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

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

Summary

Brunei’s military expenditure stands at US$331.7 Million in 2017 and is projected to register a CAGR of 3.41% to reach US$389 Million by 2022. The country’s defense expenditure is primarily driven by territorial disputes in the South China Sea, military modernization of Royal Brunei Armed Forces (RBAF) and threat of terrorism. As a percentage of GDP, the country’s defense budget is expected to register an average of 2.5% over the forecast period. The average allocation for capital expenditure over the historic period was 32.4%. Over the forecast period it is expected to allocate an average of 32.5% for capital expenditure.

Brunei’s defense industrial base is largely undeveloped and, as a result, the country is highly dependent on foreign suppliers to meet its military needs. Brunei’s arms imports registered a decreasing trend from 2012 to 2013, after peaking in 2011, when the country imported defense equipment worth US$229 Million, however it is anticipated that during the forecast period the country will follow a more balanced procurement pattern to develop the capabilities of its army, navy, and air force. Brunei sourced the majority of its arms imports from Germany, while US stood as the second largest arms importer followed by France, Denmark, Netherlands, and Sweden.

China’s claims in South China Sea and its subsequent growing assertiveness in this region has forced Brunei to reevaluate its priorities and invest in shaping its defense capability to address the maritime security threats. In the medium-term, the Brunei navy is expected to acquire maritime patrol aircraft, three CN235-220 maritime aircraft, and place an order to induct a C-130J Super Hercules transport aircraft from US to enhance air lift capabilities, maritime and border surveillance, disaster relief, and special operations capabilities. The RBAF has received delivery of final S-70i helicopters in 2015 under its multi-mission helicopter modernization program; however Brunei is likely to exercise its options for ten additional helicopters as part of the RBAF Sikorsky S70i project contract signed in 2011.

The report “Future of the Brunei Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2022” offers detailed analysis of Brunei defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, this report provides an in-depth analysis of the following -
- Brunei defense industry market size and drivers: Detailed analysis of Brunei defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns.
- Budget allocation and key challenges: Insights into procurement schedules formulated within the country and a breakdown of the defense budget. It also details the key challenges faced by defense market participants within the country.
- Porter’s Five Force analysis of Brunei defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
- Import and Export Dynamics: Analysis of prevalent trends in the country’s imports and exports over the last five years.
- Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
- Competitive landscape and strategic insights: Analysis of the competitive landscape of Brunei defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Companies mentioned in this report: Royal Brunei Technical Services (RBTS).

Scope

- The Brunei defense budget stands at US$331.7 million in 2017 and registered a CAGR of -5.67% during the historic period.Expenditure will be driven by territorial disputes in the South China Sea, military modernization of RBAF, and threat of terrorism. Demand is expected to revolve around multi-mission helicopters, maritime surveillance radar, airspace surveillance platforms, maritime patrol aircraft, fixed wing transport aircraft, and medium range air defense systems. Over the forecast period, revenue expenditure is expected to reach US$262.2 million by 2022, registering a CAGR of 3.31%. This increase is owing to a construction of a new naval training school for the Royal Brunei Navy, personnel salaries, operational expenses, and training of armed forces.
- During 2013-2017, an average of 32.4% of the country’s defense budget was allocated to capital expenditure, while an average of 67.6% was reserved for revenue expenditure. Over the forecast period 2018-2022, the share of capital expenditure is expected to average 32.5%, while the remaining 67.5% will be assigned to revenue expenditure, which will continue to comprise the majority of the nation‘s defense budget.
- The MoD is expected to invest in multi-mission helicopter, transport aircraft, maritime patrol aircraft.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of Brunei defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of Brunei defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts


