Future of the Vietnamese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

  • ID: 4581063
  • Report
  • Region: Vietnam
  • 80 Pages
  • Strategic Defence Intelligence
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FEATURED COMPANIES

  • Admiralty Shipyards
  • Sukhoi JSC
  • MORE

The growing strength of the Chinese Navy and its assertiveness with regards to territorial claims in the South China Sea has compelled the Vietnamese Government to enhance its military capabilities. In addition, the country is in the process of addressing its limitations with respect to combating modern threat scenarios with its existing obsolete equipment, and has embarked on military modernization plans over the last few years. This has driven Vietnam’s defense expenditure throughout 2014-2018 and is expected to do so over. The Vietnamese Government allocated US$5.4 billion towards military expenditure in 2018, of which 32.2% is earmarked for the procurement of defense equipment. The country’s defense expenditure increased at a CAGR of 6.14% over 2014-2018.

The country’s economy is projected to grow at a CAGR of 8.99% over the forecast period, and defense expenditure as a percentage of GDP is expected to average 2.1%. However, slow population growth is projected to increase per capita defense expenditure to US$76.9 by 2023.

Vietnamese homeland security expenditure, on a cumulative basis, is expected to be US$20.5 billion over the forecast period. Efforts to police its maritime boundaries, coupled with the need to counter human trafficking and the illicit drug trade are anticipated to drive homeland expenditure. This is likely to increase the demand for equipment capable of enhancing seaport and airport security as well as border surveillance systems such as CCTV cameras and scanners.

The country’s limited domestic defense industrial capability offers an opportunity for a considerable number of foreign OEMs to venture into the Vietnamese defense market. Vietnam’s defense industry is largely dominated by Russian defense equipment suppliers, but other European and Israeli suppliers have recently entered the defense market through direct commercial sale of advanced defense systems. Moreover, Vietnam prefers government-to-government deals when procuring armory; therefore, developing government-to-government relationships is expected to open up business opportunities over the forecast period.

"Future of the Vietnamese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023", provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Key Inclusions of the report are:

  • Market opportunity and attractiveness: detailed analysis of the current industry size and growth expectations during 2019-2023, including highlights of the key growth stimulators
  • Procurement dynamics: trend analysis of imports and exports, together with their implications and impact on the Vietnamese defense industry
  • Industry structure: five forces analysis to identify various power centers in the industry and how these are expected to develop in the future
  • Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the defense industry in Vietnam.
  • Business environment and country risk: a range of drivers at country level, assessing business environment and country risk.

Companies Mentioned: Vietnam Shipbuilding Industry Corporation (SBIC), Sukhoi JSC, Admiralty Shipyards and Damen Schelde Naval Shipbuilding (DSNS)

Scope:

  • Conflicts in the South China Sea and the need to replace obsolete military equipment have driven Vietnam’s defense expenditure throughout 2014–2018 and are expected to do so over the forecast period. Vietnam’s defense budget grew from US$4.3 billion in 2014 to US$5.4 billion in 2018, at a CAGR 6.14%.
  • The Vietnamese Government is expected to maintain a steady allocation of an average of 32.3% of defense budget for capital expenditure over the forecast period, which is same as average of 32.3% between 2014 and 2018.
  • The country is expected to procure military equipment to boost its naval strength and maritime security in order to counter the threat from China’s growing naval strength in the South China Sea. In addition, Vietnam intends to procure military equipment such as corvettes, patrol vessels, frigates, submarines, aircraft, missiles, and armored vehicles as part of its modernization program.

Reasons to buy:

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

  • Admiralty Shipyards
  • Sukhoi JSC
  • MORE

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

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Military Fleet Size
3.1.2. Procurement Programs
3.1.3. Key Drivers and Challenges
3.2. Defense Market Size Historical and Forecast
3.2.1. Defense expenditure is projected to grow at a CAGR of 7.05% during the forecast period
3.2.2. Military modernization and the crisis in the South China Sea are expected to be the prime factors driving Vietnamese military expenditure
3.2.3. Defense expenditure as a percentage of GDP is expected to hover at 2.1% over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Share of capital expenditure in the overall defense budget is expected to increase
3.3.2. Vietnam’s capital expenditure is expected to grow at a CAGR of 7.03% over the forecast period
3.3.3. Per capita defense expenditure to be US$76.9 by 2023
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security expenditure is expected to be US$4.5 billion by 2023
3.4.2. The main factors driving homeland security expenditure are the illicit drugs trade and human trafficking
3.4.3. Vietnam faces a some level threat from foreign terrorist organizations
3.4.4. Vietnam faces negligible threat from foreign terrorist organizations
3.4.5. Vietnam has a minimal terrorism index score of 0
3.5. Benchmarking with Key Global Markets
3.5.1. Vietnamese defense expenditure is expected to remain low compared to leading spenders
3.5.2. Vietnam has a low defense expenditure compared to other Asian countries
3.5.3. Vietnam’s defense expenditure as a percentage of GDP is higher than leading Asian defense spenders
3.6. Defense Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited domestic defense capabilities drives the country’s defense imports
4.1.2. Defense imports are expected to increase over the forecast period
4.1.3. Russia is a significant defense trade partner of Vietnam
4.1.4. Naval vessels and aircraft accounted for the majority of defense imports over 2013-2017
4.2. Export Market Dynamics
4.2.1. The country has been unable to access the global defense market

