Future of the Malaysian Defense Industry Market ... · Future of the Malaysian Defense Industry –...

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Future of the Malaysian Defense Industry –

Market Attractiveness, Competitive

Landscape and Forecasts to 2019

Future of the Malaysian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2019

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Summary

“Future of the Malaysian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to

2019” report offers the reader detailed analysis of the defense budget over the next five years. Alongside it

offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original

equipment manufacturers) to gain a market share in the Malaysian defense industry.

The report provides detailed analysis of the current industry size and growth expectations during 2015-2019,

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.

Key Findings

As the third largest economy in South East Asia, Malaysia is a newly industrialized market that has

experienced a financial boom over the last decade. This rapid economic development also triggered a high

level of investment by the government in the defense sector to ensure adequate protection and security for

citizens and the critical infrastructure of the country. The Malaysian annual defense budget, valued at

US$XX billion in 2014, is expected to grow at an estimated CAGR of XX% over the forecast period, to reach

US$XX billion in 2019. This significant increase in defense expenditure can be attributed to the

modernization of the armed forces and the procurement programs that are to be executed over the forecast

period. Additionally, participation in a number of UN peacekeeping operations and a rising number of

territorial disputes, are expected to fuel Malaysian defense expenditure. Per capita defense spending is

expected to reach US$XX by 2019, from US$XX in 2015.

Key Features and Benefits

The report provides detailed analysis of the Malaysian defense industry during 2010–2019, including the

factors that influence the military expenditure. It provides detailed expectations of growth rates and projected

total expenditure.

It provides the manufacturers with insights on market opportunities along with industry structure and

dynamics prevalent in the country. In addition, the report focuses on the regulations governing the Malaysian

defense industry and the potential market entry strategies with an expert analysis of the competitive

structure.


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1. Market Attractiveness and Emerging Opportunities

1.1. Defense Market Size Historical and Forecast

1.1.1. The Malaysian defense budget is expected to reach US$XX billion by 2019, at a CAGR of XX%

In 2014, the Malaysian government allocated US$XX billion as its total defense budget, recording a CAGR of

XX% during the review period. The country’s defense budget is further expected to grow at an estimated

CAGR of XX% over the forecast period, to reach US$XX billion in 2019. The consistent increase is driven

primarily by the need to upgrade the existing arsenal of the armed forces. Consequently, the Malaysian MoD

is expected to procure a significant amount of military equipment during the forecast period, including

armored personnel carriers, maritime patrol aircraft, multi-purpose ships for the navy, multi-role aircraft,

drones, Airborne Early Warning and Command (AEW&C) aircraft, corvettes, and amphibious ships.

The following table and figure show the Malaysian defense expenditure during the review period:

Table 1: Malaysian Defense Expenditure, 2010-2014

Year Defense expenditure (US$ bn)

Defense growth percentage

2010

2011

2012

2013

2014

CAGR 2010-2014

Source: Ministry of Defense and SDI analysis © SDI

Figure 1: Malaysian Defense Expenditure, 2010-2014


-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0

1

2

3

4

5

6

2010 2011 2012 2013 2014

Defe

nse e

xp

en

dit

ure

gro

wth

rate

(%

)

Defe

nse b

ud

get

(US

$ B

illi

on

)

Defense Expenditure (US$ bn) Defense Growth Percentage


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The following table and figure show projected defense expenditure of the Malaysian over the forecast period:

Table 2: Malaysian Defense Expenditure, 2015-2019

Year Defense expenditure (US$ bn)

Defense growth percentage

2015

2016

2017

2018

2019

CAGR 2015-2019


Figure 2: Malaysian Defense Expenditure, 2015-2019


0%

1%

2%

3%

4%

5%

6%

7%

8%

0

1

2

3

4

5

6

7

2015 2016 2017 2018 2019

Defe

nse e

xp

en

dit

ure

gro

wth

rate

(%

)

Defe

nse b

ud

get

(US

$ B

illi

on

)

Defence Expenditure (US$ bn) Defense expenditure growth %


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1.2. Analysis of Defense Budget Allocation

1.2.1. Capital expenditure allocation is expected to increase over the forecast period

The Malaysian MoD allocated an average of XX% of the total budget to capital expenditure during the review

period, which is expected to increase marginally over the forecast period to reach XX%. This increase in

capital expenditure is primarily due to a number of procurements and modernization programs formulated by

the Malaysian Armed Forces. Malaysian revenue expenditure is also expected to record robust growth during

the forecast period and is expected to account for an average of XX% of the country’s total defense

expenditure during the forecast period. This expenditure is expected to aid in the areas of personnel training,

additional army personnel, capability enhancement, and improvements of the quality of life of military

personnel.

