Future of the Omani 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 Strategic Defense Intelligence 11

2. Executive Summary 12

3. Market Attractiveness and Emerging Opportunities 14

3.1. Current Market Scenario 15

3.1.1. Primary Threat Perception 15

3.1.2. Military Doctrine and Strategy 16

3.1.3. Military Fleet Size 18

3.1.4. Procurement Programs 22

3.1.5. Social, Political and Economic Environment and Support for Defense Projects 25

3.1.6. Political and Strategic Alliances 26

3.2. Defense Market Size Historical and Forecast 27

3.2.1. Defense expenditure expected to grow at a CAGR of

4.96% during 2019-2023 27

3.2.2. Arms race in the Middle East expected to drive defense expenditure over the forecast period 29

3.2.3. Defense expenditure as a percentage of GDP is expected to increase over the forecast period 30

3.3. Analysis of Defense Budget Allocation 32

3.3.1. Capital expenditure allocation expected to increase during the forecast period 32

3.3.2. Omani defense capital expenditure to value US$5 billion in 2023 34

3.3.3. Per capita defense expenditure expected to decline over the forecast period 36

3.4. Homeland Security Market Size and Forecast 38

3.4.1. Maritime oil trade routes protection will be the key factor driving homeland security 38

3.4.2. Oman considered at ‘some risk’ of terrorist attack 39

3.4.3. Oman scores

0.0 on the Terrorism Index 40

3.4.4. Oman faces a moderate threat from foreign terrorist organizations 41

3.5. Benchmarking with Key Global Markets 43

3.5.1. Omani defense expenditure expected to remain low compared to leading spenders 43

3.5.2. The country’s defense budget is low compared to Middle Eastern countries 45

3.5.3. Oman tops the leading military spenders in terms of defense expenditure as a percentage of GDP 46

3.6. Market Opportunities: Key Trends and Drivers 47

3.6.1. Top 10 Defense Sectors by Value (US$ Million) – Projections over 2018-2023 47

3.6.2. Critical Infrastructure Protection (CIP) – Physical Security 48

3.6.3. C4ISR – Land-based 49

3.6.4. Military infrastructure and Logistics – Infrastructure Construction 50

4. Defense Procurement Market Dynamics 51

4.1. Import Market Dynamics 52

4.1.1. The defense industry heavily relies on imports from foreign countries 52

4.1.2. The US and the UK were the key defense suppliers to Oman 53

4.1.3. Aircraft and ships dominate Omani defense imports 54

4.2. Export Market Dynamics 55

4.2.1. Oman’s defense export market is negligible 55

5. Industry Dynamics 56

5.1. Five Forces Analysis 56

5.1.1. Bargaining Power of Supplier: Medium to High 57

5.1.2. Bargaining Power of Buyer: Medium to High 57

5.1.3. Barrier to Entry: Medium 57

5.1.4. Intensity of Rivalry: Low to Medium 57

5.1.5. Threat of Substitution: Medium to High 57

6. Market Entry Strategy 58

6.1. Market Regulation 58

6.1.1. The Omani government allows 49% FDI in the defense industry 58

6.1.2. Oman prefers indirect offsets 58

6.2. Market Entry Route 58

6.2.1. Budgeting Process 58

6.2.2. Procurement Policy and Process 58

6.2.3. Direct selling is the preferred market entry route for foreign OEMs 59

6.3. Key Challenges 60

6.3.1. The UK and the US dominate the market, posing challenges to other foreign firms 60

6.3.2. Lack of skilled labor 60

7. Competitive Landscape and Strategic Insights 61

7.1. Competitive Landscape Overview 61

7.1.1. Omani defense sector is dominated by foreign competitors 61

