Future of the Qatari Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019

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Future of the Qatari Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019

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Product Synopsis

This report is the result of SDI's extensive market and company research covering the Qatari defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

Introduction and Landscape

Why was the report written?
The Future of the Qatari Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Qatari defense industry.

What is the current market landscape and what is changing?
Being one of the most attractive markets in the Middle East due to its robust financial position and aggressive procurement strategies, Qatar is closing its gap with historical regional strongholds such as Saudi Arabia and UAE. For the moment, the country's procurements are focused on missile defense systems and associated radars, a trend that is being witnessed throughout the Middle East. With a collective expenditure of over US$13 billion, the primary reason for such expenditure is the need to build up defense against Iranian ballistic missiles and long-range rockets. Qatari defense expenditure stands at US$3 billion in 2014 and is estimated to increase at a strong CAGR of 16.48% to reach US$6.4 billion by 2019. Qatari defense expenditure is primarily driven by participating in peacekeeping initiatives, the upgrade of military equipment such as Terminal High Altitude Defense Systems(THAADS) and PAC missile defense systems, multi-mission and attack helicopters, fighter aircraft main battle tanks and the procurement of advanced technology equipment. The country's cumulative expenditure on the procurement of advanced military hardware is projected to be US$5.0 billion over the next five years. With an underdeveloped domestic defense sector, the country is reliant on foreign manufacturers and this will provide numerous opportunities for suppliers and OEMs to access the Qatari market. The country's defense industry is expected to focus its expenditure on Main Battle Tanks (MBTs), artillery systems, missile defense systems, radar systems, utility helicopters, training and fighter aircraft, and night-vision goggles.

What are the key drivers behind recent market changes?
Arms race in the Middle East and strong cash reserves

What makes this report unique and essential to read?
The Future of the Qatari Defense Industry - Market Attractiveness, Competitive Landscape, and Forecasts to 2019provides detailed analysis of the current industry size and growth expectations from 2015 to 2019, 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 2015 to 2019, 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 Qatari 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 Qatar. 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

With its small territory and narrow population base, Qatar relies primarily on external cooperation and support for its security. Since 2009, there has been a shift in the country's procurement strategy towards the use of US made weapons, with 87% of defense imports coming from companies based in the US. The acquisition of attack and transport helicopters and other weapons systems, including air defense and missile defense, points to the country's increasing reliance on US made systems. Furthermore, the Defense Cooperation Agreement signed by both countries in 2013 will allow US military troops to operate at Qatar's Al Udeid Air Base through at least 2024. Qatar also imports from Italy and France and efforts are set to continue in the forecast period so as to reduce dependency from a single nation. However, during the forecast period, the country will largely depend on the US for its military equipment procurements and support services.

Foreign investors may be deterred from entering the Saudi Arabian defense market because of a scarcity of skilled labor, induced by the lack of industrial capabilities within the country. Moreover, the country's labor market is anticipated to feel the pressure created by neighboring countries such as the UAE, Oman and Saudi Arabia, who are set to launch large development projects and are offering better pay scales to skilled and semi-skilled laborers.

Key Highlights

One of the major factors driving Qatari military expenditure is the sheer meteoric rise in the country's GDP over the past four decades, with growth of 18.8% in 2011 according to the World Bank. While growth is projected to slow in the next few years, largely due to a slowdown in the global petroleum markets, GDP is still estimated to grow between 5% and 6%. The volume of the country's cash reserves can be gauged by the fact that Greece, Italy, Malaysia, Egypt and other Arab Spring countries have been among the recipients of Qatari aid over the last few years and this comes at a time when most of the developed world is reeling from the after effects of the economic slowdown. A country's defense expenditure is often intrinsically related to its economic health and the robust growth of Qatar's defense expenditure further highlights this relationship. Its defense budget more than doubled in 2013 compared to 2011 and is expected to double again in 2015 to value US$3.5 billion. The majority of expenditure has been directed towards the missile defense segment with the purchases of the PATRIOT missile systems and THAAD systems, at US$9.9 billion and US$6.5 billion respectively. Despite the high value of the contracts, the increase in expenditure is only a reflection of Qatar's continuing national growth and a new-found ability to afford a comprehensive purchase of the systems to fulfill a relevant national security requirement. Additionally, they don't have to follow the usual defense procurement policy of making incremental purchases but can eliminate the entire requirement at once. With the country's cash reserves only expected to get a boost in the coming years thanks to robust energy, manufacturing and construction sectors, defense expenditure is also expected to witness a strong increase.

