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Market Research Report

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

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Future of the Pakistani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023
Published: June 20, 2018 Content info: 146 Pages
Description

Summary

The Future of Pakistani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023, 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.

This report offers detailed analysis of Pakistani 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 -

Pakistani defense industry market size and drivers: detailed analysis of Pakistani defense industry during 2019-2023, 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 Pakistani 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 Pakistanin defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

One of the most attractive defense markets in South Asia, Pakistan is anticipated to invest US$66.9 billion cumulatively over the forecast period, compared to US$42.3 billion spent during 2014-2018. Expenditure is anticipated to focus more on the procurement of equipment to augment air defense capabilities, enhance the operational capabilities of the current fleet of naval vessels, and better communication and surveillance systems. Cumulative expenditure on the procurement of advanced military hardware is projected to stand at US$25.6 billion over the next five years.

The share of capital expenditure as a percentage of overall defense expenditure is anticipated to rise from an average of 36.1% during 2014-2018 to 38.3% over the forecast period.

The Pakistani MoD is expected to invest in land based C4ISR, conventional diesel electric submarine, multirole aircraft, airborne C4ISR, missile defense system, attack helicopters, Main Battle Tanks (MBT), corvettes MRO, infrastructure construction and frigates.

Reasons to buy

This report will give the user confidence to make the correct business decisions based on a detailed analysis of Pakistani 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 Pakistani defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

Table of Contents
Product Code: DF0504MR

Table of Contents

1. Introduction 10

  • 1.1. What is this Report About? 10
  • 1.2. Definitions 10
  • 1.3. Summary Methodology 13
  • 1.4. About Strategic Defence Intelligence 15

2. Executive Summary 16

3. Market Attractiveness and Emerging Opportunities 18

  • 3.1. Current Market Scenario 19
    • 3.1.1. Primary threat perception 19
    • 3.1.2. Military Doctrine & Strategy 21
    • 3.1.3. Military Fleet Size 23
    • 3.1.4. Procurement Programs 28
    • 3.1.5. Ongoing procurement programs 28
    • 3.1.6. Future procurement programs 29
    • 3.1.7. Top Procurement Programs by Value (US$ Million) 2018-2023 30
    • 3.1.8. Social, Political and Economic Environment & Support for Defense Projects 31
    • 3.1.9. Political & Strategic Alliances 32
  • 3.2. Defense Market Size Historical and Forecast 33
    • 3.2.1. Pakistani annual defense expenditure to reach US$15.7 billion by 2023 33
    • 3.2.2. US Annual military and security aid to Pakistan boosts military spending 36
    • 3.2.3. Territorial disputes and the war against terrorism expected to drive defense expenditure 38
    • 3.2.4. The country's defense expenditure as a percentage of GDP to increase over 2019-2023 39
  • 3.3. Analysis of Defense Budget Allocation 41
    • 3.3.1. Capital expenditure share to average 38.3% during the forecast period 41
    • 3.3.2. Capital expenditure to record a CAGR of 9.45% over 2019-2023 43
    • 3.3.3. Budget allocation for the army to be highest over the forecast period 45
    • 3.3.4. Defense expenditure allocation for the army expected to increase over the forecast period 47
    • 3.3.5. Per capita defense expenditure expected to increase during the forecast period 52
  • 3.4. Homeland Security Market Size and Forecast 53
    • 3.4.1. Allocation for the police forms the major component of homeland security expenditure 53
    • 3.4.2. Measures to curb organized crime and cyber-attacks will drive homeland security expenditure 55
    • 3.4.3. Pakistan is at a significant risk from external and internal threats 56
    • 3.4.4. Pakistan is one of the most terror prone countries in the world 57
    • 3.4.5. Pakistan has a terrorism index score of "8.4" 59
  • 3.5. Benchmarking with Key Global Markets 60
    • 3.5.1. Pakistani defense expenditure expected to record a CAGR of 9.34% over 2019-2023 60
    • 3.5.2. Pakistani defense expenditure is low compared to other Asian defense spenders 62
    • 3.5.3. Pakistan's defense expenditure is anticipated to reach 3.1% of GDP in 2023 63
  • 3.6. Market Opportunities: Key Trends and Growth Stimulators 64
    • 3.6.1. Top 10 Defense Market Sectors by Value (US$ Million) - Projections over period 2018-2023 64
    • 3.6.2. Land-Based C4ISR 65
    • 3.6.3. SSK-Diesel Electric Submarine 66
    • 3.6.4. Fighter and multi-role aircraft 67

