The Sri Lankan Defense Industry - Market Opportunities and Entry Strategies Analyses and Forecasts to 2015
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Synopsis
• Top level overview of the Sri Lankan defense industry
• A breakdown of the Sri Lankan defense industry by spend pattern valued from 2006 through 2010 and forecasted from 2011 through 2015
• A breakdown of the markets by segment valued from 2006 through 2010 and forecasted from 2011 through 2015
•Details of top companies active across the Sri Lankan defense industry
•Emerging trends and opportunities in the Sri Lankan defense industry in the last 12 months
Summary
This report offers insights into the market opportunities and entry strategies adopted by foreign OEMs
(original equipment manufacturers) to gain a market share in the Sri Lankan defense industry. In
particular, it offers in-depth analysis of the following:
• Market opportunity and attractiveness: detailed analysis of the current industry size and
growth expectations during 2011–2015, including highlights of the key growth stimulators. It also
benchmarks the industry against key global markets and provides detailed understanding of
emerging opportunities in specific areas.
• Procurement dynamics: trend analysis of imports and exports, together with its implications and impact on the Sri Lankan defense industry.
• Industry structure: five forces analysis to identify various power centers in the industry and how these are likely to develop in the future.
• Market entry strategy: analysis of possible ways to enter the market, together with detailed descriptions of how existing players have entered the market, including key contracts, alliances, and strategic initiatives.
• Competitive landscape and strategic insights: analysis of competitive landscape of the defense industry in Sri Lanka. It provides 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.
Scope
Analysis of Defense industry market size from 2006 through 2010 and forecasts till 2015
Analysis of defense budget allocation
Benchmarking with key global markets
Market opportunities
Defense procurement dynamics
Industry dynamics
Market entry strategy
Competitive landscape and strategic insights
Business environment and country risk
Reasons To Buy
• Gain insight into the Sri Lankan defense industry with current, historic and forecast market values
• Get insight on market opportunity and attractiveness
• Get insight on industry procurement dynamics
• Gain insight on industry structure
• Gain insight into the regulations governing the Sri Lankan defense industry and the potential market entry strategies with an expert analysis of the competitive structure
• Identify top companies of the Sri Lankan defense industry along with profiles of all those companies
Key Highlights
Sri Lankan defense expenditure, estimated at US$1.5 billion during 2011, grew at a CAGR of 17.37% during the review period. During the forecast period, it is expected to record a CARC of -0.46% and remain at US$1.5 billion by 2015. Over the next five years the country's defense expenditure is expected to be driven by factors such as post war rehabilitation, a tense relationship with India and a persistent threat from separatists.
During the review period, the country allocated an average of 3.3% of GDP (gross domestic product) to defense expenditure. However, as a percentage of GDP the country's military spending is projected to decline to an average of 2.1% during the forecast period, largely due to the country's economic growth outpacing defense expenditure growth over the next five years.
The majority of the Sri Lankan defense budget is allocated to revenue expenditure, due to the country's large troop size. During the review period, the country allocated an average of 86% of its total defense budget to revenue expenses, while an average of 14% of the defense budget was spent on the procurement and modernization of equipment. With the country planning to increase troop size, the share of revenue expenditure in the overall defense budget is expected to increase to an average of 95% during the forecast period. Although the country is not expected to embark on a defense modernization strategy, market opportunities will exist for air defense systems as Sri Lanka aims to enhance its air defense capabilities.
The country's homeland security expenditure is estimated to be US$0.4 billion in 2011. Anticipated to record a CARC of -0.17% during the forecast period, the nation's homeland security expenditure is expected to be driven by internal security threats.
