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

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


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Executive Summary

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

 

Summary

 

The Future of the Colombian Defense Industry-Market Attractiveness, Competitive Landscape and Forecasts to 2023, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

 

Synopsis

 

This report offers detailed analysis of the Colombian 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, it provides an in-depth analysis of the following-

- The Colombian defense industry market size and drivers: detailed analysis of the Colombian defense industry during 2019-2023, 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 with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country

- Porter's Five Force analysis of the Colombian 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 the Colombian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

 

Scope

 

- The Colombian defense industry is expected to register steady growth over the next five years due to the rise of both external and internal security threats, along with the stabilization of the economy. Valued at USD 11.1 billion in 2018.

- During the historic period, Colombia allocated an average of 4.6% of its total defense budget to capital expenditure and the remaining 95.4% for revenue expenses. The share of capital expenditure is expected to decrease to an average of 3.3% of the country's defense budget over the forecast period, with the remaining 96.7% being allocated to operating expenditure or revenue expenditure.

- The MoD is expected to invest in Land-based physical security of critical infrastructure, frigates and land based C4ISR.

 

Reasons to buy

 

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Colombian 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 the Colombian defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts



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Table of Contents

1. Introduction 7

1.1. What is this Report About? 7

1.2. Definitions 7

1.3. Summary Methodology 9

1.4. About Strategic Defence Intelligence 10

2. Executive Summary 11

3. Market Attractiveness and Emerging Opportunities 13

3.1. Current Market Scenario 14

3.1.1. Primary Threat Perception 14

3.1.2. Military Doctrine and Strategy 15

3.1.3. Military Fleet Size 17

3.1.4. Procurement Programs 22

3.1.5. Social, Political and Economic Environment and Support for Defense Projects 24

3.1.6. Political and Strategic Alliances 25

3.2. Defense Market Size Historical and Forecast 26

3.2.1. Colombian aggregate defense expenditure, inclusive of US military aid, is anticipated to post a CAGR of 5.61% over the forecast period 26

3.2.2. Colombian defense expenditure expected to reach USD 15 billion by 2023 29

3.2.3. Internal threats from rebel groups, a strained relationship with Venezuela, and the development of the domestic industry are set to drive defense expenditure 31

3.2.4. Defense expenditure as a percentage of GDP expected to be 3.5% by 2023 33

3.3. Analysis of Defense Budget Allocation 35

3.3.1. Majority of defense budget to be allocated to revenue expenditure 35

3.3.2. Colombian to cumulatively allocate USD 2.2 billion towards defense capital expenditure (excluding US aid) over the forecast period 37

3.3.3. Per capita defense expenditure to increase over the forecast period 39

3.4. Homeland Security Market Size and Forecast 41

3.4.1. Homeland security expenditure is expected to increase at a CAGR of 4.37% over the forecast period 41

3.4.2. High levels of crime and drug trafficking to increase homeland security expenditure 43

3.4.3. Terrorism Index rates indicate that Colombia is a highly affected region 44

3.4.4. Colombia scores 5.6 on the Terrorism Index 45

3.4.5. Colombia faces a moderate threat from foreign terrorist organizations 46

3.5. Benchmarking with Key Global Markets 48

3.5.1. Colombian defense expenditure is forecast to grow faster than many of the world's largest global defense budgets 48

