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Summary
Venezuela is currently the largest arms importer in Latin America and occupies nearly one-third of military goods imported in the region. The increasing military expenditure is strongly supported by revenues from the world's largest proven oil reserves in the country. This burgeoning defense expenditure can be attributed to the modernization of the armed forces, re-armament programs, border disputes, and a strong focus on the development of the indigenous military sector. However, in the recent times, the falling oil prices along with the catastrophic economic collapse is likely to hamper the growth of the industry restricting the growth in the period 2016-2020 to lower levels on par with 2011-2015

Key Findings
- With a defense budget of US$5.3 billion in 2015, the country is currently the largest arms importer in Latin American and occupies nearly one-third of defense imports of military goods in the region.

- This burgeoning defense expenditure can be attributed to the modernization of the armed forces, re-armament program, border disputes, and development of indigenous military sector

- Key opportunities for equipment suppliers are expected in areas such as multi-role aircraft, military infrastructure, transport aircraft, naval vessels, missile systems, surveillance systems, and UAVs

- The defense budget as a percentage of GDP is expected to increase at an average of 2.7% over 2016-2020 from an average of 2.2% in the historic period
Venezuelan homeland security (HLS) expenditure stands at US$10.4 billion in 2015 and is expected to grow at a CAGR of 9.82% over the period 2016-2020, to reach US$17.9 billion in 2020

Synopsis
Strategic Defense Intelligence's - Future of Venezuelan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2020 offers detailed analysis of industry with market size forecasts for the period 2016-2020 is done. Also, analysis of factors that influence demand for the industry, key market trends, and challenges faced by industry participants is covered.

In particular, it provides an in-depth analysis of the following:

- Defense industry market size and drivers: detailed analysis of the defense industry during 2016-2020, including highlights of the demand drivers and growth stimulators. 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 the army, navy, and air force. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, 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 from 2015 to 2025

- Competitive landscape and strategic insights: including an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