Maritime Security: The Qatari Ministry of Interior has overall responsibility for public security and law and order. The country has the world's third largest natural gas reserve, which is the primary contributor to its economy; therefore it plans to enhance its maritime security to protect its infrastructure. Furthermore, the government plans to set up a new port facility outside the capital city of Doha for its Maritime security providing landing to its naval vessels and it will also be used for commercial purposes. The Gulf countries have also enhanced efforts to protect territorial waters due to the tensions with Iran and threats from Al-Qaeda. Qatar's offshore oil exploration infrastructure is threatened by various militant groups and therefore it has increased its surveillance and procured radars systems to detect insurgents and drug peddlers. The country is expected to create market opportunities for access control, surveillance, information technology security, and command, control, communications and intelligence (C3I) markets during the forecast period.

Qatari defense imports started to gain momentum from 2009 onwards due to the country's growing defense expenditure and modernization strategy. Qatar spent robustly on defense imports during 2008-2012, apart from 2010 due to the economic slowdown, and is anticipated to grow its imports in the future. Qatari aircraft imports account for almost 96.8% of its total arms procurements, and involves the import of utility helicopters and training aircraft, and also plans to procure advanced fighter jets. Moreover, the government is increasing efforts to modernize its air defense missile systems and is currently contracting with US partners in this regard. During 2010-2014, defense imports from the US, the largest importer in the region, stood at US$86.7 million.
1 Introduction
1.1 What is this Report About?
1.2 Definitions
1.3 Summary Methodology
1.4 SDI Terrorism Index
1.5 About Strategic Defence Intelligence
2 Executive Summary
3 Market Attractiveness and Emerging Opportunities
3.1 Defense Market Size Historical and Forecast
3.1.1 Qatari defense budget to grow at a CAGR of 12.43% during 2010-2014
3.1.2 Arms race in the Middle East and strong cash reserves are the main factors driving Qatari defense expenditure
3.2 Analysis of Defense Budget Allocation
3.2.1 Procurement of advanced equipment to drive capital expenditure allocation during the forecast period
3.2.2 Defense expenditure as a percentage of GDP to increase during the forecast period
3.3 Homeland Security Market Size and Forecast
3.3.1 Homeland security expenditure (HLS) in Qatar is mainly driven by Maritime Security, Soccer World Cup 2022, and Cyber-security
3.3.2 Qatar considered a some risk country for terror activities
3.3.3 Qatar faces minimal threat from terrorists
3.4 Benchmarking with Key Global Markets
3.4.1 Qatari defense budget expected to register rapid growth over the period 2015-2019
3.4.2 Qatari defense expenditure is small compared to the leading spenders
3.4.3 Qatar spent over 1.4% of its GDP on defense in 2014
3.4.4 Qatar faces "some risk" by acts of terrorism
3.5 Market Opportunities: Key Trends and Drivers
3.5.1 Missile Defense Systems
3.5.2 Fighters and Multi-Role Aircraft
3.5.3 Attack Helicopters
3.5.4 Multi-Mission Helicopters
4 Defense Procurement Market Dynamics
4.1 Import Market Dynamics
4.1.1 Defense imports are expected to increase during the forecast period