1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About Strategic Defence Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary threat perception
3.1.2. Military Doctrine & Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Social, Political and Economic Environment & Support for Defense Projects
3.1.6. Political & Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. Brunei defense expenditure is expected to reach US$389 million by 2022
3.2.2. Territorial disputes in the South China Sea, military modernization initiatives, and threat of terrorism are expected to drive defense expenditure over the forecast period
3.2.3. Brunei defense expenditure as a percentage of GDP is expected to decrease marginally over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure allocation expected to increase during the forecast period
3.3.2. Capital expenditure to increase at a CAGR of 3.61% over 2018-2022
3.3.3. Brunei revenue expenditure is projected to reach US$1.2 billion cumulatively over forecast period
3.3.4. Per capita defense expenditure is expected to increase during the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Brunei homeland security market to increase at a CAGR of 2.70% over the forecast period
3.4.2. Homeland security expenditure to be driven by human and illicit drug trafficking
3.4.3. Brunei faces some level of threat from terrorism
3.5. Benchmarking with Key Global Markets
3.5.1. Brunei’s defense budget is poised to grow over the forecast period
3.5.2. Brunei’s defense spending is low compared to other major military spenders
3.5.3. Brunei allocates a significant percentage of GDP towards defense spending
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Multi-mission Helicopter
3.6.2. Transport aircraft
3.6.3. Maritime patrol aircraft
4. Defense Procurement Market Dynamics
4.1. Import Dynamics
4.1.1. Defense imports recorded a decline during 2011-2015
4.1.2. Brunei sourced the majority of its arms imports from Germany
4.1.3. Ship and Aircraft accounted for the majority of arms imports during 2011-2015
4.2. Export Market Dynamics
4.2.1. Brunei does not export military hardware due to lack of domestic manufacturing capacity
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low
5.1.2. Bargaining power of buyer: low to medium
5.1.3. Barrier to entry: high
5.1.4. Intensity of rivalry: low to medium
5.1.5. Threat of substitution: low
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Brunei has not disclosed any offset obligations imposed by the country
6.1.2. FDI in the defense sector is controlled entirely by the government
6.2. Market Entry Route
6.2.1. Budget Process
6.2.2. Procurement Policy & Process
6.2.3. The biennial defense exhibition provides an attractive entry route
6.2.4. Direct commercial sales being the preferred entry route
6.2.5. Closer military co-operation provides opportunity to enter into defense market
6.3. Key Challenges
6.3.1. A relatively small defense budget fails to attract investors and suppliers
6.3.2. Lack of transparency in the bidding process makes foreign companies wary of investing
6.3.3. Lack of skilled labor
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Private Sector Companies
7.2.1. Royal Brunei Technical Services: Overview
7.2.2. Royal Brunei Technical Services: Services
7.2.3. Royal Brunei Technical Services: Recent announcements and strategic initiatives
7.2.4. Royal Brunei Technical Services: Alliances
7.2.5. Royal Brunei Technical Services: Recent contract wins
8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices
8.1.3. Exports of goods and services, current prices
8.1.4. Imports of goods and services, current prices
8.1.5. Gross National disposable income (US$ Billion)
8.1.6. Local Currency Unit per US Dollar
8.1.7. Goods exports as a percentage of GDP
8.1.8. Goods imports as a percentage of GDP
8.1.9. Service Imports as a percentage of GDP
8.1.10. Service Exports as a percentage of GDP
8.1.11. Foreign direct investment, net (BoP, current US$ Bn)
8.1.12. Net foreign direct investment as % of GDP
8.1.13. Mining, Manufacturing, Utilities Output (LCU Billion)
9. Appendix
9.1. About SDI
9.2. Disclaimer
List of Tables
Table 1: Brunei Land Forces Strength
Table 2: Brunei Navy Strength
Table 3: Brunei Air Force Strength
Table 4: Brunei Ongoing Procurement Programs
Table 5: Brunei Future Procurement Programs
Table 6: Brunei Defense Expenditure (BND Million & US$ Million), 2013-2022
Table 7: Brunei GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2013-2022
Table 8: Brunei Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Table 9: Brunei Defense Capital Expenditure (BND Million & US$ Million), 2013-2022
Table 10: Brunei Defense Revenue Expenditure (BND Million & US$ Million), 2013-2022
Table 11: Brunei Per-Capita Defense Expenditure (US$), 2013-2022
Table 12: Brunei Homeland Security Expenditure (BND Million & US$ Million), 2013-2022
Table 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Table 14: Transport Aircraft Procurement
Table 15: Maritime Patrol Aircraft Procurement
Table 16: Brunei Budget Preparation Process
Table 17: Brunei - Competitive Landscape of Defense Industry, 2017
Table 18: Royal Brunei Technical Services
Table 19: Royal Brunei Technical Services - Alliances
Table 20: Royal Brunei Technical Services - Recent Contract Wins 62"
List of Figures
Figure 1: Brunei Defense Expenditure (BND Million), 2013-2022
Figure 2: Brunei Defense Expenditure (US$ Million), 2013-2022
Figure 3: Brunei GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022
Figure 4:Brunei Budget Split Between Capital and Revenue Expenditure (%), 2013-2022
Figure 5: Brunei Defense Capital Expenditure (BND Million), 2013-2022
Figure 6: Brunei Defense Capital Expenditure (US$ Million), 2013-2022
Figure 7: Brunei Defense Revenue Expenditure (BND Million), 2013-2022
Figure 8:Brunei Defense Revenue Expenditure (US$ Million), 2013-2022
Figure 9: Brunei Per Capita Expenditure (US$), 2013-2022
Figure 10: Brunei Homeland Security Budget (BND Million), 2013-2022
Figure 11: Brunei Homeland Security Budget (US$ Million), 2013-2022
Figure 12: Terrorism Heat Map, 2017
Figure 13: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022
Figure 14: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2017 and 2022
Figure 15: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017
Figure 16: Multi-mission Helicopter Market Size (US$ Million), 2017-2019
Figure 17: Brunei Defense Imports (US$ Million), 2011-2015
Figure 18: Brunei Defense Imports by Country (%), 2011-2015
Figure 19: Brunei Defense Imports by Weapon Category (%), 2011-2015
Figure 20: Industry Dynamics Porter’s Five Forces Analysis
Figure 21: Brunei GDP Per Capita, 2015-2025
Figure 22: Brunei GDP, Current Prices (In US$ Billions), 2015-2025
Figure 23: Brunei Exports of goods and services, current prices (LCU Billion), 2005- 2014
Figure 24: Brunei Imports of goods and services, current prices (LCU Billion), 2005-2014
Figure 25: Brunei Gross National Disposable Income (US$ Billion), 2010-2013
Figure 26: Local Currency Unit per US$- Exchange Rate, 2015-2024
Figure 27: Brunei Goods Exports as a percentage of GDP, 2005-2009
Figure 28: Brunei Goods Imports as a percentage of GDP, 2005-2009
Figure 29: Brunei Service Imports as a percentage of GDP, 2005-2009
Figure 30: Brunei Service Exports as % of GDP, 2005-2009
Figure 31: Brunei Foreign direct investment, net (BoP, current US$ Bn), 2005-2009
Figure 32: Brunei Net foreign direct investment as % of GDP, 2005-2009
Figure 33: Brunei Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014

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