The following table and chart display Malaysian’s defense budget share of capital, revenue and other

expenditure during the review period:

Table 3: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2010–2014

Year Capital Expenditure Share Revenue Expenditure Share

2010

2011

2012

2013

2014

Source: Ministry of Finance, Malaysia and SDI analysis © SDI

Figure 3: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014

Def

ense

Bud

get

Sha

re (

%)

Capital Expenditure Revenue Expenditure


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The following table and chart display Malaysian’s defense budget share of capital, revenue and other

expenditure over the forecast period:

Table 4: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015–2019

Year Capital Expenditure Share Revenue Expenditure Share

2015

2016

2017

2018

2019


Figure 4: Malaysian Defense Budget Split Between Capital, Revenue and Other Expenditure (%), 2015-2019


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019

Defe

nse B

ud

get

Sh

are

(%

)

Capital Expenditure Revenue Expenditure


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1.3. Homeland Security Market Size and Forecast

1.3.1. Malaysian homeland security expenditure is expected to grow at a CAGR of XX% over the forecast

period

The Royal Malaysian Police (RMP) is responsible for internal security, and the homeland security

expenditure is expected to grow at a CAGR of XX% over the forecast period, to reach US$XX billion in 2019.

This growth in homeland security expenditure can be attributed to the growing terrorism threats in the

country, racial tension between ethnic groups, political divisions, and increasing criminal activities.

Consequently, the majority of investment opportunities are anticipated to be in surveillance technologies,

ballistic identification systems, anti-riot equipment, and technology catering to border security. Overall,

Malaysia is expected to spend a total of US$XX billion on homeland security during the forecast period.

The table and chart below show Malaysian’s homeland security expenditure during the review period:

Table 5: Malaysian Homeland Security Expenditure (US$ billion), 2010-2014

Year Homeland expenditure

(US$ billion) % Growth

2010

2011

2012

2013

2014


Figure 5: Malaysian Homeland Security Expenditure (US$ billion), 2010-2014


-5%

0%

5%

10%

15%

20%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2010 2011 2012 2013 2014

Gro

wth

rat

e (%

)

Ho

mel

and

Sec

uri

ty E

xpen

dit

ure

(U

S$

Bn

)

Homeland Security Defense Expenditure (US$ Bn) Growth Rate (%)


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2. Industry Dynamics - Porter’s Five Forces Analysis

Figure 4: Industry Dynamics – Porter’s Five Forces Analysis

Source: SDI analysis © SDI

Intensity of Rivalry Bargaining Power of Supplier

Bargaining Power of Buyer

Barrier to Entry

Threat of Substitute


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Report Methodology

SDI’s dedicated research and analysis teams consist of experienced professionals with a background in

industry research and consulting in the defense sector. The following research methodology is followed for all

databases and reports:

Secondary Research

The research process begins with exhaustive secondary research to source reliable qualitative and

quantitative information related to the defense market. The secondary research sources that are typically

referred to include, but are not limited to:

Industry associations

National government documents and statistical databases

Company websites, annual reports, financial reports, broker reports, investor presentations

Industry trade journals and other literature

Internal and external proprietary databases

News articles, press releases, and webcasts specific to the companies operating in the market

Primary Research

SDI conducts hundreds of primary interviews a year with industry participants and commentators in order to

validate its data and analysis. A typical research interview fulfills the following functions:

Provides first-hand information on market size, market trends, growth trends, competitive landscape,

and future outlook

Helps to validate and strengthen secondary research findings

Further develops the analysis team’s expertise and market understanding

Primary research involves e-mail interactions, telephone interviews, and face-to-face interviews for

each market category, division, and sub-division across geographies

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers,

and national sales managers

External experts: investment bankers, valuation experts, research analysts, and key opinion leaders

specializing in defense markets

Conventions

Currency conversions are performed on the basis of average annual conversion rate format

calculations

All the values in tables, with the exception of compounded annual growth rate (CAGR) and

compounded annual rate of change (CARC), are displayed to one decimal place; therefore, due to

this rounding method, growth rates may appear inconsistent with absolute values

The forecasted values are projected on the basis of nominal values; the inflation was not taken into account


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TABLE OF CONTENTS

1. Introduction ...............................................................................................................................11

1.1. What is this Report About? ...................................................................................................... 11

1.2. Definitions ................................................................................................................................ 11

1.3. Summary Methodology ............................................................................................................ 13

1.4. SDI Terrorism Index ................................................................................................................. 14

1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com) ..................... 14

2. Executive Summary .................................................................................................................15

