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

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

  • September 2017
  • 116 pages
  • ID: 5123529

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

Summary
Defense budget of Malaysia for the year 2017 is US$3.5 Billion, which reflected a drop of 17.6% from the previous year. For the historic period, 2013-2017, the defense budget of the country registered a CAGR of -8.58%. One of the major causes of this falling defense budget over the years is the lower percentage allocation of GDP towards defense sector. Malaysia has also postponed some of its new procurement programs and is increasingly favoring the modernization of its current equipment to cut costs.

Modernization and procurement programs of the armed forces, the country’s participation in UN peacekeeping missions, and territorial disputes with neighboring countries such as Brunei over Limbang, Louisa, and Mariveles, with Indonesia over Ambalat, with the Philippines over Ardasier and Erica, and with Thailand over Ko Kra and Ko Losin, drove the Malaysian defense expenditure during the historic period. With this trend expected to continue over the forecast period, the country is projected to cumulatively spend US$20.3 Billion over 2018-2022.

Malaysia’s homeland security (HLS) budget stands at US$2.9 Billion in 2017, and is estimated to reach US$3.6 Billion in 2022 with a growth rate of 3.07% over 2018-2022. This expenditure is primarily driven by the need to curb drug smuggling, illegal immigration, and increasing criminal activities in the country. This is expected to lead to an increased demand for maritime security equipment, air defense systems, and technology catering to border security, as well as equipment designed to counter security threats posed by international terrorist organizations, pirates, and cross border insurgents.

Malaysia’s defense exports were negligible during 2012-2016 due to the absence of an advanced and developed domestic defense industry. However, it is expected that the domestic market will gain capabilities with collaborations and technology transfers during the forecast period, resulting in less reliance on defense imports. Malaysia has enforced a robust defense offset policy to enhance the participation of its local industries. The country seeks to develop capability to produce at least some critical defense equipment locally and has already entered into deals with Turkey for the supply of Pars AV-8 armored vehicles.

The report “The Future of the Malaysia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original equipment manufacturers) to gain market share in the Malaysian defense industry.

In particular, this report provides the following analysis -
- Market opportunity and attractiveness: Detailed analysis of the current industry size and growth expectations during 2018-2022, including highlights of the key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
- Procurement Dynamics: Trend analysis of imports and exports, together with their implications and impact on the Malaysian 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 Malaysia, providing an overview of key defense companies (both domestic and foreign), together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
- Business Environment and country risk: A range of drivers at country level, assessing business environment and country risk. It covers historical and forecast values for a range of indicators, evaluating business confidence, economic performance, infrastructure quality and availability, labor force, demographics, and political and social risk.

Companies mentioned in this report: Leonardo Malaysia, Sukhoi, Denel Land Systems (DLD), SME Ordnance Sdn Bhd (SMEO), SME Aerospace Sdn Bhd,Aircraft Inspection, Repair & Overhaul Depot (AIROD) Sdn Bhd, Boustead Naval Shipyard (BN Shipyard), Sapura Thales Electronics Sdn Bhd (STE), DRB Hicom Defence Technologies Sdn Bhd (DEFTECH), Labuan Shipyard & Engineering Sdn Bhd (LSE) and D’Aquarian (M) Sdn Bhd (DASB).

Scope
- The defense budget of Malaysia for the year 2017 is US$3.5 billion, which reflected a drop of 17.6% from the previous year. For the historic period, 2013-2017, the defense budget of the country registered a CAGR of -8.58%. One of the major causes of this falling defense budget over the years is the lower percentage allocation of GDP towards defense sector. Malaysia has also postponed some of its new procurement programs and is increasingly favoring the modernization of its current equipment to cut costs. This is part of attempts by the Malaysian government to bring in economic reforms and stabilize the economy. Malaysia has also released the 11th growth plan, wherein plans for achieving economic growth have been well drafted. It is expected that with the implementation of the plans the country’s GDP will rise.
- During the historic period, the Malaysian MoD allocated an average of 21.1% of the total defense budget to capital expenditure, while an average of 78.9% was reserved for revenue expenditure. Over the forecast period, allocation towards capital expenditure is forecasted to remain at an average of 23.2%. For the next couple of years, allocation towards capital expenditure is expected to reduce slightly due to the postponement of some procurement programs.
- The MoD is expected to invest in multi-role aircraft and Armoured Personnel Carrier (APC).

Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Malaysian 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 Malaysian 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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