Table of Contents
1 Introduction
1.1 About this Report
1.2 Definitions
1.3 Methodology
1.3.1 Secondary research
1.3.2 Primary research
1.3.3 Conventions
1.4 ICD Research Intelligence Terrorism Index
1.5 About ICD Research Defense Intelligence Center
1.6 About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1 Defense Market Size and Forecast
3.1.1 Sri Lankan defense expenditure expected to register lower growth during the forecast period
3.1.2 Post war rehabilitation efforts, strained relationship with India and persistent threats from separatists are expected to drive defense spending
3.1.3 Defense expenditure as a percentage of GDP likely to come down during the forecast period
3.2 Analysis of Defense Budget Allocation
3.2.1 Revenue expenditure accounts for a majority of the country's defense expenditure
3.2.2 The army accounts for the largest share of defense expenditure
3.2.3 Air force expenditure expected to grow at a CAGR of 3.09% during the forecast period
3.2.4 The country is expected to spend US$4.8 billion on its army during the forecast period
3.2.5 Naval defense budget projected to grow at a CAGR of 0.50% during the forecast period
3.3 Homeland Security Market Size and Forecast
3.3.1 Homeland security budget projected to decline during the forecast period
3.3.2 Internal security threats are expected to drive the Sri Lankan homeland security spending
3.3.3 The country is considered at 'high risk of terrorist attack
3.3.4 Sri Lanka experienced high terror activity during the review period
3.4 Benchmarking with Key Global Markets
3.4.1 The country is expected to remain a small player in the international defense market
3.4.2 The Sri Lankan military expenditure is limited compared to countries with the largest defense expenditure
3.4.3 Compared to the leading spenders, the country allocates a higher percentage of its GDP towards defense
3.4.4 Sri Lanka has a low per capita defense expenditure
3.5 Market Opportunities: Key Trends and Growth Stimulators
3.5.1 Modernization of the air force will create demand for combat aircrafts
3.5.2 Obsolete and unsuitable equipment to fuel demand for upgraded military land based procurement
4 Defense Procurement Market Dynamics
4.1.1 Lack of domestic defense capabilities drives imports
4.1.2 Defense imports expected to witness a decline during the forecast period
4.1.3 China accounted for a majority of the nation's defense imports during the review period
4.1.4 Aircraft and sensors emerged as the largest imported military hardware during the review period
4.2 Export Market Dynamics
4.2.1 The country exported negligible defense goods during the review 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 Barrier to entry: medium
5.1.4 Intensity of rivalry: medium
5.1.5 Threat of substitution: high
6 Market Entry Strategy
6.1 Market Regulation
6.1.1 The Sri Lankan defense sector is partially regulated
6.2 Market Entry Route
6.2.1 Equipment manufacturers enter the market through direct sales
6.2.2 Foreign companies venture into the market by setting up offices in Sri Lanka
6.2.3 Partnership with domestic defense firms provides an attractive entry route
6.3 Key Challenges
6.3.1 Small defense budget deters investors from entering the market
6.3.2 Corruption mars the growth of the Sri Lankan defense sector
7 Competitive Landscape and Strategic Insights
7.1 Competitive Landscape Overview
7.2 Key Foreign Companies
7.2.1 AmSafe: overview
7.2.2 AmSafe: products
7.2.3 AmSafe: recent announcements and strategic initiatives
7.2.4 AmSafe: alliances
7.2.5 AmSafe: recent contract wins
7.2.6 AmSafe: financial analysis
7.2.7 Colombo Dockyard PLC: overview
7.2.8 Colombo Dockyard PLC: products
7.2.9 Colombo Dockyard PLC: recent announcements and strategic initiatives
7.2.10 Colombo Dockyard PLC: alliances
7.2.11 Colombo Dockyard PLC: recent contract wins
7.2.12 Colombo Dockyard PLC: financial analysis
8 Business Environment and Country Risk
8.1 Business Confidence
8.1.1 Market capitalization trend – Colombo stock exchange, Sri Lanka
8.1.2 FDI inflows by sector
8.1.3 Deployment of credit by sector
8.2 Economic Performance
8.2.1 GDP at constant prices (US dollars)
8.2.2 GDP per capita at constant prices (US dollars)
8.2.3 GDP at current prices (US dollars)
8.2.4 GDP per capita at current prices (US dollars)
8.2.5 GDP split by key segments
8.2.6 Agriculture net output at current prices (Sri Lankan rupee)
8.2.7 Agriculture net output at current prices (US dollars)
8.2.8 Agriculture net output at current prices as percentage of GDP
8.2.9 Manufacturing net output at current prices (Sri Lankan rupee)