4. Defense Procurement Market Dynamics 69

  • 4.1. Import Market Dynamics 71
    • 4.1.1. Defense imports projected to increase over the forecast period 71
    • 4.1.2. China and the US were the leading suppliers of arms to Pakistan during 2013-2017 72
    • 4.1.3. Aircraft and armored vehicles accounted for the majority of defense imports between 2013 and 2017 73
  • 4.2. Export Market Dynamics 74
    • 4.2.1. DEPO expected to start defense exports 74

5. Industry Dynamics 75

  • 5.1. Five Forces Analysis 75
    • 5.1.1. Bargaining power of the supplier: low to medium 76
    • 5.1.2. Bargaining power of the buyer: high 76
    • 5.1.3. Barriers to entry: medium to high 76
    • 5.1.4. Intensity of rivalry: low to medium 76
    • 5.1.5. Threat of substitution: low to medium 76

6. Market Entry Strategy 77

  • 6.1. Market Regulation 77
    • 6.1.1. Defense procurements assigned to DGDP and DGMP 77
    • 6.1.2. Pakistani government updated Offset Act for defense equipment procurements 79
  • 6.2. Market Entry Route 81
    • 6.2.1. Budgeting Process 81
    • 6.2.2. Procurement Policy & Process 82
    • 6.2.3. Foreign firms enter the Pakistani defense industry through Foreign Military Sales (FMS) 82
    • 6.2.4. Collaborations and joint ventures - a viable market entry route 84
  • 6.3. Key Challenges 85
    • 6.3.1. Corruption in the Pakistani defense sector hinders its growth 85
    • 6.3.2. An unstable political system coupled with internal instability discourages foreign participation 85

7. Competitive Landscape and Strategic Insights 86

  • 7.1. Competitive Landscape Overview 86
    • 7.1.1. Foreign suppliers manufacture defense systems overseas and deliver to Pakistan 86
    • 7.1.2. Growing domestic defense industry is predominantly state run 88
  • 7.2. Key Domestic Companies 90
    • 7.2.1. Karachi Shipyard & Engineering Works: overview 90
    • 7.2.2. Karachi Shipyard & Engineering Works: products and services 90
    • 7.2.3. Karachi Shipyard & Engineering Works (KS&EW): recent announcements and strategic initiatives 91
    • 7.2.4. Karachi Shipyard & Engineering Works: alliances 91
    • 7.2.5. Karachi Shipyard & Engineering Works: recent contract wins 92
    • 7.2.6. Pakistan Aeronautical Complex: overview 93
    • 7.2.7. Pakistan Aeronautical Complex: products and services 93
    • 7.2.8. Pakistan Aeronautical Complex: recent announcements and strategic initiatives 94
    • 7.2.9. Pakistan Aeronautical Complex: alliances 94
    • 7.2.10. Pakistan Aeronautical Complex: recent contract wins 95
    • 7.2.11. Pakistan Ordnance Factories: overview 96
    • 7.2.12. Pakistan Ordnance Factories: products and services 96
    • 7.2.13. Pakistan Ordnance Factories: recent announcements and strategic initiatives 97
    • 7.2.14. Pakistan Ordnance Factories: alliances 98
    • 7.2.15. Pakistan Ordnance Factories: recent contract wins 98
    • 7.2.16. Pakistan Space and Upper Atmosphere Research Commission: overview 99
