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

  • ID: 4424996
  • Report
  • Region: Philippines
  • 93 pages
  • Strategic Defence Intelligence
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Philippines’ Defense Expenditure Recorded a Historic-Period CAGR of 11.55% by the End of 2017

FEATURED COMPANIES

  • ELTA Systems Ltd
  • Leonardo
  • Raytheon
  • Remington Arms Company
  • MORE

Philippines’ defense expenditure recorded a historic-period CAGR of 11.55% by the end of 2017. The growing strength and assertiveness of the Chinese Navy with regards to territorial claims in the South China Sea has spurred the government to enhance its military capabilities. The consequent demand for defense equipment will revolve around fighter and multi-role aircraft, frigates, infrastructure construction, submarines, naval vessels and surveillance equipment. As a percentage of GDP, defense expenditure will post a forecast-period CAGR of 0.9%.

Capital expenditure allocation, which stood at an average of 38.5% during the historic period, will increase over the forecast period due to the procurement of fighter aircraft, frigates, and infrastructure construction projects. The share of revenue expenditure decreased from 61.5% during the historic period to 59.1% over the forecast period, as the defense department is increasing efforts to reduce operational costs. Population growth will inflate the per capita defense expenditure at a CAGR of 10.28%.

During 2012-2016, the US emerged as the largest supplier of military hardware to the Philippines with a 40%+ share of defense imports, followed by Indonesia and South Korea. The US mainly supplied aircraft and naval vessels, a trend anticipated to continue over the forecast period due to the country’s dependence on the US as a defense supplier. However, the government is beginning to widen its supplier base and plans to procure equipment from Indonesia, South Korea, Italy, Spain, Poland, Australia and Israel.

Homeland security budget will record a historic period CAGR of 1.40% to value US$2.3 Billion, driven by investments in counter terrorism and drug smuggling activities.

The report “Future of the Philippines’ Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers detailed analysis of the Philippines 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.

Particularly, this report provides the following:

  • The Philippines defense industry market size and drivers: Detailed analysis of the Philippines 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 with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
  • Porter’s Five Force analysis of the Philippines 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 the Philippines 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: United Defense Manufacturing Corporation (UDMC), Leonardo, Remington Arms Company, ELTA Systems Ltd and Raytheon

Scope

  • The defense budget of Philippines for the year 2017 is US$2.9 billion. For the historic period, 2013-2017, the defense budget of the country registered a CAGR of 11.55%. The defense budget is currently being driven by efforts to modernize the army, threats from terrorist organizations, and tensions in the South China Sea.
  • During the historic period, the Philippines MoD allocated an average of 38.5% of the total defense budget to capital expenditure, while an average of 61.5% was reserved for revenue expenditure. Over the forecast period, allocation towards capital expenditure is expected to increase at an average of 40.9%.
  • The MoD is expected to invest in multi-role aircraft, diesel electric submarines and infrastructure construction.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Philippines 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 the Philippines 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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FEATURED COMPANIES

  • ELTA Systems Ltd
  • Leonardo
  • Raytheon
  • Remington Arms Company
  • MORE

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

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 and strategy
3.1.3. Military fleet size
3.1.4. Procurement Programs
3.1.5. Social, political and economic environment and support for defense projects
3.1.6. Political and strategic alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. The Philippines’ defense budget to grow at a forecast-period CAGR of 12.49%
3.2.2. Tensions in the South China Sea and modernization initiatives to drive the defense industry
3.2.3. Defense budget as a percentage of GDP to remain at an average of 0.87% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure will increase over the forecast period
3.3.2. Capital expenditure is anticipated to record a forecast-period CAGR of 12.94%
3.3.3. The army accounted for the largest percentage share of the overall Philippines’ defense budget
3.3.4. Army defense expenditure to reach US$2.0 billion in 2022
3.3.5. Per capita defense expenditure to rise over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. The homeland security market will post a forecast-period CAGR of 9.12%
3.4.2. Illicit drug trade drives homeland security expenditure
3.4.3. The Philippines falls under the “highly affected” category in the terrorism index
3.4.4. The Philippines faces threats from terrorist organizations
3.4.5. The Philippines has a terrorism index score of 7.1
3.5. Benchmarking with Key Global Markets
3.5.1. The Philippines ranks among the world’s key global defense markets
3.5.2. The Philippines’ defense expenditure is relatively smaller than other Asia countries
3.5.3. The defense budget as a percentage of GDP to decline over the forecast period
3.6. Market Opportunities: Key Trends and Drivers
3.6.1. Multi-role aircraft
3.6.2. Diesel electric submarines
3.6.3. Infrastructure construction

