegra , Radar and Communications Systems, and PT SOG.

Scope

  • Indonesia, the world’s sixteenth largest economy, is currently one of the most attractive defense markets in South Asia but recorded a CAGR of -0.22% during 2013-2017 to reach US$8.7 billion in 2017. The was mainly attributed to the instability in exchange rates, which resulted in slight decline in defense spending in US dollars. However, over the forecast period, the country is anticipated to boost its defense spending primarily to replace ageing defense equipment and systems. The country’s increasing military capital expenditure is reflected in the ongoing modernization drive to replace its aging military hardware, in addition to building its indigenous defense industrial base. Furthermore, continuous territorial disputes and the country’s vulnerability to natural disasters have led to the upgrade of military equipment such as military transport aircraft, rescue helicopters, and naval vessels.
  • The Indonesian MoD allocated an average of 30.8% of the total budget to capital expenditure during 2013-2017, which is expected to increase to an average of 42.4% over the forecast period. The substantial allocation for capital expenditure is primarily due to a number of procurements and modernization programs formulated by the Indonesian MoD. The country’s 2010 strategic defense plan outlined a modernization program that included the procurement of 10 jet fighter squadrons, 274 ships, and 12 submarines by 2024, a significant increase in the country’s military capabilities. The country’s military investments are in tandem with this strategy. Recent purchases include Sukhoi Su-30MK2s aircraft, Su-27 SKM, F-16, and Su-35 fighters, AS565 Panther anti-submarine warfare (ASW) helicopters, and Chang Bogo-class tactical submarines, among many others.
  • The MoD is expected to invest in fighters and Multi-role aircraft, Military-IT networking and submarines.

Reasons to Buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of Indonesia defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of Indonesia defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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Note: Product cover images may vary from those shown
2 of 4

FEATURED COMPANIES

  • Dok & Perkapalan
  • PAL Indonesia
  • PT Dahana
  • PT Dirgantara
  • PT Multiintegra
  • PT Pindad
  • MORE

1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary threat perception
3.1.2. Military Doctrine & Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Ongoing procurement programs
3.1.6. Future procurement programs
3.1.7. Social, Political and Economic Environment & Support for Defense Projects
3.1.8. Political & Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Indonesian defense budget is expected to reach US$17.2 billion by 2022, at a CAGR of 14.38%
3.2.2. Defense expenditure is driven by the modernization of the armed forces, indigenization, territorial disputes, and natural disasters
3.2.3. Defense budget as a percentage of GDP expected to increase over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure share in defense budget is expected to increase to an average of 42.4% over the forecast period
3.3.2. Capital expenditure to increase over the forecast period
3.3.3. Per capita defense expenditure expected to increase during the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security expenditure is expected to grow at a CAGR of 10.46% during the forecast period
3.4.2. Border Security and Terrorism to drive the homeland security market over the forecast period
3.4.3. Indonesia considered as ‘high risk’ category of terrorist attack
3.4.4. Indonesia faces high level of threat from foreign terrorist organizations
3.4.5. Indonesia has a terrorism index score of “4.4”
3.5. Benchmarking with Key Global Markets
3.5.1. Indonesia’s defense budget expected to register rapid growth over the forecast period
3.5.2. Indonesian defense expenditure is relatively small compared to other Asian countries
3.5.3. The Indonesian defense budget as a percentage of GDP is expected to increase during 2018-2022
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Military-IT Networking
3.6.2. Multi-Role Aircraft
3.6.3. Submarine

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to increase during forecast period
4.1.2. Indonesia plans to diversify arms imports
4.1.3. Aircraft and ships constitute the majority of Indonesian defense imports
4.2. Export Market Dynamics
4.2.1. Indonesia does not possess significant defense export capability

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: Low
5.1.2. Bargaining power of Buyer: Medium
5.1.3. Barrier to entry: Medium
5.1.4. Intensity of rivalry: Low
5.1.5. Threat of Substitution: High

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Defense investment policy conducive to both domestic and foreign investment
6.1.2. New procurement policy to support small and medium enterprises
6.1.3. Indonesia to launch formal offset policy
6.2. Market Entry Route
6.2.1. Budget Process
6.2.2. Procurement Policy & Process
6.2.3. Foreign defense suppliers enter the Indonesian defense market primarily through joint ventures
6.2.4. Strategic partnership and military collaborations an easier way to access the Indonesian defense market
6.3. Key Challenges
6.3.1. Small defense budget deters investment
6.3.2. Lack of defense infrastructure
6.3.3. Corruption impedes the growth of the Indonesian defense industry