5. Industry Dynamics
5.1. Market Regulation
5.1.1. Vietnamese procurement rules stress on international collaborations
5.1.2. Vietnam has not disclosed any offset obligations
5.2. Market Entry Route
5.2.1. Budget Process
5.2.2. Procurement Policy and Process
5.2.3. Foreign equipment manufacturers can enter the market through direct commercial sales
5.2.4. Government-to-government deals are an attractive entry route to the country’s defense market
5.3. Key Challenges
5.3.1. Lack of private participants and foreign direct investment may restrict domestic defense industry growth
5.3.2. Lack of transparency and corruption impedes the growth of Vietnam’s defense industry

6. Competitive Landscape and Strategic Insights
6.1. Competitive Landscape Overview

7. Business Environment and Country Risk
7.1. Economic Performance
7.1.1. Gross Domestic per Capita
7.1.2. Gross Domestic Product, current US$
7.1.3. Exports of Goods and Services
7.1.4. Imports of Goods and Services
7.1.5. Local Currency Unit per US$
7.1.6. Market capitalization of listed companies (US$ Billion)
7.1.7. Market capitalization of listed companies as a % of GDP
7.1.8. Goods Exports as a percentage of GDP
7.1.9. Goods Imports as a percentage of GDP
7.1.10. Services Imports as a percentage of GDP
7.1.11. Services Exports as a percentage of GDP
7.1.12. Foreign direct investment, net (BoP, current US$ Bn)
7.1.13. Net foreign direct investment as a % of GDP
7.1.14. Mining, Manufacturing, Utilities Output

8. Appendix

List of Tables:
Table 1: Vietnam Army Strength
Table 2: Vietnamese Navy Strength
Table 3: Vietnamese Air Force Strength
Table 4: Vietnam - Ongoing Development and Procurement Programs
Table 5: Vietnamese - Future Procurement Programs
Table 6: Vietnamese Defense Expenditure (VND Trillion & US$ Billion), 2014-2023
Table 7: Vietnamese GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2014-2023
Table 8: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Table 9: Vietnamese Defense Capital Expenditure (VND Trillion & US$ Billion), 2014-2023
Table 10: Vietnamese Per Capita Defense Expenditure (US$), 2014-2023
Table 11: Vietnamese Homeland Security Expenditure (VND Trillion & US$ Billion), 2014-2023
Table 12: Terrorism Index, 2018
Table 13: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Table 14: Top Vietnamese Defense Market Sectors by Value (US$ Million) - 2018-2023
Table 15: Vietnamese Budget Formation Process
Table 16: Competitive Landscape of the Vietnamese Defense Industry

List of Figures:
Figure 1: Vietnamese Defense Expenditure (VND Trillion), 2014-2023
Figure 2: Vietnamese Defense Expenditure (US$ Billion), 2014-2023
Figure 3: Vietnamese GDP Growth vs. Defense Expenditure as a Percentage of GDP Growth, 2014-2023
Figure 4: Vietnamese Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023
Figure 5: Vietnamese Defense Capital Expenditure (VND Trillion), 2014-2023
Figure 6: Vietnamese Defense Capital Expenditure (US$ Billion), 2014-2023
Figure 7: Vietnamese Per Capita Defense Expenditure (US$), 2014-2023
Figure 8: Vietnamese Homeland Security Expenditure (VND Trillion), 2014-2023
Figure 9: Vietnamese Homeland Security Expenditure (US$ Billion), 2014-2023
Figure 10: Terrorism Heat Map, 2018
Figure 11: Terrorism Index, 2018
Figure 12: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023
Figure 13: Benchmarking with World’s Largest and Top Regional Defense Spenders (US$ Billion), 2018 and 2023
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018
Figure 15: Vietnamese Defense Import Trend, 2013-2017 (TIV values)
Figure 16: Vietnamese Defense Imports by Country (%), 2013-2017
Figure 17: Vietnamese Defense Imports by Category (%), 2013-2017
Figure 18: Vietnam’s GDP per capita, 2015-2025
Figure 19: Vietnam’s Gross Domestic Product (current US$ Billion), 2015-2025
Figure 20: Vietnam’s Exports of goods and services (LCU Billion), 2005-2014
Figure 21: Vietnam’s Imports of goods and services (LCU Bn), 2005-2014
Figure 22: Vietnam’s LCU per US$, 2015-2024
Figure 23: Vietnam’s market capitalization of listed companies (US$ Billion), 2005-2012
Figure 24: Vietnam’s market capitalization of listed companies as a % of GDP, 2005-2012
Figure 25: Vietnam’s Goods Exports as a percentage of GDP, 2005-2013
Figure 26: Vietnam’s Goods Imports as a percentage of GDP, 2005-2013
Figure 27: Vietnam’s Services Imports as a percentage of GDP, 2005-2013
Figure 28: Vietnam’s Services Exports as a percentage of GDP, 2005-2013
Figure 29: Vietnam’s Foreign direct investment, net (BoP, current US$ Bn), 2005-2013
Figure 30: Vietnam’s Net foreign direct investment as a % of GDP, 2005-2013
Figure 31: Vietnam’s Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014

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  • Vietnam Shipbuilding Industry Corporation (SBIC)
  • Sukhoi JSC
  • Admiralty Shipyards
  • Damen Schelde Naval Shipbuilding (DSNS)
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