3. Market Attractiveness and Emerging Opportunities ...........................................................17

3.1. Defense Market Size Historical and Forecast .......................................................................... 18

3.1.1. The Malaysian defense budget is expected to reach US$XX billion by 2019, at a CAGR of XX% ......... 18

3.1.2. Modernization of the armed forces, participation in UN peacekeeping operations, and territorial

disputes are the major drivers of the Malaysian defense industry ..................................................................... 22

3.1.3. Defense budget as a percentage of GDP will remain at an average of XX% over the forecast period ... 23

3.2. Analysis of Defense Budget Allocation ................................................................................... 25

3.2.1. Capital expenditure allocation is expected to increase over the forecast period .................................... 25

3.2.2. The Malaysian MoD is to increase capital expenditure at a CAGR of XX% over the forecast period...... 27

3.2.3. Revenue expenditure set to increase over the forecast period .............................................................. 31

3.2.4. Per capita defense expenditure expected to increase during the forecast period .................................. 35

3.3. Homeland Security Market Size and Forecast ......................................................................... 37

3.3.1. Malaysian homeland security expenditure is expected to grow at a CAGR of XX% over the forecast

period ............................................................................................................................................................ 37

3.3.2. The homeland security expenditure in Malaysia is mainly driven by border security and rising criminal

activities .......................................................................................................................................................... 41

3.3.3. Malaysia is at a “some risk” of terrorism ............................................................................................... 42

3.3.4. Malaysia has a terrorism index score of “0.5” ....................................................................................... 43

3.4. Benchmarking with Key Global Markets .................................................................................. 44

3.4.1. Malaysian defense expenditure is expected to increase over the forecast period .................................. 44

3.4.2. Malaysian defense expenditure is relatively smaller than other Asian countries .................................... 46

3.4.3. The Malaysian defense budget as a percentage of GDP is expected to decline over the forecast period47

3.4.4. Iraq, Pakistan, and Afghanistan are the most terror-prone countries ..................................................... 48

3.5. Market Opportunities: Key Trends and Growth Stimulators ................................................... 50

3.5.1. Multi-Role Aircraft ................................................................................................................................ 50

3.5.2. Corvettes ............................................................................................................................................. 51

3.5.3. Armored Personnel Carrier (APC) ........................................................................................................ 52


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3.5.4. Cyber Defense..................................................................................................................................... 53

4. Defense Procurement Market Dynamics ...............................................................................54

4.1. Import Market Dynamics .......................................................................................................... 55

4.1.1. Malaysian defense imports are expected to increase over the forecast period ...................................... 55

4.1.2. Germany, Russia, and France to remain the key arms suppliers to Malaysia ........................................ 56

4.1.3. Ships, aircraft, and missiles are the key imports for Malaysia ............................................................... 57

4.2. Export Market Dynamics .......................................................................................................... 58

4.2.1. No defense exports for Malaysia .......................................................................................................... 58

5. Industry Dynamics ...................................................................................................................59

5.1. Five Forces Analysis ................................................................................................................ 59

5.1.1. Bargaining power of supplier: low......................................................................................................... 60

5.1.2. Bargaining power of buyer: high ........................................................................................................... 60

5.1.3. Barrier to entry: medium ...................................................................................................................... 60

5.1.4. Intensity of rivalry: medium to high ....................................................................................................... 60

5.1.5. Threat of substitution: high ................................................................................................................... 61

6. Market Entry Strategy ..............................................................................................................62

6.1. Market Regulation .................................................................................................................... 62

6.1.1. The Malaysian defense industry is largely driven by the government’s offset policy .............................. 62

6.2. Market Entry Route .................................................................................................................. 63

6.2.1. Entry through technology transfer program .......................................................................................... 63

6.2.2. Entry through partnerships with domestic defense companies .............................................................. 63

6.2.3. Defense exhibitions can be used as a direct entry route into the Malaysian defense industry................ 64

6.3. Key Challenges ........................................................................................................................ 65

6.3.1. Negligible defense exports pose a challenge for domestic defense companies..................................... 65

6.3.2. Limited defense budget discourages investors from market entry ......................................................... 65

6.3.3. Corruption and a lack of transparency impede the growth of Malaysia’s defense industry ..................... 65

6.3.4. Malaysia’s new economic policy (NEP) limits the entry of foreign investors .......................................... 66

7. Competitive Landscape and Strategic Insights ...................................................................67

7.1. Competitive Landscape Overview ........................................................................................... 67

7.2. Key Foreign Companies ........................................................................................................... 68

7.2.1. AgustaWestland Malaysia Sdn Bhd: Overview ..................................................................................... 68

7.2.2. Agusta Westland Malaysia Sdn Bhd: Products and services ................................................................ 68