    • 7.2.17. Pakistan Space and Upper Atmosphere Research Commission: products and services 99
    • 7.2.18. Pakistan Space and Upper Atmosphere Research Commission: recent announcements and strategic initiatives 100
    • 7.2.19. Pakistan Space and Upper Atmosphere Research Commission: alliances 101
    • 7.2.20. Pakistan Space and Upper Atmosphere Research Commission: recent contract wins 101
    • 7.2.21. Heavy Industries Taxila: overview 102
    • 7.2.22. Heavy Industries Taxila: products and services 102
    • 7.2.23. Heavy Industries Taxila: recent announcements and strategic initiatives 103
    • 7.2.24. Heavy Industries Taxila: alliances 103
    • 7.2.25. Heavy Industries Taxila: recent contract wins 104
    • 7.2.26. The Heavy Mechanical Complex: overview 105
    • 7.2.27. The Heavy Mechanical Complex: products and services 105
    • 7.2.28. The Heavy Mechanical Complex: recent announcements and strategic initiatives 105
    • 7.2.29. The Heavy Mechanical Complex: alliances 106
    • 7.2.30. SATUMA: overview 107
    • 7.2.31. SATUMA: products and services 107
    • 7.2.32. SATUMA: recent announcements and strategic initiatives 107
    • 7.2.33. SATUMA: recent contract wins 107
  • 7.3. Key Foreign Companies 108
    • 7.3.1. Boeing: overview 108
    • 7.3.2. Boeing: products and services 108
    • 7.3.3. Boeing: recent announcements and strategic initiatives 109
    • 7.3.4. Boeing: recent contract wins 109
    • 7.3.5. Boeing: Financial Analysis 110
    • 7.3.6. Raytheon: overview 112
    • 7.3.7. Raytheon: products and services 112
    • 7.3.8. Raytheon: recent announcements and strategic initiatives 112
    • 7.3.9. Raytheon: recent contract wins 112
    • 7.3.10. Raytheon: financial analysis 113
    • 7.3.11. Lockheed Martin: overview 115
    • 7.3.12. Lockheed Martin: products and services 115
    • 7.3.13. Lockheed Martin: recent announcements and strategic initiatives 115
    • 7.3.14. Lockheed Martin: alliances 116
    • 7.3.15. Lockheed Martin: recent contract wins 117
    • 7.3.16. Lockheed Martin Corp.: financial analysis 118
    • 7.3.17. Chengdu Aircraft Industry Group: overview 120
    • 7.3.18. Chengdu Aircraft Industry Group: products and services 120
    • 7.3.19. Chengdu Aircraft Industry Group: recent announcements and strategic initiatives 120
    • 7.3.20. Chengdu Aircraft Industry Group: alliances 121
    • 7.3.21. Chengdu Aircraft Industry Group: recent contract wins 121
    • 7.3.22. Turkish Aerospace Industries (TAI): overview 122
    • 7.3.23. Turkish Aerospace Industries: products 122
    • 7.3.24. Turkish Aerospace Industries: Recent Announcements and Strategic Initiatives 123
    • 7.3.25. Turkish Aerospace Industries: Alliances 124
    • 7.3.26. Turkish Aerospace Industries: Recent Contract Wins 125
    • 7.3.27. Aselsan: overview 126
    • 7.3.28. Aselsan: products 126
    • 7.3.29. Aselsan: recent announcements and strategic initiatives 127
    • 7.3.30. Aselsan: Alliances 128
    • 7.3.31. Aselsan: recent contract wins 129

