Future of the Indonesian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 8

• 1.1. What is this Report About? 8
• 1.2. Definitions 8
• 1.3. Summary Methodology 10
• 1.4. About GlobalData 12

2. Executive Summary 13

3. Market Attractiveness and Emerging Opportunities 15

• 3.1. Current Market Scenario 16
  • 3.1.1. Primary threat perception 16
  • 3.1.2. Military Doctrine & Strategy 17
  • 3.1.3. Military Fleet Size 19
  • 3.1.4. Procurement Programs 26
  • 3.1.5. Top Procurement Programs by Value (US$ Million) 2018-2023 28
  • 3.1.6. Social, Political and Economic Environment & Support for Defense Projects 29
  • 3.1.7. Political & Strategic Alliances 30
• 3.2. Defense Market Size Historical and Forecast 31
  • 3.2.1. Indonesian defense budget is expected to reach US$11.1 billion by 2023, at a CAGR of 6.52% 31
  • 3.2.2. Defense expenditure is driven by the modernization of the armed forces, indigenization, territorial disputes, and natural disasters 33
  • 3.2.3. Defense budget as a percentage of GDP expected to increase over the forecast period 36
• 3.3. Analysis of Defense Budget Allocation 38
  • 3.3.1. Capital expenditure share of defense budget is expected to increase to an average of 34.5% over the forecast period 38
  • 3.3.2. Capital expenditure to increase over the forecast period 40
  • 3.3.3. Per capita defense expenditure expected to increase during the forecast period 42
• 3.4. Homeland Security Market Size and Forecast 43
  • 3.4.1. Homeland security expenditure is expected to grow at a CAGR of 8.28% during the forecast period 43
  • 3.4.2. Border Security and Terrorism will drive the homeland security market over the forecast period 45
  • 3.4.3. Indonesia is considered as ‘highly affected’ by terrorism 46
  • 3.4.4. Indonesia faces high level of threat from foreign terrorist organizations 47
  • 3.4.5. Indonesia has a terrorism index score of 4.6 49
• 3.5. Benchmarking with Key Global Markets 50
  • 3.5.1. Indonesia’s defense budget expected to register rapid growth over the forecast period 50
  • 3.5.2. Indonesian defense expenditure is relatively small compared to other Asian countries 52
  • 3.5.3. The Indonesian defense budget as a percentage of GDP is expected to slightly decrease during 2019-2023 53
• 3.6. Market Opportunities: Key Trends and Growth Stimulators 54
  • 3.6.1. Top Defense Sectors by Value (US$ Million)-Projection over 2018-2023 54
  • 3.6.2. Military Infrastructure and Logistics 55
  • 3.6.3. C4SIR-Land Based 56
  • 3.6.4. Maritime and Border Security - Maritime surveillance and detection 57

4. Defense Procurement Market Dynamics 58

• 4.1. Import Market Dynamics 59
  • 4.1.1. Defense imports expected to increase during forecast period 59
  • 4.1.2. Indonesia plans to diversify arms imports 60
  • 4.1.3. Aircraft and ships constitute the majority of Indonesian defense imports 61
• 4.2. Export Market Dynamics 62
  • 4.2.1. Indonesia does not possess significant defense export capability 62

5. Industry Dynamics 63

• 5.1. Five Forces Analysis 63
  • 5.1.1. Bargaining power of supplier: Low 64
  • 5.1.2. Bargaining power of Buyer: Medium 64
  • 5.1.3. Barrier to entry: Medium 64
  • 5.1.4. Intensity of rivalry: Low 64
  • 5.1.5. Threat of Substitution: High 64

6. Market Entry Strategy 65

• 6.1. Market Regulation 65
  • 6.1.1. Defense investment policy conducive to both domestic and foreign investment 65
  • 6.1.2. New procurement policy to support small and medium enterprises 66
  • 6.1.3. Indonesia to launch formal offset policy 66
• 6.2. Market Entry Route 67
  • 6.2.1. Budget Process 67
  • 6.2.2. Procurement Policy & Process 68
  • 6.2.3. Foreign defense suppliers enter the Indonesian defense market primarily through joint ventures 68
  • 6.2.4. Strategic partnerships and military collaborations an easier way to access the Indonesian defense market 69
• 6.3. Key Challenges 70
  • 6.3.1. US Sanctions affecting the market 70
  • 6.3.2. Limited budget for capex deters investment 70
  • 6.3.3. Lack of defense infrastructure 70
  • 6.3.4. Corruption impedes the growth of the Indonesian defense industry 70