7.2.3. Agusta Westland Malaysia Sdn Bhd: Recent announcements and strategic initiatives .......................... 68

7.2.4. Agusta Westland Malaysia Sdn Bhd: alliances ..................................................................................... 69

7.2.5. Agusta Westland Malaysia Sdn Bhd: recent contract wins .................................................................... 69

7.2.6. Sukhoi: Overview ................................................................................................................................. 71

7.2.7. Sukhoi: Products and services ............................................................................................................. 71


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7.2.8. Sukhoi: recent contract wins ................................................................................................................ 71

7.2.9. Denel Land Systems: Overview ........................................................................................................... 72

7.2.10. Denel Land Systems: Products and services........................................................................................ 72

7.2.11. Denel Land Systems: recent contract wins ........................................................................................... 72

7.3. Key Public Sector Companies ................................................................................................. 73

7.3.1. SME Ordnance Sdn Bhd: overview ...................................................................................................... 73

7.3.2. SME Ordnance Sdn Bhd: products and services .................................................................................. 73

7.3.3. SME Ordnance Sdn Bhd: Recent announcements and strategic initiatives ........................................... 74

7.3.4. SME Ordnance Sdn Bhd: Alliances ...................................................................................................... 75

7.3.5. SME Ordnance Sdn Bhd: recent contract wins ..................................................................................... 75

7.3.6. SME Aerospace Sdn Bhd: Overview .................................................................................................... 76

7.3.7. SME Aerospace Sdn Bhd: Products and services ................................................................................ 76

7.3.8. SME Aerospace Sdn Bhd: Recent announcements and strategic initiatives .......................................... 76

7.3.9. SME Aerospace Sdn Bhd: Recent contract wins .................................................................................. 77

7.3.10. AIROD Sdn Bhd: Overview .................................................................................................................. 78

7.3.11. AIROD Sdn Bhd: Products and services .............................................................................................. 78

7.3.12. AIROD Sdn Bhd: Recent announcements and strategic initiatives ........................................................ 80

7.3.13. AIROD Sdn Bhd: Alliances................................................................................................................... 80

7.3.14. AIROD Sdn Bhd: Recent contract wins ................................................................................................ 81

7.4. Key Private Sector Companies ................................................................................................ 82

7.4.1. Boustead Naval Shipyard: Overview .................................................................................................... 82

7.4.2. Boustead Naval Shipyard: Products and services ................................................................................ 82

7.4.3. Boustead Naval Shipyard: Recent contract wins .................................................................................. 83

7.4.4. Sapura Thales Electronics Sdn Bhd: Overview .................................................................................... 84

7.4.5. Sapura Thales Electronics Sdn Bhd: Products and services ................................................................. 84

7.4.6. Sapura Thales Electronics Sdn Bhd: Recent announcements and strategic initiatives .......................... 84

7.4.7. Sapura Thales Electronics Sdn Bhd: Alliances ..................................................................................... 85

7.4.8. Sapura Thales Electronics Sdn Bhd: Recent contract wins ................................................................... 85

7.4.9. DRB Hicom Defence Technologies Sdn Bhd: Overview ....................................................................... 86

7.4.10. DRB Hicom Defence Technologies Sdn Bhd: Products and services .................................................... 86

7.4.11. DRB Hicom Defence Technologies Sdn Bhd: Recent announcements and strategic initiatives ............. 86

7.4.12. DRB Hicom Defence Technologies Sdn Bhd: Alliances ........................................................................ 87

7.4.13. DRB Hicom Defence Technologies Sdn Bhd: Recent contract wins...................................................... 88

7.4.14. Labuan Shipyard & Engineering Sdn Bhd: overview ............................................................................. 89

7.4.15. Labuan Shipyard & Engineering Sdn Bhd: products and services ......................................................... 89

7.4.16. Labuan Shipyard & Engineering Sdn Bhd: recent announcements and strategic initiatives ................... 89

7.4.17. Labuan Shipyard & Engineering Sdn Bhd: alliances ............................................................................. 89

7.4.18. Labuan Shipyard & Engineering Sdn Bhd: recent contract wins............................................................ 90


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7.4.19. D’ Aquarian Sdn Bhd: Overview ........................................................................................................... 91

7.4.20. D’Aquarian Sdn Bhd: Products and services ........................................................................................ 91

7.4.21. D’Aquarian Sdn Bhd: Recent contract wins .......................................................................................... 91

8. Business Environment and Country Risk .............................................................................92

8.1. Demographics .......................................................................................................................... 92

8.1.1. Total Rural population .......................................................................................................................... 92

8.1.2. Total urban population ......................................................................................................................... 93