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited domestic defense capabilities to drive the country’s defense imports
4.1.2. The US, Indonesia and South Korea are the major suppliers for the Philippines
4.1.3. Aircraft and ships accounted for 90.0% of defense imports
4.2. Export Market Dynamics
4.2.1. No defense exports for the Philippines

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of suppliers: low
5.1.2. Bargaining power of buyers: medium
5.1.3. Barrier to entry: low to medium
5.1.4. Intensity of rivalry: low to medium
5.1.5. Threat of substitution: high
5.2. Market Regulation
5.2.1. Countertrade/offset policy aids the development of the domestic defense industry
5.2.2. Government unveils new procurement rules
5.3. Market Entry Route
5.3.1. Budgeting process
5.3.2. Procurement Policy and Process
5.3.3. Foreign military sales (FMS)
5.3.4. Collaborations provide market entry opportunities
5.4. Key Challenges
5.4.1. Increase in corruption and lack of transparency impedes industry growth

6. Competitive landscape and Strategic Insights
6.1. Competitive landscape Overview
6.2. Key Companies
6.2.1. United Defense Manufacturing Corporation: overview
6.2.2. United Defense Manufacturing Corporation: key products
6.2.3. United Defense Manufacturing Corporation: recent announcements and strategic initiatives
6.2.4. Leonardo: overview
6.2.5. Leonardo: products and services
6.2.6. Leonardo: recent announcements and strategic initiatives
6.2.7. Leonardo-Finmeccanica: recent contract wins
6.2.8. Remington Arms Company, LLC: overview
6.2.9. Remington Arms Company, LLC: key products and services
6.2.10. Remington Arms Company, LLC: Recent Contract Wins
6.2.11. ELTA Systems Ltd: overview
6.2.12. ELTA Systems Ltd: key products and services
6.2.13. ELTA Systems Ltd: Recent Contract Wins
6.2.14. Raytheon: overview
6.2.15. Raytheon: products
6.2.16. Raytheon: Recent Contract Wins

7. Business Environment and Country Risk
7.1. Economic Performance
7.1.1. GDP per capita at constant prices (US$)
7.1.2. GDP at current prices (US$)
7.1.3. Exports of goods and services
7.1.4. Imports of goods and services
7.1.5. Gross national disposable income (US$ billions)
7.1.6. LCU per US$ (period average)
7.1.7. Market capitalization of listed companies (US$ billions)
7.1.8. Market capitalization of listed companies (percentage of GDP)
7.1.9. Government cash surplus/deficit as a percentage of GDP (LCU)
7.1.10. Goods exports as a percentage of GDP
7.1.11. Goods imports as a percentage of GDP
7.1.12. Service imports as a percentage of GDP
7.1.13. Services exports as a percentage of GDP
7.1.14. Foreign direct investment (FDI), net (BoP, current US$ billions)
7.1.15. Net FDI as a percentage of GDP
7.1.16. Mining, manufacturing, utilities output (PHP trillion)

8. Appendix
8.1. About the Author
8.2. Disclaimer

List of Tables
Table 1: The Philippines Ground Forces Strength
Table 2: Philippines Air Force Strength
Table 3: Philippines Navy Strength
Table 4: The Philippines - Ongoing Development and Procurement Programs (US$ Million), 2014-2018
Table 5: The Philippines - Future Procurement Programs
Table 6: The Philippines - Defense Expenditure (PHP Billion and US$ Billion), 2013-2022
Table 7: The Philippines - GDP Growth and Defense Expenditure as Percentage of GDP Growth (%), 2013-2022
Table 8: The Philippines - Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: The Philippines - Defense Capital Expenditure (PHP Billion & US$ Billion), 2013-2022
Table 10: The Philippines - Defense Budget Split by Army, Navy, Air Force, and Other Expenditure (%), 2013-2022
Table 11: Philippines Defense Budget in PHP Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022
Table 12: The Philippines - Defense Budget by Services (US$ Billion), 2013-2022
Table 13: The Philippines - Per Capita Defense Expenditure (US$), 2013-2022
Table 14: The Philippines - Homeland Security Expenditure (PHP Billion and US$ Billion), 2013-2022
Table 15: Terrorism Index
Table 16: The Philippines - Benchmarked Against Key Markets, 2013-2017 vs. 2018-2022
Table 17: The Philippines - Countertrade/Offset Regulations
Table 18: Philippines Budget Formation Timetable
Table 19: FMS deals to Philippines
Table 20: Competitive Landscape of the Philippines Defense Industry
Table 21: United Defense Manufacturing Corporation - Key Products
Table 22: Leonardo - Key Products
Table 23: Leonardo-Finmeccanica - Recent Contract Wins
Table 24: Remington Arms Company, LLC: Key Products
Table 25: Remington Arms Company, LLC. - Recent Contract Wins
Table 26: ELTA Systems Ltd: Key Products
Table 27: ELTA Systems Ltd - Recent Contract Wins
Table 28: Raytheon - Key Products
Table 29: Raytheon - Recent Contract Wins