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Table Of Contents

Future of the Venezuelan Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2020
Table of Contents
1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Venezuelan defense expenditure expected to grow at an anticipated CAGR of 6.02%
3.1.2. Modernization, border disputes, and development of the domestic defense industry to drive defense expenditure in the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. Revenue expenditure accounts for the majority of the Venezuelan defense budget
3.2.2. Capital expenditure is expected to increase at a forecast CAGR of 3.57% during 2016-2020
3.2.3. Defense budget as a percentage of GDP expected to decrease during 2016-2020
3.2.4. Per-capita defense expenditure expected to increase during the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security (HLS) budget projected to increase in the forecast period
3.3.2. Revenue expenditure occupies majority share of homeland expenditure
3.3.3. Civil unrest, drug trafficking and organized crime to drive the HLS market
3.3.4. Venezuela considered to be at ‘some risk' from terrorist attack
3.4. Benchmarking with Key Global Markets
3.4.1. Venezuela's defense budget expected to increase in the forecast period
3.4.2. Venezuela's military expenditure is limited compared to countries with the highest defense expenditures
3.4.3. Venezuela allocates a high percentage of GDP to defense
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Fighters and Multi-role aircraft
3.5.2. Military Infrastructure
3.5.3. Transport aircraft
4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limited capability of domestic defense market drives imports
4.1.2. Russia is the key defense supplier to Venezuela
4.1.3. Air defense systems, missiles, and armored vehicles are the most imported military hardware
4.2. Export Market Dynamics
4.2.1. Defense exports increased in the historic period
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. Barriers to entry: medium
5.1.4. Intensity of rivalry: low to medium
5.1.5. Threat of substitution: low to medium
6 Market Entry Strategy
6.1. Market Regulation
6.1.1. Venezuela does not disclose any offset obligations
6.1.2. Venezuela allows 100% FDI in defense industry
6.2. Market Entry Route
6.2.1. Direct selling is the preferred market entry route for foreign OEMs
6.2.2. Joint product development and military collaborations provide market entry opportunities
6.3. Key Challenges
6.3.1. Small defense budget and underdeveloped domestic industry discourages foreign participation
6.3.2. Corruption acts as an obstacle for market entry
6.3.3. The arms embargo against Venezuela makes market entry difficult for foreign defense companies
7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. CA Venezolana de Industrias Militares (CAVIM): overview
7.2.2. CA Venezolana de Industrias Militares (CAVIM): products and services
7.2.3. CA Venezolana de IndustriasMilitares (CAVIM): recent announcements and strategic initiatives
7.2.4. CA Venezolana de IndustriasMilitares (CAVIM): alliances
7.2.5. UCOCAR CA: overview
7.2.6. UCOCAR CA: products and services
7.2.7. UCOCAR CA: recent announcements and strategic initiatives
7.2.8. UCOCAR CA: recent contract awards
7.2.9. Diques y Astilleros Nacionales CA (DIANCA): overview
7.2.10. Diques y Astilleros Nacionales CA (DIANCA): products and services
7.2.11. Diques y Astilleros Nacionales CA (DIANCA): alliances
7.2.12. Diques y Astilleros Nacionales CA (DIANCA): recent contract awards
8 Business Environment and Country Risk
8.1. Demographics and Social Statistics
8.1.1. Total Rural Population
8.1.2. Total Urban Population
8.1.3. Number of Households
8.2. Economic Performance
8.2.1. GDP Per Capita
8.2.2. GDP, Current Prices (US$ Billion)
8.2.3. Exports of Goods and Services (current US$ billion)
8.2.4. Imports of Goods and Services (current US$ billion)
8.2.5. Gross National Disposable Income (US$ billion)
8.2.6. Manufacturing Output, (US$ billion)
8.2.7. Consumer Price Index
8.2.8. Wholesale Price Index
8.2.9. Local Currency Unit per US$ (period average)
8.2.10. Local Currency Unit per EUR (period average)
8.2.11. Lending Rate
8.2.12. Deposit Rate
8.2.13. Real Interest Rate
8.2.14. Market Capitalization of Listed Companies
8.2.15. Market Capitalization of Listed Companies (% of GDP)
8.2.16. Goods Export as % of GDP
8.2.17. Goods Imports as % of GDP
8.2.18. Goods Balance as % of GDP
8.2.19. Service Imports as % of GDP
8.2.20. Service Exports as % of GDP
8.2.21. Service Balance as % of GDP
8.2.22. Foreign Direct Investment
8.2.23. Net Foreign Direct Investment as % of GDP
8.2.24. International Reserves, including gold
8.2.25. External Debt as % of GDP
8.3. Energy and Utilities
8.3.1. Conventional Thermal Electricity Net Generation
8.3.2. Hydroelectricity Net Generation
8.3.3. Nuclear electricity Net Generation
8.3.4. Conventional Thermal Electricity Installed Capacity
8.3.5. Electricity Exports
8.3.6. Proved Natural Gas Reserves
8.3.7. Petroleum Consumption
8.3.8. Crude Oil Proved Reserves
8.4. Infrastructure
8.4.1. Air transport, freight
8.4.2. Overall Construction
8.5. Minerals
8.5.1. Mining, Manufacturing, Utilities Output
8.6. Technology
8.6.1. Patents Granted
8.7. Telecommunications
8.7.1. Telephone Lines
8.7.2. Telephone Lines Penetration Rate
9 Appendix
9.1. About SDI
9.2. Disclaimer