8.2.10 Manufacturing net output at current prices (US dollars)
8.2.11 Manufacturing net output at current prices as percentage of GDP
8.2.12 Mining, manufacturing and utilities net output at current prices (Sri Lankan rupee)
8.2.13 Mining, manufacturing and utilities at current prices (US dollars)
8.2.14 Mining, manufacturing and utilities at current prices, as percentage of GDP
8.2.15 Construction net output at current prices (Sri Lankan rupee)
8.2.16 Construction net output at current prices, (US dollars)
8.2.17 Construction net output at current prices as a percentage of GDP
8.2.19 Inflation rate
8.2.20 Fiscal balance as a percentage of GDP
8.2.21 Current account balance as a percentage of GDP
8.2.22 Exports as a percentage of GDP
8.2.23 Imports as a percentage of GDP
8.2.24 Exports growth
8.2.25 Imports growth
8.2.26 External debt as a percentage of GDP
8.2.27 Annual average exchange rate US$–LKR
8.2.28 End of the period exchange rate US$–LKR
8.2.29 Debt service ratio
8.3 Infrastructure Quality and Availability
8.3.1 Total airports and sea ports
8.3.2 Railways and roadways
8.3.3 Automotive components exports trend
8.3.4 Automotive components imports trend
8.3.5 Total installed capacity for electricity generation
8.3.6 Installed capacity for the generation of conventional thermal electricity
8.3.7 Electricity production
8.3.8 Installed capacity for hydro–electricity generation
8.3.9 Installed capacity for renewable electricity generation
8.3.10 Electricity consumption
8.3.12 Healthcare expenditure
8.3.13 Healthcare expenditure as percentage of GDP
8.3.14 Healthcare expenditure per capita
8.3.15 Total internet subscribers
8.3.16 Broadband internet subscribers
8.3.17 Personal computer penetration rate
8.3.18 Mobile phone penetration rate
8.3.19 R&D expenditure as a percentage of GDP
8.4 Labor Force
8.4.1 Labor force
8.4.2 Unemployment rate
8.5 Demographics
8.5.1 Total population
8.5.2 Urban and rural population
8.5.3 Female percentage of population
8.5.4 Male percentage of population
8.5.5 Mean age of population
8.5.6 Median age of population
8.5.7 Population density
8.5.8 Age distribution of the total population
8.5.9 Age distribution of the male population
8.5.10 Age distribution of the female population
8.5.11 Number of households
8.6 Political and Social Risk
8.6.1 Political stability
8.6.2 Terrorism index
8.6.3 Transparency index
9 Appendix
9.1 Contact Us
9.2 About ICD Research
9.3 Disclaimer
List of Tables
Table 1: ICD Research Intelligence Terrorism Index
Table 2: AmSafe – Alliances
Table 3: Colombo Dockyard PLC – Alliances
List of Figures
Figure 1: Sri Lankan Defense Market Size and Forecast (US$ Billion), 2006–2015
Figure 2: Sri Lankan Defense Expenditure as a Percentage of GDP (%), 2006–2015
Figure 3: Sri Lankan Defense Budget Allocation of Revenue and Capital Expenditure (%), 2006–2015
Figure 4: Sri Lankan Defense Budget Allocation (%), 2006–2015
Figure 5: Sri Lankan Defense Budget Allocation for the Air Force (US$ Billion), 2006–2015
Figure 6: Sri Lankan Defense Budget Allocation for Army (US$ Billion), 2006–2015
Figure 7: Sri Lankan Defense Budget Allocation for Navy (US$ Billion), 2006–2015
Figure 8: Sri Lankan Homeland Security Budget (US$ Billion), 2006–2015
Figure 9: ICD Research Intelligence Terrorism Heat Map, 2010
Figure 10: ICD Research Intelligence Terrorism Index, 2010
Figure 11: Benchmarking with Key Global Markets: Historical vs. Expected Defense Budget Growth (%), 2006–2015
Figure 12: Defense Expenditure of Countries with the Largest Global Military Expenditure (US$ Billion), 2010 and 2015
Figure 13: Defense Expenditure as a Percentage of GDP of Countries with the Largest Military Expenditure (%), 2010
Figure 14: Per Capita Defense Expenditure of the Countries with the Largest Per Capita Defense Expenditure in the World (US$), 2010
Figure 15: Sri Lankan Defense Imports (US$ Million), 2006–2010
Figure 16: Sri Lankan Defense Imports by Country (%), 2006–2010 and 2010
Figure 17: Sri Lankan Defense Imports by Category (%), 2006–2010 and 2010
Figure 18: Industry Dynamics - Porter's Five Forces Analysis
Figure 19: Colombo Dockyard PLC - Revenue Trend Analysis (US$ Billion), 2006–2010
Figure 20: Colombo Dockyard PLC - Net Profit Trend Analysis (US$ Billion), 2006–2010
Figure 21: Colombo Exchange Market Capitalization (US$ Billion), 2003–2009
Figure 22: Sri Lankan FDI Inflows (US$ Million), 2003–2009
Figure 23: Sri Lankan Deployment of Credit by Sector (US$ Billion), 2003–2009
Figure 24: Sri Lankan GDP at Constant Prices (US$ Billion), 2003–2015
Figure 25: Sri Lankan GDP Per Capita at Constant Prices (US$), 2003–2015
