Future of the Bangladeshi Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2023

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 Defense 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 & Strategy 16

3.1.3. Military Fleet Size 17

3.1.4. Procurement Programs 21

3.1.5. Top Procurement Programs by Value (US$ Million) 2018-2023 23

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

3.1.7. Political and Strategic Alliances 25

3.2. Defense Market Size Historical and Forecast 26

3.2.1. The Bangladeshi defense budget is anticipated to grow at a CAGR of

11.60% 26

3.2.2. Military modernization and peacekeeping missions are anticipated to drive defense expenditure over the forecast period 28

3.2.3. Bangladeshi defense expenditure as a percentage of GDP set to increase over the forecast period 29

3.3. Analysis of Defense Budget Allocation 31

3.3.1. Capital expenditure allocation is expected to increase slightly over the forecast period 31

3.3.2. Need to replace obsolete equipment to drive defense capital expenditure 33

3.3.3. Army Defense accounted for the largest percentage share of the overall defense budget 35

3.3.4. Army to account for the majority share of Bangladesh’s defense budget 37

3.3.5. Per capita defense expenditure expected to increase over the forecast period 41

3.4. Homeland Security Market Size and Forecast 42

3.4.1. Bangladeshi homeland security expenditure is anticipated to grow at a CAGR of

8.44% over the forecast period 42

3.4.2. Measures to combat drug smuggling and human trafficking are expected to drive Bangladeshi homeland security expenditure 44