7. Competitive Landscape and Strategic Insights 71

• 7.1. Competitive landscape Overview 71
• 7.2. Key Public Sector Companies 74
  • 7.2.1. PT Dirgantara Indonesia: overview 74
  • 7.2.2. PT Dirgantara Indonesia: Major Products and Services 74
  • 7.2.3. PT Dirgantara Indonesia: recent announcements and strategic initiatives 74
  • 7.2.4. PT Dirgantara Indonesia: alliances 76
  • 7.2.5. PT Dirgantara Indonesia: recent contract wins 77
  • 7.2.6. PAL Indonesia: overview 79
  • 7.2.7. PAL Indonesia: Major Products 79
  • 7.2.8. PAL Indonesia: recent announcements and strategic initiatives 79
  • 7.2.9. PAL Indonesia: Alliances 80
  • 7.2.10. PAL Indonesia: Recent Contract Wins 80
  • 7.2.11. PT Pindad: overview 81
  • 7.2.12. PT Pindad: Major Products 81
  • 7.2.13. PT Pindad: recent announcements and strategic initiatives 82
  • 7.2.14. PT Pindad: alliances 83
  • 7.2.15. PT Pindad: Recent Contract Wins 83
  • 7.2.16. Dok & Perkapalan: overview 84
  • 7.2.17. Dok & Perkapalan: Major Products 84
  • 7.2.18. Dok & Perkapalan: recent announcements and strategic initiatives 84
  • 7.2.19. Dok & Perkapalan: alliances 85
  • 7.2.20. Dok & Perkapalan: Recent Contract Wins 85
• 7.3. Key Private Sector Companies 86
  • 7.3.1. PT Dahana: overview 86
  • 7.3.2. PT Dahana: products 86
  • 7.3.3. PT Dahana: recent announcements and strategic initiatives 86
  • 7.3.4. PT Dahana: alliances 87
  • 7.3.5. PT Dahana: recent contract wins 87
  • 7.3.6. PT Multiintegra: overview 88
  • 7.3.7. PT Multiintegra: products 88
  • 7.3.8. PT Multiintegra: recent announcements and strategic initiatives 89
  • 7.3.9. PT Multiintegra: recent contract wins 89
  • 7.3.10. Radar and Communications Systems: overview 90
  • 7.3.11. Radar and Communications Systems: products 90
  • 7.3.12. Radar and Communications Systems: recent announcements and strategic initiatives. 90
  • 7.3.13. Radar and Communications Systems: alliances 91
  • 7.3.14. PT SOG Indonesia: overview 92
  • 7.3.15. PT SOG Indonesia: products and services 92
  • 7.3.16. PT SOG Indonesia: recent announcements and strategic initiatives 92
  • 7.3.17. PT SOG Indonesia: alliances 93

8. Business Environment and Country Risk 94

• 8.1. Economic Performance 94
  • 8.1.1. GDP Per Capita 94
  • 8.1.2. GDP, Current Prices 95
  • 8.1.3. Exports of goods and services, current prices 96
  • 8.1.4. Imports of goods and services, current prices 97
  • 8.1.5. Gross National disposable income (US$ Bn) 98
  • 8.1.6. Local Currency Unit per US Dollar 99
  • 8.1.7. Market Capitalization of Listed Companies 100
  • 8.1.8. Market Capitalization of Listed Companies (% of GDP) 101
  • 8.1.9. Government Cash Surplus/Deficit as % of GDP 102
  • 8.1.10. Goods exports as % of GDP 103
  • 8.1.11. Goods imports as % of GDP 104
  • 8.1.12. Service Imports as % of GDP 105
  • 8.1.13. Service Exports as % of GDP 106
  • 8.1.14. Foreign Direct Investment (US$ Billion) 107
  • 8.1.15. Net foreign direct investment as % of GDP 108
  • 8.1.16. Mining, Manufacturing, Utilities Output (LCU Tn) 109

9. Appendix 110

• 9.1. About GlobalData 110