8.1.3. Number of households ......................................................................................................................... 94

8.2. Economic Performance ............................................................................................................ 95

8.2.1. GDP per capita at constant prices ........................................................................................................ 95

8.2.2. GDP at current prices (US$) ................................................................................................................ 96

8.2.3. Exports of goods and services (current US$ billion).............................................................................. 97

8.2.4. Imports of goods and services (current US$ billion) .............................................................................. 98

8.2.5. Gross national disposable income (US$ billion) .................................................................................... 99

8.2.6. Manufacturing Output (US$ Billion) .................................................................................................... 100

8.2.7. Consumer price index ........................................................................................................................ 101

8.2.8. Wholesale price index ........................................................................................................................ 102

8.2.9. LCU per EUR (period average) .......................................................................................................... 103

8.2.10. LCU per US$ (period average)........................................................................................................... 104

8.2.11. Lending Rate (%) ............................................................................................................................... 105

8.2.12. Deposit rate (%)................................................................................................................................. 106

8.2.13. Real interest rate (%) ......................................................................................................................... 107

8.2.14. Market capitalization of listed companies (US$ billion) ....................................................................... 108

8.2.15. Market capitalization of listed companies (% of GDP) ......................................................................... 109

8.2.16. Total Government cash surplus/deficit (LCU billion) ........................................................................... 110

8.2.17. Government cash surplus/deficit as a percentage of GDP (LCU) ........................................................ 111

8.2.18. Central government debt (LCU billion) ............................................................................................... 112

8.2.19. Central government debt as a percentage of GDP (LCU) ................................................................... 113

8.2.20. Goods exports as a percentage of GDP ............................................................................................. 114

8.2.21. Goods imports as a percentage of GDP ............................................................................................. 115

8.2.22. Goods balance as a percentage of GDP ............................................................................................ 116

8.2.23. Services imports as a percentage of GDP .......................................................................................... 117

8.2.24. Service exports as a percentage of GDP............................................................................................ 118

8.2.25. Services balance as a percentage of GDP ......................................................................................... 119

8.2.26. Foreign direct investment, net (BoP, current US$ billion) .................................................................... 120

8.2.27. Net foreign direct investment as a percentage of GDP ....................................................................... 121

8.2.28. International reserves, including gold (US$ billion) ............................................................................. 122

8.3. Energy and utilities ................................................................................................................ 123


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8.3.1. Total Conventional Thermal Electricity Net Generation (Billion kWh) .................................................. 123

8.3.2. Hydroelectricity Net Generation (Billion kWh) ..................................................................................... 124

8.3.3. Total Conventional Thermal Electricity Installed Capacity (Million kW) ................................................ 125

8.3.4. Proved Reserves of Natural Gas (Trillion Cubic Feet) ........................................................................ 126

8.3.5. Total Petroleum Consumption (Thousand Barrels Per Day)................................................................ 127

8.3.6. Crude Oil Proved Reserves (Billion Barrels) ....................................................................................... 128

8.4. Infrastructure Quality and Availability ................................................................................... 129

8.4.1. Rail lines (total route-km) ................................................................................................................... 129

8.4.2. Air transport, freight (million ton-km)................................................................................................... 130

8.4.3. Overall construction (US$ million) ...................................................................................................... 131

8.5. Technology............................................................................................................................. 132

8.5.1. Mining, Manufacturing, Utilities Output (USD Bn) ............................................................................... 132

8.5.2. Patents Granted ................................................................................................................................ 133

8.6. Telecommunication ................................................................................................................ 134

8.6.1. Telephone lines (in mn) ..................................................................................................................... 134

8.6.2. Telephone lines Penetration Rate (per 100 people) ............................................................................ 135

9. Appendix................................................................................................................................. 136

9.1. About SDI ............................................................................................................................... 136

9.2. Disclaimer .............................................................................................................................. 136


