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

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

Summary

The Future of Indonesia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, 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.

Synopsis

This report 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 countrys 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
- Porters 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 countrys 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

Scope

- Indonesia, the worlds 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 countrys 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 countrys 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 countrys 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 countrys military capabilities. The countrys 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, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 8
1.1. What is this Report About? 8
1.2. Definitions 8
1.3. Summary Methodology 10
1.4. About Strategic Defence Intelligence 11
2. Executive Summary 12
3. Market Attractiveness and Emerging Opportunities 14
3.1. Current Market Scenario 15
3.1.1. Primary threat perception 15
3.1.2. Military Doctrine & Strategy 16
3.1.3. Military Fleet Size 18
3.1.4. Procurement Programs 24
3.1.5. Ongoing procurement programs 24
3.1.6. Future procurement programs 26
3.1.7. Social, Political and Economic Environment & Support for Defense Projects 27
3.1.8. Political & Strategic Alliances 28
3.2. Defense Market Size Historical and Forecast 29
3.2.1. Indonesian defense budget is expected to reach US$17.2 billion by 2022, at a CAGR of 14.38% 29
3.2.2. Defense expenditure is driven by the modernization of the armed forces, indigenization, territorial disputes, and natural disasters 31
3.2.3. Defense budget as a percentage of GDP expected to increase over the forecast period 34
3.3. Analysis of Defense Budget Allocation 36
3.3.1. Capital expenditure share in defense budget is expected to increase to an average of 42.4% over the forecast period 36
3.3.2. Capital expenditure to increase over the forecast period 38
3.3.3. Per capita defense expenditure expected to increase during the forecast period 40
3.4. Homeland Security Market Size and Forecast 41
3.4.1. Homeland security expenditure is expected to grow at a CAGR of 10.46% during the forecast period 41
3.4.2. Border Security and Terrorism to drive the homeland security market over the forecast period 43
3.4.3. Indonesia considered as high risk category of terrorist attack 44
3.4.4. Indonesia faces high level of threat from foreign terrorist organizations 45
3.4.5. Indonesia has a terrorism index score of 4.4 47
3.5. Benchmarking with Key Global Markets 48
3.5.1. Indonesias defense budget expected to register rapid growth over the forecast period 48
3.5.2. Indonesian defense expenditure is relatively small compared to other Asian countries 50
3.5.3. The Indonesian defense budget as a percentage of GDP is expected to increase during 2018-2022 51
3.6. Market Opportunities: Key Trends and Growth Stimulators 52
3.6.1. Military-IT Networking 52
3.6.2. Multi-Role Aircraft 53
3.6.3. Submarine 54
4. Defense Procurement Market Dynamics 55
4.1. Import Market Dynamics 56
4.1.1. Defense imports expected to increase during forecast period 56
4.1.2. Indonesia plans to diversify arms imports 57
4.1.3. Aircraft and ships constitute the majority of Indonesian defense imports 58
4.2. Export Market Dynamics 59
4.2.1. Indonesia does not possess significant defense export capability 59
5. Industry Dynamics 60
5.1. Five Forces Analysis 60
5.1.1. Bargaining power of supplier: Low 61
5.1.2. Bargaining power of Buyer: Medium 61