8. Business Environment and Country Risk 131

  • 8.1. Economic Performance 131
    • 8.1.1. GDP per capita 131
    • 8.1.2. GDP, current prices 132
    • 8.1.3. Exports of goods and services (LCU billion) 133
    • 8.1.4. Imports of goods and services (LCU) 134
    • 8.1.5. Local currency unit per US$ 135
    • 8.1.6. Market capitalization of listed companies US$ billion 136
    • 8.1.7. Market capitalization of listed companies (% of GDP) 137
    • 8.1.8. Government cash surplus/deficit as a percentage of GDP 138
    • 8.1.9. Goods exports as a Percentage of GDP 139
    • 8.1.10. Goods imports as a percentage of GDP 140
    • 8.1.11. Service imports as a percentage of GDP 141
    • 8.1.12. Service Exports as a percentage of GDP 142
    • 8.1.13. Foreign direct investment 143
    • 8.1.14. Net foreign direct investment as a percentage of GDP 144
    • 8.1.15. Mining, manufacturing, utilities output 145

9. Appendix 146

  • 9.1. About SDI 146
  • 9.2. Disclaimer 146

List of Tables

  • Table 1: Pakistan - Land Forces Strength, 2018 23
  • Table 2: Pakistan - Navy Strength, 2018 25
  • Table 3: Pakistan - Air Force Strength, 2018 26
  • Table 4: Pakistan - Ongoing Procurement Programs, 2018 28
  • Table 5: Pakistan - Future Procurement Programs, 2018 29
  • Table 6: Pakistan - Defense Procurement Programs by Value (US$ Million), 2018-2023 30
  • Table 7: Pakistan - Defense Expenditure (PKR Billion & US$ Billion), 2014-2023 34
  • Table 8: Pakistan - Defense Expenditure Including US Aid, 2014-2018 36
  • Table 9: Pakistan - GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023 39
  • Table 10: Pakistan - Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 41
  • Table 11: Pakistan - Defense Capital Expenditure (PKR Billion & US$ Billion), 2014-2023 43
  • Table 12: Pakistan - Defense Capital Expenditure Breakdown (%), 2014-2023 45
  • Table 13: Pakistan - Defense Budget in PKR Billion, by Service (PKR Billion / %), 2014-2023 48
  • Table 14: Pakistan - Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2014-2023 50
  • Table 15: Pakistan - Per Capita Defense Expenditure (US$), 2014-2023 52
  • Table 16: Pakistan - Homeland Security Expenditure (PKR Billion / US$ Billion), 2014-2023 53
  • Table 17: Terrorism Index, 2018 57
  • Table 18: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 60
  • Table 19: Pakistan - Defense Market Sectors by Value (US$ Million), 2018-2023 64
  • Table 20: Offset Multiplier Categories 80
  • Table 21: Pakistan - Budget Formation Timetable: 81
  • Table 22: FMS route followed by Foreign Companies 82
  • Table 23: Market Entry Strategies by Key Foreign Companies 84
  • Table 24: Key Foreign Companies and Operations in Pakistan's Defense Industry 86
  • Table 25: Top Defense Suppliers in Pakistan's Defense Industry - By Value (US$ Million) 2018-2023 87
  • Table 26: Competitive Landscape of Pakistan's Defense Industry 88
  • Table 27: Karachi Shipyard & Engineering Works - Product Focus 90
  • Table 28: Karachi Shipyard & Engineering Works - Alliances 91
  • Table 29: Karachi Shipyard & Engineering Works - Recent Contract Wins 92
  • Table 30: Pakistan Aeronautical Complex - Product Focus 93
  • Table 31: Pakistan Aeronautical Complex - Alliances 94
  • Table 32: Pakistan Aeronautical Complex - Recent Contract Wins 95
  • Table 33: Pakistan Ordnance Factories - Product Focus 96
  • Table 34: Pakistan Ordnance Factories - Alliances 98
  • Table 35: Pakistan Ordnance Factories - Recent Contract Wins 98
  • Table 36: Pakistan Space and Upper Atmosphere Research Commission - Product Focus 99
  • Table 37: Pakistan Space and Upper Atmosphere Research Commission - Alliances 101
  • Table 38: Pakistan Space and Upper Atmosphere Research Commission - recent contract wins 101
  • Table 39: Heavy Industries Taxila - product focus 102
  • Table 40: Heavy Industries Taxila - alliances 103
  • Table 41: Heavy Industries Taxila - recent contract wins 104
  • Table 42: The Heavy Mechanical Complex - product focus 105
  • Table 43: The Heavy Mechanical Complex - alliances 106
  • Table 44: SATUMA - product focus 107
  • Table 45: SATUMA - recent contract wins 107
  • Table 46: Boeing - Product Focus 108
  • Table 47: Boeing - Recent Contract Wins 109
  • Table 48: Raytheon - Product Focus 112
  • Table 49: Raytheon - Recent Contract Wins 112
  • Table 50: Lockheed Martin - Product Focus 115
  • Table 51: Lockheed Martin - alliances 116
  • Table 52: Lockheed Martin - Recent Contract Wins 117
  • Table 53: Chengdu Aircraft Industry Group - Product Focus 120
  • Table 54: Chengdu Aircraft Industry Group - Alliances 121
  • Table 55: Chengdu Aircraft Industry Group - Recent Contract Wins 121
  • Table 56: Turkish Aerospace Industries (TAI) - Main Products 122
  • Table 57: Turkish Aerospace Industries (TAI) - Alliances 124
  • Table 58: Turkish Aerospace Industries (TAI) - Recent Contract Wins 125
  • Table 59: Aselsan - Main Products 126
  • Table 60: Aselsan - Alliances 128
  • Table 61: Aselsan - Recent Contract Wins 129