3.4.3. Bangladesh falls under the “highly affected” category 46

3.4.4. Bangladesh is “highly affected” by acts of terrorism 47

3.4.5. Bangladesh has a terrorism index score of “6.2” 49

3.5. Benchmarking with Key Global Markets 50

3.5.1. Bangladeshi defense budget expected to increase at a CAGR of

11.60% over the forecast period 50

3.5.2. Bangladeshi military expenditure remains very low compared to other Asian countries 52

3.5.3. The country allocates a low percentage of its GDP towards the defense sector 53

3.6. Market Opportunities: Key Trends and Growth Stimulators 54

3.6.1. Top 10 Defense Market Categories by Value (US$ million) – Forecast-Period Projections 54

3.6.2. Maritime surveillance and detection 55

3.6.3. Corvettes MRO 56

3.6.4. Multi-role aircraft 57

4. Defense Procurement Market Dynamics 58

4.1. Import Market Dynamics 60

4.1.1. Defense imports are expected to increase over the forecast period 60

4.1.2. Weapons manufactured in China comprised the majority of imports to Bangladesh 61

4.1.3. Armored vehicles and ships dominated military hardware imports 62

4.2. Export Market Dynamics 63

4.2.1. The country exported negligible defense goods during 2013-2017 63

5. Industry Dynamics 64

5.1. Five Forces Analysis 64

5.1.1. Bargaining Power of Supplier: High 65

5.1.2. Bargaining Power of Buyer: Low 65

5.1.3. Barrier to Entry: Medium 65

5.1.4. Intensity of Rivalry: Low to Medium 65

5.1.5. Threat of Substitution: Medium to High 65

5.2. Market Regulation 66

5.2.1. Bangladesh does not disclose any offset obligations imposed by the country 66

5.2.2. Foreign direct investment (FDI) in the defense sector not disclosed by the government 66

5.3. Market Entry Route 67

5.3.1. Budgeting Process 67

5.3.2. Equipment manufacturers enter the market through government-to-government deals 68

5.3.3. Joint venture and license manufacturing agreements provide an attractive market entry route 68

5.4. Key Challenges 69

5.4.1. Limited defense budget deters investors from market entry 69

5.4.2. Corruption hinders growth of the Bangladeshi defense sector 69

5.4.3. Chinese companies dominate the market, creating a challenge for other foreign firms 69

6. Competitive Landscape and Strategic Insights 70

6.1. Competitive Landscape Overview 70

6.2. Key Companies 72

6.2.1. Bangladesh Ordnance Factory: Overview 72

6.2.2. Bangladesh Ordnance Factory: Products and Services 72

6.2.3. Bangladesh Machine Tools Factory (BMTF) Ltd: Overview 73

6.2.4. Bangladesh Machine Tools Factory: Products and Services 73

6.2.5. Leonardo: Overview 74

6.2.6. Leonardo: products 74

6.2.7. Leonardo: recent announcements and strategic initiatives 75

6.2.8. Leonardo: alliances 76

6.2.9. Leonardo: recent contract wins 77

6.2.10. Leonardo: financial analysis 80

6.2.11. Airbus Helicopters SAS: Overview 83

6.2.12. Airbus Helicopters SAS: Products and Services 83

6.2.13. Airbus Helicopters SAS: Recent Contract Wins 83

7. Business Environment and Country Risk 84

7.1. Economic Performance 84

7.1.1. Nominal GDP per Capita 84

7.1.2. GDP at Current Prices (US$ Billion) 85

7.1.3. Exports of Goods and Services (Current LCU Billion) 86

7.1.4. Imports of Goods and Services (Current LCU Billion) 87

7.1.5. Gross National Disposable Income (US$ Billion) 88

7.1.6. LCU per US$ (Period Average) 89

7.1.7. Market Capitalization of Listed Companies (US$ Billion) 90

7.1.8. Market Capitalization of Listed Companies (% of GDP) 91

7.1.9. Government Cash Surplus/Deficit as a Percentage of GDP (LCU) 92

7.1.10. Goods Exports as a Percentage of GDP 93

7.1.11. Goods Imports as a Percentage of GDP 94

7.1.12. Services Imports as a Percentage of GDP 95

7.1.13. Service Exports as a Percentage of GDP 96

7.1.14. Foreign Direct Investment, Net (BoP, current US$ Billion) 97

7.1.15. Net Foreign Direct Investment as a Percentage of GDP 98

7.1.16. Mining, Manufacturing, Utilities Output (LCU Billion) 99

8. Appendix 100

8.1. About SDI 100

8.2. Disclaimer 100

List of Tables

Table 1: Bangladeshi Ground Forces Strength 17

Table 2: Bangladesh Navy Strength 19

Table 3: Bangladesh Air Force Strength 20

Table 4: Bangladeshi – Ongoing Development and Procurement Programs 21

Table 5: Bangladesh – Future Procurement Programs 22

Table 6: Bangladesh – Defense Procurement Programs by Value (US$ Million), 2018-2023 23

Table 7: Bangladeshi Defense Expenditure (BDT Billion & US$ Billion), 2014-2023 26

Table 8: Bangladeshi GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2014-2023 29

Table 9: Bangladeshi Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 31

Table 10: Bangladesh Defense Capital Expenditure (BDT Billion & US$ Billion), 2014-2023 33

Table 11: Bangladeshi Defense Budget Split Between Military Services (Army, Air Force, Navy and Others) (%), 2014-2023 35

Table 12: Bangladesh – Defense Budget Breakdown by Service (BDT Billion), 2014-2023 37

Table 13: Bangladesh – Defense Budget Breakdown by Service ( US$ Billion), 2014-2023 39

Table 14: Bangladeshi Per Capita Defense Expenditure (US$), 2014-2023 41

Table 15: Bangladeshi Homeland Security Expenditure (BDT Billion & US$ Billion), 2014-2023 42

Table 16: Terrorism Index, 2018 47

Table 17: Benchmarking with Key Markets – 2014-2018 vs. 2019-2023 50

Table 18: Bangladesh – 10 Leading Defense Market Categories by Value (US$ Million), 2018-2023 54

Table 19: Bangladeshi Budget Formation Timetable 67

Table 20: Bangladesh – Top Defense Suppliers by Value (US$ Million), 2018-2023 70

Table 21: Competitive Landscape of the Bangladeshi Defense Industry 71

Table 22: Bangladesh Ordnance Factory – Key Products and Services 72

Table 23: Bangladesh Machine Tools Factory – Key Products and Services 73

Table 24: Leonardo – Product Focus 74

Table 25: Leonardo – Alliances 76

Table 26: Leonardo- Recent Contract Wins 77

Table 27: Airbus Helicopters SAS – Key Products and Services 83

Table 28: Airbus Helicopters SAS – Recent Contracts 83

List of Figures

Figure 1: Bangladeshi Defense Expenditure (BDT Billion), 2014-2023 27

Figure 2: Bangladeshi Defense Expenditure (US$ Billion), 2014-2023 27

Figure 3: Bangladeshi GDP Growth vs. Defense Expenditure as Percentage of GDP, 2014-2023 30