5.1.3. Barrier to entry: Medium 61
5.1.4. Intensity of rivalry: Low 61
5.1.5. Threat of Substitution: High 61
6. Market Entry Strategy 62
6.1. Market Regulation 62
6.1.1. Defense investment policy conducive to both domestic and foreign investment 62
6.1.2. New procurement policy to support small and medium enterprises 63
6.1.3. Indonesia to launch formal offset policy 63
6.2. Market Entry Route 64
6.2.1. Budget Process 64
6.2.2. Procurement Policy & Process 66
6.2.3. Foreign defense suppliers enter the Indonesian defense market primarily through joint ventures 67
6.2.4. Strategic partnership and military collaborations an easier way to access the Indonesian defense market 67
6.3. Key Challenges 68
6.3.1. Small defense budget deters investment 68
6.3.2. Lack of defense infrastructure 68
6.3.3. Corruption impedes the growth of the Indonesian defense industry 68
7. Competitive Landscape and Strategic Insights 69
7.1. Competitive landscape Overview 69
7.2. Key Public Sector Companies 72
7.2.1. PT Dirgantara Indonesia: overview 72
7.2.2. PT Dirgantara Indonesia: Major Products and Services 72
7.2.3. PT Dirgantara Indonesia: recent announcements and strategic initiatives 72
7.2.4. PT Dirgantara Indonesia: alliances 73
7.2.5. PT Dirgantara Indonesia: recent contract wins 74
7.2.6. PAL Indonesia: overview 76
7.2.7. PAL Indonesia: Major Products 76
7.2.8. PAL Indonesia: recent announcements and strategic initiatives 76
7.2.9. PAL Indonesia: Alliances 77
7.2.10. PAL Indonesia: Recent Contract Wins 77
7.2.11. PT Pindad: overview 78
7.2.12. PT Pindad: Major Products 78
7.2.13. PT Pindad: recent announcements and strategic initiatives 79
7.2.14. PT Pindad: alliances 80
7.2.15. PT Pindad: Recent Contract Wins 80
7.2.16. Dok & Perkapalan: overview 81
7.2.17. Dok & Perkapalan: Major Products 81
7.2.18. Dok & Perkapalan: recent announcements and strategic initiatives 81
7.2.19. Dok & Perkapalan: alliances 82
7.2.20. Dok & Perkapalan: Recent Contract Wins 82
7.3. Key Private Sector Companies 83
7.3.1. PT Dahana: overview 83
7.3.2. PT Dahana: products 83
7.3.3. PT Dahana: recent announcements and strategic initiatives 83
7.3.4. PT Dahana: alliances 84
7.3.5. PT Dahana: recent contract wins 84
7.3.6. PT Multiintegra: overview 85
7.3.7. PT Multiintegra: products 85
7.3.8. PT Multiintegra: recent announcements and strategic initiatives 87
7.3.9. PT Multiintegra: recent contract wins 87
7.3.10. Radar and Communications Systems: overview 88
7.3.11. Radar and Communications Systems: products 88
7.3.12. Radar and Communications Systems: recent announcements and strategic initiatives. 88
7.3.13. Radar and Communications Systems: alliances 89
7.3.14. PT SOG Indonesia: overview 90
7.3.15. PT SOG Indonesia: products and services 90
7.3.16. PT SOG Indonesia: recent announcements and strategic initiatives 90
7.3.17. PT SOG Indonesia: alliances 91
8. Business Environment and Country Risk 92
8.1. Economic Performance 92
8.1.1. GDP Per Capita 92
8.1.2. GDP, Current Prices 93
8.1.3. Exports of goods and services, current prices 94
8.1.4. Imports of goods and services, current prices 95
8.1.5. Gross National disposable income (USD Bn) 96
8.1.6. Local Currency Unit per US Dollar 97
8.1.7. Market Capitalization of Listed Companies 98
8.1.8. Market Capitalization of Listed Companies (% of GDP) 99
8.1.9. Government Cash Surplus/Deficit as % of GDP 100
8.1.10. Goods exports as % of GDP 101
8.1.11. Goods imports as % of GDP 102
8.1.12. Service Imports as % of GDP 103
8.1.13. Service Exports as % of GDP 104
8.1.14. Foreign Direct Investment (US$ Billion) 105
8.1.15. Net foreign direct investment as % of GDP 106
8.1.16. Mining, Manufacturing, Utilities Output (LCU Bn) 107
9. Appendix 108
9.1. About SDI 108
9.2. Disclaimer 108