4.1.2 US to continue to be major arms suppliers to Qatar
4.1.3 Aircraft and missiles constitute the majority of Qatari arms imports
4.2 Export Market Dynamics
4.2.1 Qatari defense exports market is negligible
5 Industry Dynamics
5.1.1 Bargaining power of supplier: medium to high
5.1.2 Bargaining power of buyer: medium to high
5.1.3 Barrier to entry: medium
5.1.4 Intensity of rivalry: low to medium
5.1.5 Threat of substitution: medium to high
6 Market Entry Strategy
6.1 Market Regulation
6.1.1 Undisclosed FDI policy relating to defense
6.1.2 Qatar has undisclosed offset policy
6.2 Market Entry Route
6.2.1 Historical evidence points to Foreign Military Sale (FMS) being the preferred entry route
6.2.2 Gulf Cooperation Council (GCC) to form joint Military Command which could be an alternative entry route for foreign OEMs
6.2.3 Cooperative agreement and military collaborations an easier way to access the Qatari defense market
6.3 Key Challenges
6.3.1 US domination of the Qatari defense market reduces opportunities for other foreign manufacturers
6.3.2 Scarcity of skilled labor
7 Competitive Landscape and Strategic Insights
7.1 Competitive Landscape Overview
7.2 Key Foreign Companies
7.2.1 Lockheed Martin: overview
7.2.2 Lockheed Martin: products and services
7.2.3 Lockheed Martin: recent announcements and strategic initiatives
7.2.4 Lockheed Martin: alliances
7.2.5 Lockheed Martin: recent contract wins
7.2.6 Sikorsky: overview
7.2.7 Sikorsky: products and services
7.2.8 Sikorsky: recent announcements and strategic initiatives
7.2.9 Sikorsky: alliances
7.2.10 Sikorsky: recent contract wins
7.2.11 Raytheon: overview
7.2.12 Raytheon: products and services
7.2.13 Raytheon: recent announcements and strategic initiatives
7.2.14 Raytheon: alliances
7.2.15 Raytheon: recent contract wins
7.2.16 Pilatus Aircraft Limited: Overview
7.2.17 Pilatus Aircraft Limited: Products and services
7.2.18 Pilatus Aircraft Limited: Recent announcements and strategic initiatives
7.2.19 Pilatus Aircraft Limited: Alliances
7.2.20 Pilatus Aircraft Limited: Recent contract wins
7.2.21 Pilatus Aircraft Limited: Financial analysis
8 Business Environment and Country Risk
8.1 Demographics
8.1.1 Total Rural population
8.1.2 Total urban population
8.2 Economic Performance
8.2.1 GDP per capita at constant prices
8.2.2 GDP at current prices (US$ Billion)
8.2.3 Exports of goods and services (current US$ bn)
8.2.4 Imports of goods and services (current US$ bn)
8.2.5 Gross national disposable income (US$ billion)
8.2.6 Manufacturing output (US$ bn)
8.2.7 Consumer price index
8.2.8 Market capitalization of listed companies (US$ bn)
8.2.9 Market capitalization of listed companies (% of GDP)
8.2.10 International reserves, including gold (US$ billion)
8.3 Energy and utilities
8.3.1 Total Conventional Thermal Electricity Net Generation (Billion kWh)
8.3.2 Total Conventional Thermal Electricity Installed Capacity (Million kW)
8.3.3 Total Petroleum Consumption (Thousand Barrels Per Day)
8.3.4 Total Proven Reserves of Natural Gas
8.4 Infrastructure Quality and Availability
8.4.1 Air transport, freight (million ton-km)
8.5 Mineral
8.5.1 Mining, Manufacturing, Utilities Output (US$ billion)
8.6 Technology
8.6.1 Research and development expenditure (LCU thousands)
8.7 Telecommunication
8.7.1 Telephone lines (in mn)
8.7.2 Telephone lines Penetration Rate (per 100 people)
9 Appendix
9.1 About SDI
9.2 Disclaimer