List of Tables
Table 1: Venezuelan Defense Expenditure (US$ Billion), 2011-2015
Table 2: Venezuelan Defense Expenditure (US$ Billion), 2016-2020
Table 3: Venezuelan Defense Expenditure (in VEF billion), 2011-2015
Table 4: Venezuelan Defense Expenditure (in VEF billion), 2016-2020
Table 5: Venezuelan Defense Budget, Split Between Capital and Revenue Expenditure (%), 2011-2015
Table 6: Venezuelan Defense Budget, Split Between Capital and Revenue Expenditure (%), 2016-2020
Table 7: Venezuelan Capital Budget Allocation (US$ Billion), 2011-2015
Table 8: Venezuelan Capital Budget Allocation (US$ Billion), 2016-2020
Table 9: Venezuelan Capital Budget Allocation (in VEF billion), 2011-2015
Table 10: Venezuelan Capital Budget Allocation (in VEF billion), 2016-2020
Table 11: Venezuelan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2011-2015
Table 12: Venezuelan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2016-2020
Table 13: Venezuelan Per-Capita Defense Expenditure (US$), 2011-2015
Table 14: Venezuelan Per-Capita Defense Expenditure (US$), 2016-2020
Table 15: Venezuelan Homeland Security Budget (US$ Billion), 2011-2015
Table 16: Venezuelan Homeland Security Budget (US$ Billion), 2016-2020
Table 17: Venezuelan Homeland Security Budget (in VEF billion),2011-2015
Table 18: Venezuelan Homeland Security Budget (in VEF billion), 2016-2020
Table 19: Venezuelan Homeland Security Budget Breakdown (%), 2011-2015
Table 20: Venezuelan Homeland Security Budget Breakdown(%),2016-2020
Table 21: Benchmarking with Key Markets, 2011-2015 vs. 2016-2020
Table 22: CA Venezolana de Industrias Militares (CAVIM)- Product Focus
Table 23: CA Venezolana de IndustriasMilitares (CAVIM) Alliances
Table 24: UCOCAR CA - Product Focus
Table 25: UCOCAR CA: Recent Contract Wins
Table 26: Diques y Astilleros Nacionales CA (DIANCA)- Product Focus
Table 27: Diques y Astilleros Nacionales CA (DIANCA): Alliances
Table 28: Diques y Astilleros Nacionales CA (DIANCA): Recent Contract Wins

