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.
Key Highlights
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 procure 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.