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LIST OF FIGURES

Figure 1: Malaysian Defense Expenditure (US$ Billion), 2010-2014 .......................................................................................................................... 18 Figure 2: Malaysian Defense Expenditure (US$ Billion), 2015-2019 .......................................................................................................................... 19 Figure 3: Malaysian Defense Expenditure (in MYR Billion), 2010–2014..................................................................................................................... 20 Figure 4: Malaysian Defense Expenditure (in MYR Billion), 2015–2019..................................................................................................................... 21 Figure 5: Malaysian GDP Growth vs. Defense Expenditure and Growth vs. Defense Expenditure as Percentage of GDP, 2010-2014 ................ 23 Figure 6: Malaysian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2015-2019 ..................... 24 Figure 7:Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014 .................................................................. 25 Figure 8: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2019 ................................................................. 26 Figure 9: Malaysian Defense Capital Expenditure (US$ billion), 2010–2014 ............................................................................................................. 27 Figure 10: Malaysian Defense Capital Expenditure (US$ billion), 2015–2019 ........................................................................................................... 28 Figure 11: Malaysian Capital Expenditure (in MYR Billion), 2010–2014 ..................................................................................................................... 29 Figure 12: Malaysian Capital Expenditure (in MYR Billion), 2015–2019 ..................................................................................................................... 30 Figure 13: Malaysian Defense Revenue Expenditure (US$ billion), 2010–2014 ........................................................................................................ 31 Figure 14: Malaysian Defense Revenue Expenditure (US$ billion), 2015–2019 ........................................................................................................ 32 Figure 15: Malaysian Revenue Expenditure (in MYR Billion), 2010–2014 ................................................................................................................. 33 Figure 16: Malaysian Revenue Expenditure (in MYR Billion), 2015–2019 ................................................................................................................. 34 Figure 17: Malaysian Per Capita Defense Expenditure (US$), 2010–2014 ................................................................................................................ 35 Figure 18: Malaysian Per Capita Defense Expenditure (US$), 2015–2019 ................................................................................................................ 36 Figure 19: Malaysian Homeland Security Expenditure (US$ billion), 2010-2014 ....................................................................................................... 37 Figure 20: Malaysian Homeland Security Expenditure (US$ billion), 2015-2019 ....................................................................................................... 38 Figure 21: Malaysian Homeland Security Budget (MYR Billion), 2010–2014 ............................................................................................................. 39 Figure 22: Malaysian Homeland Security Budget (MYR Billion), 2015–2019 ............................................................................................................. 40 Figure 23: SDI Terrorism Heat Map, 2014 ................................................................................................................................................................... 42 Figure 24: SDI Terrorism Index, 2014 .......................................................................................................................................................................... 43 Figure 25: Benchmarking with Key Markets – 2010–2014 vs. 2015–2019 ................................................................................................................. 45 Figure 26: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2014 and 2019 ................................................................ 46 Figure 27: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2014 .......................................................................... 47 Figure 28: Multi-role Aircraft Market Size (US$ Million), 2014–2024........................................................................................................................... 50 Figure 29: Corvettes Market Size (US$ Million), 2014–2024...................................................................................................................................... 51 Figure 30: Armored Personnel Carrier Market Size (US$ Million), 2014–2024 .......................................................................................................... 52 Figure 31: Cyber Defense Market Size (US$ Million), 2014–2024 ............................................................................................................................. 53 Figure 32: Malaysian Defense Import Trend, 2009–2013 (TIV values)....................................................................................................................... 55 Figure 33: Malaysian Defense Import by Country, 2009–2013 (TIV values) .............................................................................................................. 56 Figure 34: Malaysia Defense Imports by Category (%), 2009–2013 ........................................................................................................................... 57 Figure 35: Industry Dynamics – Porter’s Five Forces Analysis ................................................................................................................................... 59 Figure 36: Malaysia Rural population (In million), 2010–2019..................................................................................................................................... 92 Figure 37: Malaysia Urban population (In million), 2010–2019 ................................................................................................................................... 93 Figure 38: Malaysia - Number of Households (Million), 2008–2017............................................................................................................................ 94 Figure 39: Malaysian GDP Per Capita at Constant Prices (US$), 2010–2019 ........................................................................................................... 95 Figure 40: Malaysia - GDP at Current Prices (US$ Billion), 2010–2019 ..................................................................................................................... 96 Figure 41: Malaysian Exports of goods and services (US$ Billion), 2003–2012 ........................................................................................................ 97 Figure 42: Malaysian Imports of goods and services (US$ Billion), 2003–2012......................................................................................................... 98 Figure 43: Malaysian Gross national disposable income (US$ billion), 2003-2012.................................................................................................... 99 Figure 44: Malaysian Manufacturing Output (US$ Billion), 2004–2012 .................................................................................................................... 100 Figure 45: Malaysian Consumer price index, 2010–2019.......................................................................................................................................... 101 Figure 46: Malaysian Wholesale price index, 2002–2011 ......................................................................................................................................... 102 Figure 47: Malaysia LCU per EUR (period average), 2010–2019 ............................................................................................................................. 103 Figure 48: Malaysia LCU per US$, 2010–2019.......................................................................................................................................................... 104 Figure 49: Malaysian Lending Rate (%), 2003-2012.................................................................................................................................................. 105 Figure 50: Malaysian Deposit rate (%), 2003-2012.................................................................................................................................................... 106 Figure 51: Malaysian Real interest rate (%), 2003–2012........................................................................................................................................... 107 Figure 52: Malaysian market capitalization of listed companies (US$ billion), 2003–2012 ...................................................................................... 108 Figure 53: Malaysian market capitalization of listed companies (% of GDP), 2002–2011 ....................................................................................... 109 Figure 54: Malaysian Total Government cash surplus/deficit (LCU billion), 2003–2011 .......................................................................................... 110 Figure 55: Malaysian Government cash surplus/deficit as % of GDP (LCU), 2002–2011 ....................................................................................... 111 Figure 56: Malaysian - Central government debt (LCU billion), 2003–2011 ............................................................................................................. 112