List of Figures
Figure 1: Venezuelan Defense Expenditure (US$ Billion), 2011-2015
Figure 2: Venezuelan Defense Expenditure (US$ Billion), 2016-2020
Figure 3: Venezuelan Defense Expenditure (in VEF billion), 2011-2015
Figure 4: Venezuelan Defense Expenditure (in VEF billion), 2016-2020
Figure 5: Venezuelan Defense Budget, Split Between Capital and Revenue Expenditure (%), 2011-2015
Figure 6: Venezuelan Defense Budget, Split Between Capital and Revenue Expenditure(%), 2016-2020
Figure 7: Venezuelan Capital Budget Allocation (US$ Billion), 2011-2015
Figure 8: Venezuelan Capital Budget Allocation (US$ Billion), 2016-2020
Figure 9: Venezuelan Capital Budget Allocation (in VEF billion), 2011-2015
Figure 10: Venezuelan Capital Budget Allocation (in VEF billion), 2016-2020
Figure 11: Venezuelan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2011-2015
Figure 12: Venezuelan GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2016-2020
Figure 13: Venezuelan Per-Capita Defense Expenditure (US$), 2011-2015
Figure 14: Venezuelan Per-Capita Defense Expenditure (US$), 2016-2020
Figure 15: Venezuelan Homeland Security Budget (US$ Billion), 2011-2015
Figure 16: Venezuelan Homeland Security Budget (US$ Billion), 2016-2020
Figure 17: Venezuelan Homeland Security Budget (in VEF billion), 2011-2015
Figure 18: Venezuelan Homeland Security Budget (in VEF billion), 2016-2020
Figure 19: Venezuelan Homeland Security Budget Breakdown (%),2011-2015
Figure 20: Venezuelan Homeland Security Budget Breakdown (%),2016-2020
Figure 21: SDI Terrorism Heat Map, 2015
Figure 22: SDI Terrorism Index, 2015
Figure 23: Benchmarking with Key Markets - 2011-2015 vs. 2016-2020
Figure 24: Defense Expenditure of Countries with the Highest Global Military Expenditure (US$ Billion), 2015 and 2020
Figure 25: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2015
Figure 27 Fighters and Multi-role Aircraft (US$ Million), 2015-2025
Figure 26: Military Infrastructure Market Size (US$ Million), 2015-2025
Figure 28: Transport Aircraft Market Size (US$ Million), 2015-2025
Figure 29: Venezuelan Defense Imports (US$ Million), 2010-2014
Figure 30: Venezuelan Defense Imports by Country (%), 2010-2014
Figure 31: Venezuelan Defense Imports by Category (%), 2010-2014
Figure 34: Industry Dynamics-Porter's Five Forces Analysis
Figure 35: Venezuelan Rural Population (In Millions), 2010-2019
Figure 36: Venezuelan Urban Population (In Millions), 2010-2019
Figure 37: Venezuelan Number of Households (In Millions), 2008-2017
Figure 38: Venezuelan GDP Per Capita, 2005-2014
Figure 39: Venezuelan GDP at Current Prices (USD$ Billion), 2010-2019
Figure 40: Venezuelan Exports of Goods and Services (current US$ Billion), 2003-2012
Figure 41: Venezuelan Imports of Goods and Services (current US$ Billion), 2003-2012
Figure 42: Venezuelan Gross National Disposable Income (US$ Billion), 2003-2012
Figure 43: Venezuelan Manufacturing Output (US$ Billion), 2002-2011
Figure 44: Venezuela's Consumer Price Index, 2008-2017
Figure 45: Venezuela's Wholesale Price Index, 2002-2011
Figure 46: Local Currency per US$, 2008-2017
Figure 47: Local Currency per EUR, (period average), 2008-2017
Figure 48: Lending Rate, 2003-2012
Figure 49: Deposit Rate, 2003-2012
Figure 50: Real Interest Rate, 2003-2012
Figure 51: Market Capitalization of Listed Companies in Venezuela (US$ Billion), 2003-2012
Figure 52: Market Capitalization of Listed Companies in Venezuela (% of GDP), 2002-2011
Figure 53: Venezuelan Goods Exports as % of GDP, 2002-2011
Figure 54: Venezuelan Goods Imports as % of GDP, 2002-2011
Figure 55: Venezuelan Goods Balance as % of GDP, 2002-2011
Figure 56: Venezuelan Service Imports as % of GDP, 2002-2011
Figure 57: Venezuelan Service Exports as % of GDP, 2002-2011
Figure 58: Venezuelan Services Balance as % of GDP, 2002-2011
Figure 59: Venezuelan Foreign Direct Investment, net (current US$ Billion), 2002-2011
Figure 60: Net foreign direct investment as % of GDP, 2002-2011
Figure 61: Venezuelan International reserves, including gold (US$ Billion), 2002-2011
Figure 62: External Debt as % of GDP, 2001-2010
Figure 63: Venezuelan Conventional Thermal Electricity Net Generation (Billion Kilowatt hours), 2002-2011
Figure 64: Venezuela's Hydroelectricity Net Generation (Billion Kilowatt Hours), 2002-2011
Figure 65: Venezuela's Nuclear Electricity Net Generation (Billion Kilowatt hours), 2001-2010
Figure 66: Venezuelan Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001-2010
Figure 67: Venezuelan Electricity Exports Trend (Billion Kilowatt Hours), 2001-2010
Figure 68: Venezuelan Proved Natural Gas Reserves (Trillion Cubic Feet), 2004-2013
Figure 69: Venezuelan Petroleum Consumption (Thousand Barrels Per Day), 2003-2012
Figure 70: Venezuelan Crude Oil Proved Reserves (Million Barrels), 2003-2012
Figure 71: Venezuelan Air transport freight (Million ton-km), 2002-2011
Figure 72: Venezuelan Overall Construction (US$ Billion), 2007-2016
Figure 73: Venezuelan Mining, Manufacturing, Utilities Output (US$ Billion), 2002-2011
Figure 74:Venezuelan Patents Granted, 2002-2011
Figure 75: Venezuelan Telephone Lines (In Million), 2003-2012
Figure 76: Venezuelan Telephone Lines Penetration Rate (Per 100 People), 2003-2012

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