7.2. Key Foreign Companies 63

7.2.1. BAE Systems Plc.: Overview 63

7.2.2. BAE Systems Plc.: Products and Services 63

7.2.3. BAE Systems Plc.: Alliances 64

7.2.4. BAE Systems Plc.: Recent Contract Wins 64

7.2.5. Lockheed Martin: Overview 65

7.2.6. Lockheed Martin: Products 65

7.2.7. Lockheed Martin: Recent Announcements and Strategic Initiatives 65

7.2.8. Lockheed Martin: Alliances 66

7.2.9. Lockheed Martin: Recent Contract Wins 66

7.2.10. NHIndustries (NHI): Overview 67

7.2.11. NHIndustries (NHI): Products and Services 67

7.2.12. NHIndustries (NHI): Recent Announcements and Strategic Initiatives 67

7.2.13. NHIndustries (NHI): Recent Contract Wins 67

7.2.14. Raytheon: Overview 68

7.2.15. Raytheon: Products 68

7.2.16. Raytheon: Recent Announcements and Strategic Initiatives 68

7.2.17. Raytheon: Alliances 70

7.2.18. FNSS Defense Systems Co: Overview 72

7.2.19. FNSS Defense Systems Co: Products 72

7.2.20. FNSS Defense Systems Co: Recent Announcements and Strategic Initiatives 73

7.2.21. FNSS Defense Systems: Alliances 73

7.2.22. FNSS Defense Systems Co: Recent Contract Wins 74

7.2.23. Bell: overview 75

7.2.24. Bell: products and services 75

7.2.25. Bell: recent announcements and strategic initiatives 75

7.2.26. Bell Helicopter Textron, Inc.: alliances 77

7.2.27. Bell Helicopter Textron, Inc.: recent contract wins 77

8. Business Environment and Country Risk 79

8.1. Economic Performance 79

8.1.1. GDP per Capita 79

8.1.2. Gross Domestic Product 80

8.1.3. Exports of Goods and Services (LCU Billion) 81

8.1.4. Imports of Goods and Services (LCU Billion) 82

8.1.5. Gross National Disposable Income 83

8.1.6. LCU per US$ (Period Average) 84

8.1.7. Market Capitalization of Listed Companies 85

8.1.8. Market Capitalization of Listed Companies as a Percentage of GDP 86

8.1.9. Total Government Cash Surplus/Deficit as a Percentage of GDP 87

8.1.10. Goods Exports as a Percentage of GDP 88

8.1.11. Goods Imports as a Percentage of GDP 89

8.1.12. Services Imports as a Percentage of GDP 90

8.1.13. Services Exports as a Percentage of GDP 91

8.1.14. Net Foreign Direct Investment 92

8.1.15. Net Foreign Direct Investment as a Percentage of GDP 93

8.1.16. Mining, Manufacturing, Utilities Output 94

9. Appendix 95

9.1. About SDI 95

9.2. Disclaimer 95

List of Tables

Table 1: Oman – Army Strength, 2018 18

Table 2: Oman – Air Force Strength, 2018 20

Table 3: Oman – Navy Strength, 2018 21

Table 4: Omani – Ongoing Development and Procurement Programs, 2018 22

Table 5: Oman – Future Procurement Programs, 2018 23

Table 6: Oman – Top Defense Procurement Programs by Value (US$ Million), 2018-2023 24

Table 7: Omani – Defense Expenditure (OMR Billion & US$ Billion), 2014-2023 27

Table 8: Omani GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023 30

Table 9: Omani – Defense Budget Allocation for Capital and Revenue Expenditure (%), 2014-2023 32

Table 10: Omani – Defense Capital Expenditure, (OMR Billion & US$ Billion), 2014-2023 34

Table 11: Omani – Defense Expenditure as Per Capita Defense Spend (US$), 2014-2023 36

Table 12: Terrorism Index, 2018 41

Table 13: Benchmarking with Key Markets – 2014-2018 vs. 2019-2023 43

Table 14: Top Omani Defense Sectors by Value (US$ Million), 2018-2023 47

Table 15: Competitive Landscape of the Omani Defense Industry 61

Table 16: Top Defense Suppliers in the Omani Defense Industry – By Value (US$ Million) 2018-2023 62