List of Figures
Figure 1: The Philippines - Defense Expenditure (PHP Billion), 2013-2022
Figure 2: Philippines Defense Expenditure (US$ Billion), 2013-2022
Figure 3: Philippines GDP Growth and Defense Expenditure as Percentage of GDP Growth (%), 2013-2022
Figure 4: The Philippines - Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 5: The Philippines - Defense Capital Expenditure (PHP Billion), 2013-2022
Figure 6: The Philippines - Defense Capital Expenditure (US$ Billion), 2013-2022
Figure 7: The Philippines - Defense Budget Split, Army, Navy, Air Force and Other Expenditure, 2013-2022
Figure 8: The Philippines - Defense Budget, by Service (PHP Billion), 2013-2022
Figure 9: The Philippines - Defense Budget by Service (US$ Billion), 2013-2022
Figure 10: The Philippines - Per Capita Defense Expenditure (US$), 2013-2022
Figure 11: The Philippines - Homeland Security Expenditure (PHP Billion), 2013-2022
Figure 12: The Philippines - Homeland Security Expenditure (US$ Billion), 2013-2022
Figure 13: Terrorism Heat Map, 2017
Figure 14: Terrorism Index, 2017
Figure 15: The Philippines - Benchmarked Against Key Markets (%), 2013-2017 vs. 2018-2022
Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 18: The Philippines - Multi-Role Aircraft Market Size (US$ Million), 2017-2024
Figure 19: The Philippines - Diesel Electric Submarine Market Size (US$ Million), 2017-2027
Figure 20: The Philippine - Infrastructure Construction Market Size (US$ Million), 2017-2027
Figure 21: The Philippines - Defense Imports (US$ Million), 2012-2016 (TIV values*)
Figure 22: The Philippines - Defense Imports by Country (%), 2012-2016
Figure 23: The Philippines - Defense Imports by Category (%), 2012-2016
Figure 24: Industry Dynamics - Porter’s Five Forces Analysis
Figure 25: The Philippines - GDP Per Capita at Constant Prices (US$), 2015-2025
Figure 26: The Philippines - GDP at Current Prices (US$ Billion), 2015-2025
Figure 27: The Philippines - Exports of Goods and Services (PHP Billion), 2005-2014
Figure 28: The Philippines - Imports of Goods and Services (US$), 2005-2014
Figure 29: The Philippines - Gross National Disposable Income (US$ Billion), 2009-2012
Figure 30: The Philippines - LCU per US$, 2015-2024
Figure 31: The Philippines - Market Capitalization of Listed Companies (US$ Billion), 2005-2012
Figure 32: The Philippines - Market Capitalization of Listed Companies (Percentage of GDP), 2005-2012
Figure 33: The Philippines - Government Cash Surplus/Deficit as a Percentage of GDP (LCU), 2005-2012
Figure 34: The Philippines - Goods Exports as a Percentage of GDP (%), 2005-2014
Figure 35: The Philippines - Goods Imports as a Percentage of GDP (%), 2005-2014
Figure 36: The Philippines - Services Imports as a Percentage of GDP (%), 2005-2014
Figure 37: The Philippines - Services Exports as a Percentage of GDP (%), 2005-2014
Figure 38: The Philippines - FDI, Net (BoP, Current US$ Billion), 2005-2014
Figure 39: The Philippines - Net FDI as a Percentage of GDP, 2005-2014
Figure 40: The Philippines - Mining, Manufacturing, Utilities Output (PHP Trillion), 2005-2014

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  • ELTA Systems Ltd
  • Leonardo
  • Raytheon
  • Remington Arms Company
  • United Defense Manufacturing Corporation (UDMC)
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