List Of Tables


Table 1: Indonesian Army Strength 18
Table 2: Indonesian Navy Strength 20
Table 3: Indonesian Marine Crops. Strength 22
Table 4: Indonesian Air Force Strength 22
Table 5: Indonesian Ongoing Procurement Programs 24
Table 6: Indonesian Future Procurement Programs 26
Table 7: Indonesia - Defense Expenditure (IDR Trillion and US$ Billion), 2013-2022 29
Table 8: Indonesia - GDP Growth vs Defense Expenditure According to Percentage of GDP Growth, 2013-2022 34
Table 9: Indonesian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 36
Table 10: Indonesian - Defense Capital Expenditure (IDR Trillion and US$ Billion), 2013-2022 38
Table 11: Indonesian Per Capita Defense Expenditure (US$), 2013-2022 40
Table 12: Indonesia - Homeland Security Expenditure (IDR Trillion and US$ Billion), 2013-2022 41
Table 13: Terrorism Index, 2017 45
Table 14: Benchmarking with Key Markets - 2013-2017 vs 2018-2022 48
Table 15: Offset Regulations in Indonesia 62
Table 16: Indonesian Budget Formation Timetable: 64
Table 17: Competitive Landscape of the Indonesian Defense Industry 69
Table 18: PT Dirgantara Indonesia-Major Products & Services 72
Table 19: PT Dirgantara Indonesia - Alliances 73
Table 20: PT Dirgantara Indonesia - recent contract wins 74
Table 21: PAL Indonesia - Major Products 76
Table 22: PAL Indonesia - Alliances 77
Table 23: PAL Indonesia - recent contract wins 77
Table 24: PT Pindad - Major Products 78
Table 25: PT Pindad - Alliances 80
Table 26: PT Pindad - recent contract wins 80
Table 27: Dok & Perkapalan-Major Products 81
Table 28: Dok & Perkapalan-Alliances 82
Table 29: Dok & Perkapalan- recent contract wins 82
Table 30: PT Dahana - Major Products 83
Table 31: PT Dahana - Alliances 84
Table 32: PT Dahana- recent contract wins 84
Table 33: PT Multiintegra- Major Products 85
Table 34: PT Multiintegra - Recent Contract Wins 87
Table 35: Radar and Communications Systems - Major Products 88
Table 36: Radar and Communications Systems- Alliances 89
Table 37: PT SOG Indonesia - Major Products & Services 90
Table 38: PT SOG Indonesia - Alliances 91

List Of Figures


Figure 1: Indonesian Defense Expenditure (IDR Trillion), 2013-2022 30
Figure 2: Indonesian Defense Expenditure (US$ Billion), 2013-2022 30
Figure 3: Indonesian GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 35
Figure 4:Indonesian Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 37
Figure 5: Indonesia - Defense Capital Expenditure (IDR Trillion), 2013-2022 39
Figure 6: Indonesia - Defense Capital Expenditure (US$ Billion), 2013-2022 39
Figure 7: Indonesian Per Capita Defense Expenditure (US$), 2013-2022 40
Figure 8: Indonesian Homeland Security Budget (IDR Trillion), 2013-2022 42
Figure 9: Indonesian Homeland Security Budget (US$ billion), 2013-2022 42
Figure 10: Terrorism Heat Map, 2017 44
Figure 11: Terrorism Index, 2017 47
Figure 12: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 49
Figure 13: Defense Expenditure of the Worlds Largest Military Spenders (US$ Billion), 2017 and 2022 50
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 51
Figure 15: Military-IT Networking Market Size (US$ Million), 2017-2027 52
Figure 16: Multi-role Aircraft Defense Market Size (US$ Million), 2017-2027 53
Figure 17: Submarine Market Size (US$ Million), 2017-2027 54
Figure 18: Indonesian Defense imports TIV value (US$ Million), 2012-2016 56
Figure 19: Indonesian Defense Imports by Region (%), 2012-2016 57
Figure 20: Indonesian Defense Imports by Category (%), 2012-2016 (TIV values) 58
Figure 21: Industry Dynamics - Porters Five Forces Analysis 60
Figure 22: Indonesian GDP Per Capita, 2015-2025 92
Figure 23: Indonesian GDP, Current Prices (In US$ Billions), 2015-2025 93
Figure 24: Indonesian Exports of goods and services, current prices (LCU Trillion), 2005-2014 94
Figure 25: Indonesian Imports of goods and services, current prices (LCU Trillion), 2005-2014 95
Figure 26: Indonesian Gross National Disposable Income (US$ Billion), 2005-2012 96
Figure 27: Local Currency Unit per US$ - Exchange Rate, 2015-2024 97
Figure 28: Indonesian Market Capitalization of Listed Companies (US$ Billion), 2005-2012 98
Figure 29: Indonesian Market Capitalization of Listed Companies (% of GDP), 2005-2012 99
Figure 30: Indonesian Government Cash Surplus/Deficit as % of GDP, 2005-2009 100
Figure 31: Indonesias Goods Exports as % of GDP, 2005-2014 101
Figure 32: Indonesias Goods Imports as % of GDP, 2005-2014 102
Figure 33: Indonesias Service Imports as % of GDP, 2005-2014 103
Figure 34: Indonesias Service Exports as % of GDP, 2005-2014 104
Figure 35: Indonesian Foreign Direct Investment (US$ Billion), 2005-2014 105
Figure 36: Indonesian Net foreign direct investment as % of GDP, 2005-2014 106
Figure 37: Indonesian Mining, Manufacturing, Utilities Output (LCU Bn), 2005-2014 107

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