Table 17: BAE Systems Plc. – Products and Services 63

Table 18: BAE Systems Plc. – Alliances 64

Table 19: BAE Systems Plc. – Recent Contract Wins 64

Table 20: Lockheed Martin – Products 65

Table 21: Lockheed Martin – Alliances 66

Table 22: Lockheed Martin – Recent Contract Wins 66

Table 23: NHIndustries (NHI) – Products and Services 67

Table 24: Lockheed Martin – Recent Contract Wins 67

Table 25: Raytheon – Products 68

Table 26: Raytheon – Alliances 70

Table 27: Raytheon – Recent Contract Wins 71

Table 28: FNSS Defense Systems Co – Products 72

Table 29: FNSS Defense Systems – Alliances 73

Table 30: FNSS Defense Systems Co – Recent Contract Wins 74

Table 31: Bell – Product Focus 75

Table 32: Bell Helicopter Textron, Inc. – Alliances 77

Table 33: Bell Helicopter Textron, Inc. – Recent Contract Wins 77

List of Figures

Figure 1: Omani Defense Expenditure (OMR Billion), 2014-2023 28

Figure 2: Omani Defense Expenditure (US$ Billion), 2014-2023 28

Figure 3: Omani GDP Growth vs. Defense Expenditure as a Percentage of GDP, 2014-2023 31

Figure 4: Omani Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2023 33

Figure 5: Omani Defense Capital Expenditure (OMR Billion), 2014-2023 35

Figure 6: Omani Defense Capital Expenditure (US$ Billion), 2014-2023 35

Figure 7: Omani Per Capita Defense Expenditure (US$), 2014-2023 37

Figure 8: Terrorism Heat Map, 2018 39

Figure 9: Terrorism Index, 2018 40

Figure 10: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023 44

Figure 11: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2018 and 2023 45

Figure 12: Benchmarking with Large Defense Spenders as a Percentage of GDP – 2018 46

Figure 13: Critical Infrastructure Protection (CIP) – Physical Security Market Size (US$ Million), 2018-2023 48

Figure 14: C4ISR-Land Based Security Market Size (US$ Million), 2018-2023 49

Figure 15: Military Infrastructure and Logistics – Infrastructure Construction Market Size (US$ Million), 2018-2023 50

Figure 16: Top Omani Defense Procurements in Terms of Supplier Relationships 51

Figure 17: Omani Defense Import Trend, 2013-2017 (TIV values) 52

Figure 18: Omani Defense Imports by Country (%), 2013-2017 53

Figure 19: Omani Defense Imports by Weapon Category (%), 2013-2017 54

Figure 20: Industry Dynamics – Porter’s Five Forces Analysis 56

Figure 21: Omani GDP per Capita (US$), 2015-2024 79

Figure 22: Omani GDP (current US$ Billion), 2015-2025 80

Figure 23: Omani Exports of Goods and Services (LCU Billion), 2005-2014 81

Figure 24: Omani Imports of Goods and Services (LCU Billion), 2005-2014 82

Figure 25: Omani Gross National Disposable Income (US$ Bn), 2005-2013 83

Figure 26: Omani LCU per US$, 2015-2024 84

Figure 27: Omani Market Capitalization of Listed Companies (US$ Bn), 2005-2012 85

Figure 28: Omani Market Capitalization of Listed Companies (% of GDP), 2005-2012 86

Figure 29: Omani Total Government Cash Surplus/Deficit (% of GDP), 2005-2012 87

Figure 30: Omani Goods Exports (% of GDP), 2005-2013 88

Figure 31: Omani Goods Imports (% of GDP), 2005-2013 89

Figure 32: Omani Services Imports (% of GDP), 2005-2013 90

Figure 33: Omani Services Exports (% of GDP), 2005-2013 91

Figure 34: Omani Net Foreign Direct Investment (US$ Billion), 2005-2013 92

Figure 35: Omani Net Foreign Direct Investment (% of GDP), 2005-2012 93

Figure 36: Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 94