7. Competitive Landscape and Strategic Insights
7.1. Competitive landscape Overview
7.2. Key Public Sector Companies
7.2.1. PT Dirgantara Indonesia: overview
7.2.2. PT Dirgantara Indonesia: Major Products and Services
7.2.3. PT Dirgantara Indonesia: recent announcements and strategic initiatives
7.2.4. PT Dirgantara Indonesia: alliances
7.2.5. PT Dirgantara Indonesia: recent contract wins
7.2.6. PAL Indonesia: overview
7.2.7. PAL Indonesia: Major Products
7.2.8. PAL Indonesia: recent announcements and strategic initiatives
7.2.9. PAL Indonesia: Alliances
7.2.10. PAL Indonesia: Recent Contract Wins
7.2.11. PT Pindad: overview
7.2.12. PT Pindad: Major Products
7.2.13. PT Pindad: recent announcements and strategic initiatives
7.2.14. PT Pindad: alliances
7.2.15. PT Pindad: Recent Contract Wins
7.2.16. Dok & Perkapalan: overview
7.2.17. Dok & Perkapalan: Major Products
7.2.18. Dok & Perkapalan: recent announcements and strategic initiatives
7.2.19. Dok & Perkapalan: alliances
7.2.20. Dok & Perkapalan: Recent Contract Wins
7.3. Key Private Sector Companies
7.3.1. PT Dahana: overview
7.3.2. PT Dahana: products
7.3.3. PT Dahana: recent announcements and strategic initiatives
7.3.4. PT Dahana: alliances
7.3.5. PT Dahana: recent contract wins
7.3.6. PT Multiintegra: overview
7.3.7. PT Multiintegra: products
7.3.8. PT Multiintegra: recent announcements and strategic initiatives
7.3.9. PT Multiintegra: recent contract wins
7.3.10. Radar and Communications Systems: overview
7.3.11. Radar and Communications Systems: products
7.3.12. Radar and Communications Systems: recent announcements and strategic initiatives.
7.3.13. Radar and Communications Systems: alliances
7.3.14. PT SOG Indonesia: overview
7.3.15. PT SOG Indonesia: products and services
7.3.16. PT SOG Indonesia: recent announcements and strategic initiatives
7.3.17. PT SOG Indonesia: alliances

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices
8.1.3. Exports of goods and services, current prices
8.1.4. Imports of goods and services, current prices
8.1.5. Gross National disposable income (USD Bn)
8.1.6. Local Currency Unit per US Dollar
8.1.7. Market Capitalization of Listed Companies
8.1.8. Market Capitalization of Listed Companies (% of GDP)
8.1.9. Government Cash Surplus/Deficit as % of GDP
8.1.10. Goods exports as % of GDP
8.1.11. Goods imports as % of GDP
8.1.12. Service Imports as % of GDP
8.1.13. Service Exports as % of GDP
8.1.14. Foreign Direct Investment (US$ Billion)
8.1.15. Net foreign direct investment as % of GDP
8.1.16. Mining, Manufacturing, Utilities Output (LCU Bn)