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Figure 57: Malaysian Central government debt as % of GDP (LCU), 2003–2011 ................................................................................................... 113 Figure 58: Malaysia - Goods exports as a % of GDP (%), 2002–2011 ..................................................................................................................... 114 Figure 59: Malaysia - Goods imports as a % of GDP (%), 2002–2011 ..................................................................................................................... 115 Figure 60: Malaysian Goods balance as a % of GDP (%), 2002–2011 .................................................................................................................... 116 Figure 61: Malaysian Services imports as a % of GDP (%), 2002–2011 .................................................................................................................. 117 Figure 62: Malaysia Service exports as a % of GDP (%), 2002–2011 ...................................................................................................................... 118 Figure 63: Malaysia - Services balance as a % of GDP (%), 2002–2011 ................................................................................................................. 119 Figure 64: Malaysia - Foreign direct investment, net (BoP, current US$ billion), 2002–2011 .................................................................................. 120 Figure 65: Malaysian Net foreign direct investment as % of GDP, 2002-2011 ......................................................................................................... 121 Figure 66: Malaysian International reserves, including gold (US$ billion), 2002-2011 ............................................................................................. 122 Figure 67: Malaysia - Total Conventional Thermal Electricity Net Generation (Billion Kilowatt hours), 2002–2011 ............................................... 123 Figure 68: Malaysian Hydroelectricity Net Generation (Billion Kilowatt hours), 2002–2011 .................................................................................... 124 Figure 69: Malaysian Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001–2010 ................................................... 125 Figure 70: Malaysian Proved Reserves of Natural Gas (Trillion Cubic Feet), 2004–2013 ....................................................................................... 126 Figure 71: Malaysian Total Petroleum Consumption (Thousand Barrels Per Day), 2003–2012 ............................................................................. 127 Figure 72: Crude Oil Proved Reserves (Billion Barrels), 2004–2013 ........................................................................................................................ 128 Figure 73: Malaysian Rail lines (total route-km), 2003–2011 .................................................................................................................................... 129 Figure 74: Malaysian Air transport, freight (million ton-km), 2002–2011 ................................................................................................................... 130 Figure 75: Malaysia - Overall construction (US$ million), 2007-2016 ....................................................................................................................... 131 Figure 76: Malaysian Mining, Manufacturing, Utilities Output (USD Bn), 2003–2012 .............................................................................................. 132 Figure 77: Malaysian Patents Granted, 2003–2012................................................................................................................................................... 133 Figure 78: Malaysian Telephone lines, 2003–2012 ................................................................................................................................................... 134 Figure 79: Malaysian Telephone lines Penetration Rate (per 100 people), 2003–2012 .......................................................................................... 135


