Future of the Bangladeshi Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018
This report is the result of SDI’s extensive market and company research covering the Bangladeshi defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.
Introduction and Landscape
Why was the report written?
The Future of the Bangladeshi Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Bangladeshi defense industry.
What is the current market landscape and what is changing?
After decades of independence from Pakistan, Bangladesh remains an emerging market-based economy, and intends to concentrate significantly upon economic, social, and human development in order to transform itself into a prosperous country over the upcoming decades. To protect its national integrity, and maintain internal and external stability, the government apportioned an average of 1.4% of its GDP for defense purposes over the review period, a cumulative figure of US$8.2 billion. During the forecast period, the defense budget is expected to be US$11.1 billion and increase at a CAGR of 6.95%.As Bangladesh has just two state-controlled defense equipment manufacturing units, the country has no other option but to import military hardware from foreign defense operators. In this regard, China holds the leading position as the arms exporter of Bangladesh, primarily due to the dynamics and diplomatic relations shared between the two governments. Bangladesh is expected to embark upon an arms procurement program in the future years that will also lead the government to enter into contracts and orders with other nations.
What are the key drivers behind recent market changes?
Certain factors pertaining to the security of Bangladesh are expected to drive the nation’s defense expenditure in the coming years. These include the risk of attacks from internal and external terrorist groups and border conflicts with the Algeria and Spain. Additionally, ammunition modernization initiatives will be an area of focus for military expenditure over the forecast period.
What makes this report unique and essential to read?
The Future of the Bangladeshi Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
Key Features and Benefits
The report provides detailed analysis of the current industry size and growth expectations from 2014to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
The report includes trend analysis of imports and exports, together with their implications and impact on the Bangladeshi defense industry.
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
The report allows readers to identify 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.
The report helps the reader to understand the competitive landscape of the defense industry in Bangladesh. 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.
Key Market Issues
During the forecast period Bangladesh is expected to invest US$11.1 billion in its armed forces, of which US$2.7 billion is forecast to be on the acquisition of military hardware, offering foreign OEMs limited opportunities to cater to the Bangladeshi defense industry. Although the allocation is higher than that of the review period, when it was US$2.2 billion, the budget still remains highly inadequate for the procurement of high-tech defense equipment. Furthermore, the country is expected to focus more on developing its economic conditions and bring in more wealth and prosperity for its people in the coming years. These factors do not make the Bangladeshi defense market an attractive investment destination for foreign companies.
According to Transparency International’s Corruption Perceptions Index 2012, Bangladesh is classified as a highly corrupt country. Failure on the part of parliament and legislature to exercise adequate control over the proceedings of the defense sector, led it to face a high level of corruption. Incidents of malpractice within Bangladesh’s military industrial base may limit the growth of the country’s defense sector. In addition to damaging the country’s image in the global arms market, it also discourages foreign OEMs from market entry. Although a number of laws including the Anti-Corruption Commission Act and Money Laundering Act have been implemented in Bangladesh to prevent corruption within the nation, it has not brought forth large-scale positive changes to date.
Every country, including Bangladesh, aims to have a prudent and skilled Army, Navy, and Air Force for which a modern military base is essential. To protect the nation from internal and external aggression, as well as to establish and maintain peace within the nation, it is necessary to procure modern and high-tech arms, ammunitions and war-equipment that will enhance the combat capabilities of the armed forces. Furthermore, an efficient military unit also requires necessary training related to the advanced warfare techniques and have a well-connected and secured communication network. To achieve this goal, in 2010 the Bangladeshi government outlined a 10-year modernization program for its armed forces that is expected to value around US$490 million, and will see expenditure on the purchase of foreign military hardware, as well as the development of indigenous ordinance production. While the government intends to bring in more tanks and armored vehicles for the Army, the Air Force is expected to receive helicopters, air defense systems, air-to-air missiles, surface-to-air missiles and radars. Procurement for the Navy will include maritime patrol aircraft and patrol crafts.
Drug smuggling is a growing national concern for Bangladesh. Due to its strategic geographical location of being the central point of the ’golden triangle’ (Myanmar, Thailand and Laos) and the ’golden crescent’ (Pakistan, Afghanistan and Iran), the country serves as a transit route with easy land, sea, and air access. Furthermore, the country’s hilly northern and eastern sides, and sea on the southern side make it suitable for illicit drug trafficking. In addition to this, the Bangladeshi Department of Narcotics Control (DNC) has identified around 45-50 points along the borders that are being shared with the two neighboring countries - India and Myanmar through which drugs are smuggled in and out of the country. To combat the threat, in October 2012, Bangladesh and India agreed to share actionable intelligence and implement a coordinated strategy to curb contraband activities across the international borders. The two countries will conduct extensive training programs for the officers working in the arena of drug trafficking as well as exchange resource persons associated with such programs. The government is also working on tightening security along the Bangladesh-Burma border where Border Guard Bangladesh confiscated Yabba tablets at Dum Dum Meah check-post in May 2013. In October, Rapid Action Battalion - the anti-crime elite force of Bangladesh - arrested 10 people including seven Chinese nationals and three Bangladeshis, in Dhaka on charges of narcotics smuggling. In this respect, the country is expected to pocure equipment such as surveillance and detection systems, scanning machines, and alarms.
The Bangladeshi defense industry is highly dependent on foreign suppliers to satisfy the demand for military modernization. Underdeveloped domestic defense capabilities, in addition to internal and external security threats, require the nation to import military hardware. As a result, the country has so far been unable to export defense equipment. In comparison with arms imported during the review period, the country’s arms equipment imports are estimated to increase as the government’s defense equipment modernization plans are put into action. Throughout the review period, China emerged as the largest supplier of defense equipment to Bangladesh, while armored vehicles accounted for the majority of imports. During the forecast period, the demand for aircraft will remain high, while the import of air defense systems is expected to increase.
First 2 Weeks of March 2014