Figure 26: Sri Lankan GDP at Current Prices (US$ Billion), 2003–2015
Figure 27: Sri Lankan GDP Per Capita at Current Prices (US$), 2003–2015
Figure 28: Sri Lankan GDP Split by Key Segments (%) 2003 and 2009
Figure 29: Sri Lankan Agriculture Net Output at Current Prices (LKR Billion), 2003–2015
Figure 30: Sri Lankan Agriculture Net Output at Current Prices (US$ Billion), 2003–2015
Figure 31: Sri Lankan Agriculture Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 32: Sri Lankan Manufacturing Net Output at Current Prices (LKR Billion), 2003–2015
Figure 33: Sri Lankan Manufacturing Net Output at Current Prices (US$ Billion), 2003–2015
Figure 34: Sri Lankan Manufacturing Net Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 35: Sri Lankan Mining, Manufacturing and Utilities Net Output at Current Prices (LKR Billion), 2003–2015
Figure 36: Sri Lankan Mining, Manufacturing and Utilities Net Output at Current Prices (US$ Billion), 2003–2015
Figure 37: Sri Lankan Mining, Manufacturing and Utilities Net Output at Current Prices as a percentage of GDP (%), 2003–2015
Figure 38: Sri Lankan Construction Net Output at Current Prices (LKR Billion), 2003–2015
Figure 39: Sri Lankan Construction Net Output at Current Prices (US$ Billion), 2003–2015
Figure 40: Sri Lankan Construction Output at Current Prices as a Percentage of GDP (%), 2003–2015
Figure 41: Sri Lankan Inflation Rate (%), 2003–2015
Figure 42: Sri Lankan Fiscal Balance as a Percentage of GDP (%), 2003–2009
Figure 43: Sri Lankan Current Account Balance as a Percentage of GDP (%), 2003–2009
Figure 44: Sri Lankan Exports as a Percentage of GDP (%), 2003–2015
Figure 45: Sri Lankan Imports as a Percentage of GDP (%), 2003–2015
Figure 46: Sri Lankan Exports Growth (%), 2003–2015
Figure 47: Sri Lankan Imports Growth (%), 2003–2015
Figure 48: Sri Lankan External Debt as a Percentage of GDP (%), 2003–2009
Figure 49: Sri Lankan Annual Average Exchange Rate US$–LKR, 2003–2009
Figure 50: Sri Lankan End of the Period Exchange Rate US$–LKR, 2003–2009
Figure 51: Sri Lankan Debt Service Ratio (%), 2003–2009
Figure 52: Sri Lankan Airports and Sea Ports (Number of), 2009
Figure 53: Sri Lankan Railways and Roadways (Kilometers), 2009
Figure 54: Sri Lankan Automotive Components Exports (US$ Million), 2003–2015
Figure 55: Sri Lankan Automotive Components Imports (US$ Million), 2003–2015
Figure 56: Sri Lankan Total Installed Capacity for Electricity Generation (Million Kilowatts), 2003–2015
Figure 57: Sri Lankan Installed Capacity for the Generation of Conventional Thermal Electricity (Million Kilowatts),
Figure 58: Sri Lankan Electricity Production (Billion Kilowatt Hours), 2003–2015
Figure 59: Sri Lankan Installed Capacity for the Generation of Hydro-Electricity (Million Kilowatts), 2003–2015
Figure 60: Sri Lankan Installed Capacity for the Generation of Renewable Electricity (Million Kilowatts), 2003–2015
Figure 61: Sri Lankan Electricity Consumption (Billion Kilowatt Hours), 2003–2015
Figure 62: Sri Lankan Healthcare Expenditure (US$ Billion), 2003–2015
Figure 63: Sri Lankan Healthcare Expenditure as a Percentage of GDP (%), 2003–2015
Figure 64: Sri Lankan Per Capita Healthcare Expenditure (US$), 2003–2015
Figure 65: Sri Lankan Internet Subscriptions (Units), 2003–2015
Figure 66: Sri Lankan Broadband Internet Subscriptions (Units), 2003–2015
Figure 67: Sri Lankan Personal Computer Penetration Rate (per 100 people), 2003–2015
Figure 68: Sri Lankan Mobile Phone Penetration Rate (%), 2003–2015
Figure 69: Sri Lankan R&D Expenditure as a Percentage of GDP (%), 2003–2015
Figure 70: Sri Lankan Size of Labor Force in 15–59 Age Group (Million), 2003–2015
Figure 71: Sri Lankan Unemployment Rate (%), 2003–2015
Figure 72: Sri Lankan Total Population (Million), 2003–2015
Figure 73: Sri Lankan Urban and Rural Population (%), 2003–2015
Figure 74: Sri Lankan Female Percentage of Population (%), 2003–2015
Figure 75: Sri Lankan Male Percentage of Population (%), 2003–2015
Figure 76: Sri Lankan Mean Age of Population (Years), 2003–2015
Figure 77: Sri Lankan Median Age of Population (Years), 2003–2015
Figure 78: Sri Lankan Population Density (per Square Kilometer), 2003–2015
Figure 79: Sri Lankan Population Distribution by Age (%), 2003–2015
Figure 80: Sri Lankan Male Population Distribution by Age (%), 2003–2015
Figure 81: Sri Lankan Female Population Distribution by Age (%), 2003–2015
Figure 82: Sri Lankan Households, Number of (Million), 2003–2015
Figure 83: Global Terrorism Heat Map, 2009
Figure 84: Sri Lankan Transparency Index, 2003–2009
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