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LIST OF TABLES

Table 1: Malaysian Defense Expenditure (US$ Billion), 2010-2014............................................................................................................................ 18 Table 2: Malaysian Defense Expenditure (US$ Billion), 2015-2019............................................................................................................................ 19 Table 3: Malaysian Defense Expenditure (in MYR Billion), 2010–2014 ...................................................................................................................... 20 Table 4: Malaysian Defense Expenditure (in MYR Billion), 2015–2019 ...................................................................................................................... 21 Table 5: Malaysian GDP Growth vs. Defense Expenditure and Growth vs. Defense Expenditure as Percentage of GDP, 2010-2014.................. 23 Table 6: Malaysian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2015-2019 ....................... 24 Table 7: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014 .................................................................. 25 Table 8: Malaysian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2019 .................................................................. 26 Table 9: Malaysian Defense Capital Expenditure (US$ billion), 2010–2014............................................................................................................... 27 Table 10: Malaysian Defense Capital Expenditure (US$ billion), 2015–2019 ............................................................................................................ 28 Table 11: Malaysian Capital Expenditure (in MYR Billion), 2010–2014 ...................................................................................................................... 29 Table 12: Malaysian Capital Expenditure (in MYR Billion), 2015–2019 ...................................................................................................................... 30 Table 13: Malaysian Defense Revenue Budget Allocation (US$ billion), 2010–2014 ................................................................................................ 31 Table 14: Malaysian Defense Revenue Expenditure (US$ billion), 2015–2019 ......................................................................................................... 32 Table 15: Malaysian Revenue Expenditure (in MYR Billion), 2010–2014................................................................................................................... 33 Table 16: Malaysian Revenue Expenditure (in MYR Billion), 2015–2019................................................................................................................... 34 Table 17: Malaysian Per Capita Defense Expenditure (US$), 2010–2014 ................................................................................................................. 35 Table 18: Malaysian Per Capita Defense Expenditure (US$), 2015–2019 ................................................................................................................. 36 Table 19: Malaysian Homeland Security Expenditure (US$ billion), 2010-2014 ........................................................................................................ 37 Table 20: Malaysian Homeland Security Expenditure (US$ billion), 2015-2019 ........................................................................................................ 38 Table 21: Malaysian Homeland Security Budget (MYR Billion), 2010–2014 .............................................................................................................. 39 Table 22: Malaysian Homeland Security Budget (MYR Billion), 2015–2019 .............................................................................................................. 40 Table 23: Benchmarking with Key Markets – 2010–2014 vs. 2015–2019 .................................................................................................................. 44 Table 24: SDI Terrorism Index ...................................................................................................................................................................................... 48 Table 25: Malaysian Defense Offset Regulations ........................................................................................................................................................ 62 Table 26: Market Entry by Key Foreign Companies .................................................................................................................................................... 63 Table 27: Malaysian Defense Industry Capability ........................................................................................................................................................ 67 Table 28: Agusta Westland Malaysia Sdn Bhd – Product Focus ................................................................................................................................ 68 Table 29: Agusta Westland Malaysia Sdn Bhd – Alliances ......................................................................................................................................... 69 Table 30: Agusta Westland Malaysia Sdn Bhd – Recent Contract Wins .................................................................................................................... 69 Table 31: Sukhoi – Product Focus ................................................................................................................................................................................ 71 Table 32: Sukhoi – Recent Contract Wins.................................................................................................................................................................... 71 Table 33: Denel Land Systems – Product Focus ......................................................................................................................................................... 72 Table 34: Denel Land Systems – Recent Contract Wins ............................................................................................................................................. 72 Table 35: SME Ordnance Sdn Bhd – Product Focus................................................................................................................................................... 73 Table 36: SME Ordnance Sdn Bhd – Alliances............................................................................................................................................................ 75 Table 37: SME Ordnance Sdn Bhd – Recent Contract Wins ...................................................................................................................................... 75 Table 38: SME Aerospace Sdn Bhd – Product Focus ................................................................................................................................................. 76 Table 39: SME Aerospace Sdn Bhd – Recent Contract Wins ..................................................................................................................................... 77 Table 40: AIROD Sdn Bhd – Product Focus ................................................................................................................................................................ 78 Table 41: AIROD Sdn Bhd – Alliances ......................................................................................................................................................................... 80 Table 42: AIROD Sdn Bhd – Recent Contract Wins .................................................................................................................................................... 81 Table 43: Boustead Naval Shipyard – Product Focus ................................................................................................................................................. 82 Table 44: Boustead Naval Shipyard – Recent Contract Wins ..................................................................................................................................... 83 Table 45: Sapura Thales Electronics Sdn Bhd – Product Focus................................................................................................................................. 84 Table 46: Sapura Thales Electronics Sdn Bhd – Alliances .......................................................................................................................................... 85 Table 47: Sapura Thales Electronics Sdn Bhd – Recent Contract Wins..................................................................................................................... 85 Table 48: DRB Hicom Defence Technologies Sdn Bhd – Product Focus ................................................................................................................... 86 Table 49: DRB Hicom Defence Technologies Sdn Bhd – Alliances ............................................................................................................................ 87 Table 50: DRB Hicom Defence Technologies Sdn Bhd – Recent Contract Wins....................................................................................................... 88 Table 51: Labuan Shipyard & Engineering Sdn Bhd – Product Focus........................................................................................................................ 89 Table 52: Labuan Shipyard & Engineering Sdn Bhd – Alliances................................................................................................................................. 89 Table 53: Labuan Shipyard & Engineering Sdn Bhd – Recent Contract Wins ........................................................................................................... 90 Table 54: D’Aquarian Sdn Bhd – Product Focus.......................................................................................................................................................... 91 Table 55: D’Aquarian Sdn Bhd – Recent Contract Wins ............................................................................................................................................. 91

Future of the Malaysian Defense Industry Market ... · Future of the Malaysian Defense Industry –...

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