Figure 4: Bangladeshi Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 32

Figure 5: Bangladeshi Defense Capital Expenditure (BDT Billion), 2014-2023 34

Figure 6: Bangladeshi Defense Capital Expenditure (US$ Billion), 2014-2023 34

Figure 7: Bangladeshi Defense Budget Split Between Army, Air Force, Navy and Others, 2014-2023 36

Figure 8: Bangladesh – Defense Budget Breakdown by Service (BDT Billion), 2014-2023 38

Figure 9: Bangladesh. – Defense Budget Breakdown by Service (US$ Billion), 2014-2023 40

Figure 10: Bangladeshi Per Capita Defense Expenditure (US$), 2014-2023 41

Figure 11: Bangladeshi Homeland Security Expenditure (BDT Billion), 2014-2023 43

Figure 12: Bangladeshi Homeland Security Expenditure (US$ Billion), 2014-2023 43

Figure 13: Terrorism Heat Map, 2018 46

Figure 14: Terrorism Index, 2018 49

Figure 15: Benchmarking with Key Markets – 2014-2018 vs. 2019-2023 51

Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2018 and 2023 52

Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2018 53

Figure 18: Maritime surveillance and detection Market Size (US$ million), 2018-2023 55

Figure 19: Corvettes MRO Market Size (US$ million), 2018-2023 56

Figure 20: Multi-role aircraft market Size (US$ million), 2018-2023 57

Figure 21: Bangladesh – Defense Procurements in Terms of Supplier Relationships, 2018 59

Figure 22: Bangladeshi Defense Import Trend, 2013-2017 (TIV values) 60

Figure 23: Bangladeshi Defense Import by Country, 2013-2017 (TIV values) 61

Figure 24: Bangladesh Defense Imports by Category (%), 2013-2017 62

Figure 25: Industry Dynamics – Porter’s Five Forces Analysis 64

Figure 26: Leonardo- Revenue Trend Analysis (EUR Billion), 2013-2017 80

Figure 27: Leonardo- Net Profit Trend Analysis (EUR Million), 2013-2017 81

Figure 28: Leonardo- Operating Profit Trend Analysis (EUR Million), 2013-2017 82

Figure 29: Bangladeshi GDP Per Capita at Constant Prices (US$), 2015-2025 84

Figure 30: Bangladesh – GDP at Current Prices (US$ Billion), 2015-2025 85

Figure 31: Bangladeshi Exports of Goods and Services (LCU Billion), 2005-2014 86

Figure 32:Bangladeshi Imports of Goods and Services (LCU Billion), 2005-2014 87

Figure 33: Bangladeshi Gross National Disposable Income (US$ Billion), 2005-2013 88

Figure 34: Bangladesh LCU per US$, 2015-2024 89

Figure 35: Bangladeshi Market Capitalization of Listed Companies (US$ Billion), 2005-2012 90

Figure 36: Bangladeshi Market Capitalization of Listed Companies (% of GDP), 2005-2012 91

Figure 37: Bangladeshi Government Cash Surplus/Deficit as % of GDP (LCU), 2005-2011 92

Figure 38: Bangladesh – Goods Exports as a % of GDP (%), 2005-2014 93

Figure 39: Bangladesh – Goods Imports as a % of GDP (%), 2005-2014 94

Figure 40: Bangladeshi Services Imports as a % of GDP (%), 2005-2014 95

Figure 41: Bangladesh Service Exports as a % of GDP (%), 2005-2014 96

Figure 42: Bangladesh – Foreign Direct Investment, Net (BoP, current US$ Billion), 2005-2014 97

Figure 43: Bangladeshi Net Foreign Direct Investment as % of GDP, 2005-2013 98

Figure 44: Bangladeshi Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 99