9. Appendix
9.1. About
9.2. Disclaimer

List of Tables

Table 1: Indonesian Army Strength
Table 2: Indonesian Navy Strength
Table 3: Indonesian Marine Crops. Strength
Table 4: Indonesian Air Force Strength
Table 5: Indonesian Ongoing Procurement Programs
Table 6: Indonesian Future Procurement Programs
Table 7: Indonesia - Defense Expenditure (IDR Trillion and US$ Billion), 2013-2022
Table 8: Indonesia - GDP Growth vs Defense Expenditure According to Percentage of GDP Growth, 2013-2022
Table 9: Indonesian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 10: Indonesian - Defense Capital Expenditure (IDR Trillion and US$ Billion), 2013-2022
Table 11: Indonesian Per Capita Defense Expenditure (US$), 2013-2022
Table 12: Indonesia - Homeland Security Expenditure (IDR Trillion and US$ Billion), 2013-2022
Table 13: Terrorism Index, 2017
Table 14: Benchmarking with Key Markets - 2013-2017 vs 2018-2022
Table 15: Offset Regulations in Indonesia
Table 16: Indonesian Budget Formation Timetable:
Table 17: Competitive Landscape of the Indonesian Defense Industry
Table 18: PT Dirgantara Indonesia-Major Products & Services
Table 19: PT Dirgantara Indonesia - Alliances
Table 20: PT Dirgantara Indonesia - recent contract wins
Table 21: PAL Indonesia - Major Products
Table 22: PAL Indonesia - Alliances
Table 23: PAL Indonesia - recent contract wins
Table 24: PT Pindad - Major Products
Table 25: PT Pindad - Alliances
Table 26: PT Pindad - recent contract wins
Table 27: Dok & Perkapalan-Major Products
Table 28: Dok & Perkapalan-Alliances
Table 29: Dok & Perkapalan- recent contract wins
Table 30: PT Dahana - Major Products
Table 31: PT Dahana - Alliances
Table 32: PT Dahana- recent contract wins
Table 33: PT Multiintegra- Major Products
Table 34: PT Multiintegra - Recent Contract Wins
Table 35: Radar and Communications Systems - Major Products
Table 36: Radar and Communications Systems- Alliances
Table 37: PT SOG Indonesia - Major Products & Services
Table 38: PT SOG Indonesia - Alliances

List of Figures

Figure 1: Indonesian Defense Expenditure (IDR Trillion), 2013-2022
Figure 2: Indonesian Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Indonesian GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022
Figure 4:Indonesian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 5: Indonesia - Defense Capital Expenditure (IDR Trillion), 2013-2022
Figure 6: Indonesia - Defense Capital Expenditure (US$ Billion), 2013-2022
Figure 7: Indonesian Per Capita Defense Expenditure (US$), 2013-2022
Figure 8: Indonesian Homeland Security Budget (IDR Trillion), 2013-2022
Figure 9: Indonesian Homeland Security Budget (US$ billion), 2013-2022
Figure 10: Terrorism Heat Map, 2017
Figure 11: Terrorism Index, 2017
Figure 12: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Figure 13: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 15: Military-IT Networking Market Size (US$ Million), 2017-2027
Figure 16: Multi-role Aircraft Defense Market Size (US$ Million), 2017-2027
Figure 17: Submarine Market Size (US$ Million), 2017-2027
Figure 18: Indonesian Defense imports TIV value (US$ Million), 2012-2016
Figure 19: Indonesian Defense Imports by Region (%), 2012-2016
Figure 20: Indonesian Defense Imports by Category (%), 2012-2016 (TIV values)
Figure 21: Industry Dynamics - Porter’s Five Forces Analysis
Figure 22: Indonesian GDP Per Capita, 2015-2025
Figure 23: Indonesian GDP, Current Prices (In US$ Billions), 2015-2025
Figure 24: Indonesian Exports of goods and services, current prices (LCU Trillion), 2005-2014
Figure 25: Indonesian Imports of goods and services, current prices (LCU Trillion), 2005-2014
Figure 26: Indonesian Gross National Disposable Income (US$ Billion), 2005-2012
Figure 27: Local Currency Unit per US$ - Exchange Rate, 2015-2024
Figure 28: Indonesian Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 29: Indonesian Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 30: Indonesian Government Cash Surplus/Deficit as % of GDP, 2005-2009
Figure 31: Indonesia’s Goods Exports as % of GDP, 2005-2014
Figure 32: Indonesia’s Goods Imports as % of GDP, 2005-2014
Figure 33: Indonesia’s Service Imports as % of GDP, 2005-2014
Figure 34: Indonesia’s Service Exports as % of GDP, 2005-2014
Figure 35: Indonesian Foreign Direct Investment (US$ Billion), 2005-2014
Figure 36: Indonesian Net foreign direct investment as % of GDP, 2005-2014
Figure 37: Indonesian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014

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  • Dok & Perkapalan
  • PAL Indonesia
  • PT Dahana
  • PT Dirgantara
  • PT Multiintegra
  • PT Pindad
  • PT SOG
  • Radar and Communications Systems
Note: Product cover images may vary from those shown
5 of 4
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