List of Tables

Table 1: Qatari Defense Expenditure (US$ Billion), 2010-2014
Table 2: Qatari Defense Expenditure, 2015-2019
Table 3: Qatari Defense Expenditure (in QAR Billion), 2010-2014
Table 4: Qatari Defense Expenditure (in QAR Billion), 2015-2019
Table 5: Qatari Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014
Table 6: Qatari Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2019
Table 7: Qatari GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2010-2014
Table 8: Qatari GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2015-2019
Table 9: Benchmarking with Key Markets, 2010-2014 vs. 2015-2019
Table10: SDI Terrorism Index
Table 11: Lockheed Martin - product focus
Table 12: Lockheed Martin - Alliances
Table 13: Lockheed Martin - Recent Contract Wins
Table 14: Sikorsky: Alliances
Table 15: Sikorsky: Recent Contract Wins
Table 16: Raytheon - Product Focus
Table 17: Raytheon - Alliances
Table 18: Raytheon - Recent Contract Wins
Table 19: Pilatus Aircraft Limited - Alliances
Table 20: Pilatus Aircraft Limited - Recent Contract Wins

List of Figures

Figure 1: Qatari Defense Expenditure, 2010-2014
Figure 2: Qatari Defense Expenditure, 2015-2019
Figure 3: Qatari Defense Expenditure (in QAR Billion), 2010-2014
Figure 4: Qatari Defense Expenditure (in QAR Billion), 2015-2019
Figure 5: Qatari Defense Budget Split Between Capital and Revenue Expenditure (%), 2010-2014
Figure 6: Qatari Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2019
Figure 7: Qatari GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2010-2014
Figure 8: Qatari GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2015-2019
Figure 9: SDI Terrorism Heat Map, 2014
Figure 10: SDI Terrorism Index, 2014
Figure 11: Benchmarking with Key Markets, 2010-2014 vs. 2015-2019
Figure 12: Benchmarking with World's Largest Defense Spenders (US$ Billion), 2014 and 2019
Figure 13: Benchmarking with Large Defense Spenders as % of GDP - 2014
Figure 14: Missile Defense Systems (US$ Million), 2014-2024
Figure 15: Multi-role Aircraft (US$ Million), 2014-2024
Figure 16: Attack Helicopters (US$ Million), 2014-2024
Figure 17: Multi-mission Helicopter (US$ Million), 2014-2024
Figure 18: Qatari Defense Imports (US$ million), 2008-2012
Figure 19: Qatari Defense Imports by Country (%), 2008-2012
Figure 20: Qatari Defense Imports by Category, 2008-2012
Figure 21: Industry Dynamics - Porter's Five Forces Analysis
Figure 22: Pilatus Aircraft Limited - Revenue Trend Analysis (CHF million), 2008-2012
Figure 23: Qatari Rural population (In million), 2010-2019
Figure 24: Qatari Urban population (In million), 2010-2019
Figure 25: Qatari GDP Per Capita at Constant Prices (US$), 2010-2019
Figure 26: Qatari GDP at Current Prices (US$ Billion), 2010-2019
Figure 27: Qatari Exports of goods and services (US$), 2002-2011
Figure 28: Qatari Imports of goods and services (US$), 2002-2011
Figure 29: Qatari Gross national disposable income (US$ billion), 2002-2011
Figure 30: Qatari Manufacturing output (US$ Billion), 2002-2011
Figure 31: Qatari Consumer price index, 2009-2018
Figure 32: Qatari market capitalization of listed companies (US$ billion), 2003-2012
Figure 33: Qatari market capitalization of listed companies (% of GDP), 2002-2011
Figure 34: Qatari International reserves, including gold (US$ billion), 2002-2011
Figure 35: Qatari Total Conventional Thermal Electricity Net Generation (Billion Kilowatt hours), 2002-2011
Figure 36: Qatari Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001-2010
Figure 37: Qatari Total Petroleum Consumption (Thousand Barrels Per Day), 2003-2012
Figure 38: Total Proved Reserves of Natural Gas(Trillion Cubic Feet), 2004-2013
Figure 39: Qatari Air transport, freight (million ton-km), 2002-2011
Figure 40: Qatari Mining, Manufacturing, Utilities Output (US$ billion), 2002-2011
Figure 41: Qatari RandD expenditure (LCU thousands), 2000-2008
Figure 42: Qatari Telephone lines, 2003-2012
Figure 43: Qatari Telephone lines Penetration Rate (per 100 people), 2003-2012