3.5.2. Colombian defense expenditure is one of the highest in South America 50

3.5.3. Colombia spends 3.4% of its GDP on defense 51

3.6. Market Opportunities: Key Trends and Drivers 52

3.6.1. Top 10 Defense Sectors by Value (USD Million)-Projections over 2018-2023 52

3.6.2. Critical Infrastructure Protection (CIP)-Physical Security 53

3.6.3. Naval Vessels-Frigates 54

3.6.4. Land-Based C4ISR 55

4. Defense Procurement Market Dynamics 56

4.1. Import Market Dynamics 58

4.1.1. Defense imports have grown significantly over the last five years 58

4.1.2. US and Germany continue to be major arms suppliers 59

4.1.3. Aircraft account for the largest share of defense imports 60

4.2. Export Market Dynamics 61

4.2.1. Colombia is not a major defense exporting country 61

5. Industry Dynamics 62

5.1. Five Forces Analysis 62

5.1.1. Bargaining power of the supplier: low to medium 63

5.1.2. Bargaining power of the Buyer: high to medium 63

5.1.3. Barrier to entry: medium to high 63

5.1.4. Intensity of rivalry: low 63

5.1.5. Threat of Substitution: medium 63

6. Market Entry Strategy 64

6.1. Market Regulation 64

6.1.1. Offset guidelines are channeled to benefit industrial and social sectors 64

6.1.2. FDI in the defense sector is closed 65

6.2. Market Entry Route 66

6.2.1. Direct selling is the preferred market entry route for foreign OEMs 66

6.3. Key Challenges 67

6.3.1. Corruption, bribery, and influence of anti-state elements damages the credibility of the military 67

6.3.2. Low capital expenditure discourages both foreign and domestic firms 67

7. Competitive landscape and Strategic Insights 68

7.1. Competitive landscape Overview 68

7.2. Key Public Sector Companies 70

7.2.1. Industria Militar: Overview 70

7.2.2. Industria Militar: Major Products 70

7.2.3. Industria Militar: Recent Announcements and Strategic Initiatives 72

7.2.4. Industria Militar: Alliances 72

7.2.5. Industria Militar: Recent Contract Wins 72

7.3. Key Domestic and Foreign Private Sector Companies 73

7.3.1. Sudamin Aeronautica y Defensa S.A.: Overview 73

7.3.2. Sudamin Aeronautica y Defensa S.A.: Major Products and Services 73

7.3.3. Sudamin Aeronautica y Defensa S.A.: Recent Announcements and Strategic Initiatives 75

7.3.4. Sudamin Aeronautica y Defensa S.A.: Alliances 75

7.3.5. Cotecmar: Overview 76

7.3.6. Cotecmar: Major Products and Services 76

7.3.7. Cotecmar: Recent Announcements and Strategic Initiatives 77

7.3.8. Cotecmar: Alliances 78

7.3.9. Cotecmar: Recent Contract Wins 78

7.3.10. Bell: Overview 79

7.3.11. Bell : Defense Products and Services 79

7.3.12. Bell: Recent Announcements and Strategic Initiatives 79

7.3.13. Bell: Alliancess 80

7.3.14. Bell: Recent Contract Wins 81

8. Business Environment and Country Risk 83

8.1. Economic Performance 83

8.1.1. GDP Per Capita (In USD ) 83

8.1.2. GDP, Current Prices (USD Billion) 84

8.1.3. Exports of Goods and Services, Current Prices (LCU Billion) 85

8.1.4. Imports of Goods and Services, Current Prices (LCU Billion) 86

8.1.5. Gross National Disposable Income 87

8.1.6. Local Currency Unit Per USD (period average) 88

8.1.7. Market Capitalization of Listed Companies (USD Billion) 89

8.1.8. Market Capitalization of Listed Companies (% of GDP) 90

8.1.9. Government Cash Surplus/ Deficit as % of GDP (LCU) 91

8.1.10. Goods Exports as a Percentage of GDP 92

8.1.11. Goods Imports as Percentage of GDP 93

8.1.12. Services Imports as a Percentage of GDP 94

8.1.13. Services Exports as a Percentage of GDP 95

8.1.14. Foreign Direct Investment, net (BoP, current USD Billion) 96

8.1.15. Net Foreign Direct Investment as a Percentage of GDP 97

8.1.16. Mining, Manufacturing, Utilities Output 98

9. Appendix 99

9.1. About SDI 99

9.2. Disclaimer 99

List of Figures

Figure 1: Colombian-US Military Aid (USD Million), 2014-2023 27

Figure 2: Colombian-Defense Expenditure Including US Aid (USD Billion), 2014-2023 27

Figure 3: Colombian-Defense Budget Excluding US Aid (USD Billion) vs Defense Budget Including US Aid (USD Billion), 2014-2023 28

Figure 4: Colombian Defense Expenditure (COP Billion), 2014-2023 30

Figure 5: Colombian Defense Expenditure (USD Billion), 2014-2023 30

Figure 6: Colombian GDP Growth vs. Defense Expenditures Percentage of GDP Growth, 2014-2023 34

Figure 7: Colombian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 36

Figure 8: Colombian-Defense Capital Expenditure, Excluding US Aid (COP Billion), 2014-2023 38

Figure 9: Colombian-Defense Capital Expenditure, Excluding US Aid (USD Million), 2014-2023 38

Figure 10: Colombian -Defense Expenditure as Per Capita Defense Spend (USD ), 2014-2023 40

Figure 11: Colombian Homeland Security Expenditure (COP Billion),2014-2023 42

Figure 12: Colombian Homeland Security Expenditure (USD Billion), 2014-2023 42

Figure 13: Terrorism Heat Map, 2018 44

Figure 14: Terrorism Index, 2018 45

Figure 15: Benchmarking with Key Markets-2014-2018 vs. 2019-2023 49

Figure 16: Defense Expenditure of the World's Largest Military Spenders (USD Billion), 2018 and 2023 50

Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 51

Figure 18: Colombia's Fighters and Multi-Role Aircraft Market Size (USD Million), 2018-2023 53

Figure 19: Colombia's Naval Vessels-Frigates Market Size (USD Million), 2018-2023 54

Figure 20: Colombia's Land-based C4ISR Market Size (USD Million), 2018-2023 55

Figure 21: Top Colombian Defense Procurements in Terms of Supplier Relationships 57

Figure 22: Colombian Defense Import TIV Value (USD Million), 2013-2017 58

Figure 23: Colombian Defense Imports by Country (%), 2013-2017 59

Figure 24: Colombian Defense Imports by Category (%), 2013-2017 60

Figure 25: Industry Dynamics-Porter's Five Forces Analysis 62

Figure 26: Colombian GDP Per Capita, 2015-2025 83

Figure 27: Colombian GDP at Current Prices (USD Billion), 2015-2025 84

Figure 28: Colombian Exports of Goods and Services, Current Prices (LCU Billion), 2005-2014 85

Figure 29: Colombian Imports of Goods and Services, Current Prices (LCU Billion), 2003-2012 86

Figure 30: Colombian Gross National Disposable Income (USD Billion), 2005-2013 87

Figure 31: Colombian Local Currency Unit Per USD (period average), 2015-2024 88

Figure 32: Market Capitalization of Listed Companies in Colombia (USD Billion), 2005-2012 89

Figure 33: Market Capitalization of Listed Companies in Colombia (% of GDP), 2005-2012 90

Figure 34: Government Cash Surplus/ Deficit as % of GDP (LCU), 2008-2012 91

Figure 35: Colombian Goods Exports as Percentage of GDP, 2005-2014 92

Figure 36: Colombian Goods Imports as Percentage of GDP, 2005-2014 93

Figure 37: Colombian Services Imports as Percentage of GDP, 2005-2014 94

Figure 38: Colombian Services Exports as a Percentage of GDP, 2005-2014 95

Figure 39: Colombian Foreign Direct Investment, net (BoP, current USD Billion), 2005-2014 96

Figure 40: Colombian Net Foreign Direct Investment as a Percentage of GDP, 2005-2014 97

Figure 41: Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 98

List of Tables

Table 1: Colombian-Army Strength 17

Table 2: Colombian-Air Force Strength 19

Table 3: Colombian-Navy Strength 20

Table 4: Colombian-Ongoing Development and Procurement Programs, 2018 22

Table 5: Colombian-Future Procurement Programs, 2018 22

Table 6: Colombian Top Defense Procurement Programs by Value (USD Million), 2018-2023 23

Table 7: Colombian-Defense Expenditure Including US Aid, 2014-2023 26

Table 8: Colombian-Defense Expenditure (COP Billion & USD Billion), 2014-2023 29

Table 9: Colombian GDP Growth vs Defense Expenditure as a Percentage of GDP, 2014-2023 33

Table 10: Colombian-Defense Budget Allocation for Capital and Revenue Expenditure (%), 2014-2023 35

Table 11: Colombian-Defense Capital Expenditure, Excluding US Aid (COP Billion & USD Billion), 2014-2023 37

Table 12: Colombian-Defense Expenditure as Per Capita Defense Spend (USD ), 2014-2023 39

Table 13: Colombian Homeland Security Expenditure (COP Billion & USD Billion), 2014-2023 41

Table 14: Terrorism Index, 2018 46

Table 15: Benchmarking with Key Markets-2014-2018 vs. 2019-2023 48

Table 16: Top Columbian Defense Sectors by Value (USD Million), 2018-2023 52

Table 17: Offset Regulations in Colombia 65

Table 18: Competitive Landscape of the Colombian Defense Industry 68

Table 19: Top Defense Suppliers in the Colombian Defense Industry-By Value (USD Million) 2018-2023 69

Table 20: Industria Militar-Major Products 70

Table 21: Industria Militar-Alliances 72

Table 22: Industria Militar-Recent Contract Wins 72

Table 23: Sudamin Aeronautica y Defensa S.A.-Major Products and Services 73

Table 24: Sudamin Aeronautica y Defensa S.A.-Alliances 75

Table 25: Cotecmar-Major Products and Services 76

Table 26: Cotecmar-Alliances 78

Table 27: Cotecmar-Recent Contract Wins 78

Table 28: Bell-Product Focus 79

Table 29: Bell-Alliances 80

Table 30: Bell-Recent Contract Wins 81

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