List of Figures

  • Figure 1: Pakistan - Defense Expenditure (PKR Billion), 2014-2023 34
  • Figure 2: Pakistan - Defense Expenditure (US$ Billion), 2014-2023 35
  • Figure 3: Pakistan - US Military and Security Aid (US$ Million), 2014-2018 36
  • Figure 4: Pakistan - Defense Expenditure Including US Aid (US$ Billion), 2014-2018 37
  • Figure 5: Pakistan - Defense Budget Excluding US Aid (US$ Billion) vs Pakistani Defense Expenditure Including US Aid (US$ Billion), 2014-2018 37
  • Figure 6: Pakistan - GDP Growth vs. Defense Expenditure as Percentage of GDP Growth, 2014-2023 40
  • Figure 7: Pakistan - Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 42
  • Figure 8: Pakistan - Defense Capital Expenditure (PKR Billion), 2014-2023 44
  • Figure 9: Pakistan - Defense Capital Expenditure (US$ Billion), 2014-2023 44
  • Figure 10: Pakistan - Defense Expenditure Breakdown (%), 2014-2023 46
  • Figure 11: Pakistan - Defense Expenditure Allocation by Service (PKR Billion), 2014-2023 49
  • Figure 12: Pakistan - Defense Expenditure Allocation by Service (US$ Billion), 2014-2023 51
  • Figure 13: Pakistan - Per Capita Defense Expenditure (US$), 2014-2023 52
  • Figure 14: Pakistan - Homeland Security Budget (PKR Billion), 2014-2023 54
  • Figure 15: Pakistan - Homeland Security Budget (US$ Billion), 2014-2023 54
  • Figure 16: Terrorism Heat Map, 2018 56
  • Figure 17: Terrorism Index, 2018 59
  • Figure 18: Benchmarking with Key Markets - 2014-2018 vs 2019-2023 61
  • Figure 19: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2018 and 2023 62
  • Figure 20: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 63
  • Figure 21: Pakistan - Land-Based C4ISR Market Size (US$ Million), 2018-2023 65
  • Figure 22: Pakistan - SSK-Diesel Electric Submarine and MRO Market Size (US$ Million), 2018-2023 66
  • Figure 23: Pakistan - Fighter and Multirole Aircraft Market Size (US$ Million), 2018-2023 68
  • Figure 24: Top Pakistani Defense Procurements in Terms of Their Supplier Relationships 70
  • Figure 25: Pakistan - Defense Import Trend (US$ Million), 2013-2017 (TIV Values) 71
  • Figure 26: Pakistan - Defense Imports by Country (%), 2013-2017 72
  • Figure 27: Pakistan - Defense Imports by Category (%), 2013-2017 73
  • Figure 28: Industry Dynamics Porter's Five Forces Analysis 75
  • Figure 29: Pakistan - Defense Procurements System, 2018 78
  • Figure 30: Boeing - Revenue Trend Analysis (US$ Billion), 2013-2017 110
  • Figure 31: Boeing - Operating Profit Trend Analysis (US$ Billion), 2013-2017 110
  • Figure 32: Boeing - Net Profit Trend Analysis (US$ Billion), 2013-2017 111
  • Figure 33: Raytheon - Revenue Trend Analysis (US$ billion), 2013-2017 113
  • Figure 34: Raytheon - Operating Profit Trend Analysis (US$ billion), 2012-2016 114
  • Figure 35: Raytheon - Net Profit Trend Analysis (US$ billion), 2012-2016 114
  • Figure 36: Lockheed Martin Corp. - Revenue Trend Analysis (US$ billion), 2013-2017 118
  • Figure 37: Lockheed Martin Corp. - Operating Profit Trend Analysis (US$ billion), 2013-2017 119
  • Figure 38: Lockheed Martin Corp. - Net Profit Trend Analysis (US$ billion), 2013-2017 119
  • Figure 39: Pakistan - GDP Per Capita (US$), 2015-2025 131
  • Figure 40: Pakistan - GDP, Current Prices (US$ Billion), 2015-2025 132
  • Figure 41: Pakistan - Export of Goods and Services (LCU Billion), 2005-2014 133
  • Figure 42: Pakistan - Imports of Goods and Services (LCU), 2005-2014 134
  • Figure 43: Pakistan - Local Currency per US$ Exchange Rate, 2015-2024 135
  • Figure 44: Pakistan - Market Capitalization of Listed Companies (US$ Billion), 2005-2012 136
  • Figure 45: Pakistan - Market Capitalization of Listed Companies (% of GDP), 2005-2012 137
  • Figure 46: Pakistan - Government Cash Surplus/Deficit as a Percentage of GDP, 2005-2013 138
  • Figure 47: Pakistan - Goods Exports as a Percentage of GDP, 2005-2014 139
  • Figure 48: Pakistan - Goods Imports as a Percentage of GDP, 2005-2014 140
  • Figure 49: Pakistan - Service Imports as a Percentage of GDP, 2005-2014 141
  • Figure 50: Pakistan - Service Exports as a Percentage of GDP, 2005-2014 142
  • Figure 51: Pakistan - Foreign Direct Investment (US$ Billion), 2005-2014 143
  • Figure 52: Pakistan - Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 144
  • Figure 53: Pakistan - Mining, Manufacturing, Utilities Output (USD Billion), 2005-2014 145
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