Future of the Singaporean 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 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. Defense expenditure expected to grow at a CAGR of

3.14% during 2019-2023 26

3.2.2. Countering terrorist threats, acquiring sophisticated military equipment and overseas training requirements are expected to drive defense expenditure 28

3.2.3. Defense expenditure as a percentage of GDP is expected to average

3.0% during 2019-2023 30

3.3. Analysis of Defense Budget Allocation 32

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

3.3.2. Singapore’s defense capital expenditure to value US$536.4 million in 2023 34

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

3.4. Homeland Security Market Size and Forecast 38

3.4.1. Homeland Security (HLS) is expected to grow at CAGR

8.27% over the forecast period 38

3.4.2. Border protection and cyber security are driving the country’s homeland security budget 40

3.4.3. Singapore considered at ‘some risk’ of terrorist attack 41

3.4.4. Singapore scores

0.0 on the Terrorism Index 42

3.4.5. Singapore faces a moderate threat from foreign terrorist organizations 43

3.5. Benchmarking with Key Global Markets 45

3.5.1. Singapore has the second highest defense expenditure in Southeast Asia 45

3.5.2. The country’s defense budget is high compared to other Southeast Asian countries 47

3.5.3. As a percentage of GDP, Singapore’s defense expenditure ranks among the top 20 in the world 48

3.6. Market Opportunities: Key Trends and Drivers 49

3.6.1. Top 10 Defense Sectors by Value (US$ Million) – Projections over 2018-2023 49

3.6.2. Critical Infrastructure Protection (CIP) – Physical Security 50

3.6.3. C4ISR – Land-based 51

3.6.4. Military Infrastructure and Logistics – Infrastructure Construction 52

4. Defense Procurement Market Dynamics 53

4.1. Import Market Dynamics 54

4.1.1. Defense imports are expected to increase over the forecast period 54

4.1.2. The US dominated Singaporean defense imports from 2013-2017 55

4.1.3. Aircraft was the major defense import during 2013-2017 56

4.2. Export Market Dynamics 57

4.2.1. Arms’ export expected to increase over the forecast period 57

4.2.2. Oman emerged as the biggest importer of Singaporean defense equipment 58

4.2.3. Ships accounted for the majority of defense exports between 2013 and 2017 59

5. Industry Dynamics 60

5.1. Five Forces Analysis 60

5.1.1. Bargaining Power of Supplier: Low to Medium 61

5.1.2. Bargaining Power of Buyer: Medium to High 61

5.1.3. Barrier to Entry: Medium 61

5.1.4. Intensity of Rivalry: High 61

5.1.5. Threat of Substitution: High 61

6. Market Entry Strategy 62

6.1. Market Regulation 62

6.1.1. Defense policy requires investments in training and technology to develop domestic capabilities 62

6.1.2. Favorable FDI policies to attract foreign OEMs 62

6.2. Market Entry Route 63

6.2.1. Budgeting Process 63

6.2.2. Procurement Policy and Process 63

6.2.3. The transfer of technology is a key entry strategy for foreign OEMs 63

6.3. Key Challenges 65

6.3.1. Restricted availability of production discourages foreign investments 65

6.3.2. Limited defense budget discourages investors from entering market 65

7. Competitive Landscape and Strategic Insights 66

7.1. Competitive Landscape Overview 66

7.1.1. Singapore’s defense sector has a mix of domestic and foreign competitors 66

7.2. Key Foreign Companies 67

7.2.1. Boeing: Overview 67

7.2.2. Boeing: Products and Services 67

7.2.3. Boeing: Recent announcements and strategic initiatives 67

7.2.4. Boeing: Alliances 68

7.2.5. Boeing: Recent Contract Wins 68

7.2.6. ThyssenKrupp Marine Systems: Overview 69

7.2.7. ThyssenKrupp Marine Systems: Products 69

7.2.8. ThyssenKrupp Marine Systems: Recent Announcements and Strategic Initiatives 69

7.2.9. ThyssenKrupp Marine Systems: Recent Contract Wins 69

7.2.10. Thales: Overview 70

7.2.11. Thales: Products 70

7.2.12. Thales: Recent Announcements and Strategic Initiatives 70

7.2.13. Thales: Alliances 71

7.2.14. Thales: Recent Contract Wins 71

7.2.15. Singapore Technologies Aerospace: Overview 72

7.2.16. Singapore Technologies Aerospace: Products 72

7.2.17. Singapore Technologies Aerospace: Recent Announcements and Strategic Initiatives 72

7.2.18. Singapore Technologies Aerospace: Alliances 73

7.2.19. Singapore Technologies Aerospace: Recent Contract wins 74

7.2.20. Singapore Technologies Marine: Overview 75

7.2.21. Singapore Technologies Marine: Products 75

7.2.22. Singapore Technologies Marine: Recent Announcements and Strategic Initiatives 76

7.2.23. Singapore Technologies Marine: Alliances 76

7.2.24. Singapore Technologies Marine Recent Contract Wins 77

7.2.25. Singapore Technologies Electronics: Overview 78

7.2.26. Singapore Technologies Electronics: Products and Services 78

7.2.27. Singapore Technologies Electronics: Recent Announcements and Strategic Initiatives 79

7.2.28. Singapore Technologies Electronics: Alliances 79

7.2.29. Singapore Technologies Electronics: Recent contract wins 80

7.2.30. Singapore Technologies Kinetics: Overview 81

7.2.31. Singapore Technologies Kinetics: Products and Services 81

7.2.32. Singapore Technologies Kinetics: Recent Announcements and Strategic Initiatives 82

7.2.33. Singapore Technologies Kinetics: Alliances 83

7.2.34. Singapore Technologies Kinetics: Recent Contract Wins 84

8. Business Environment and Country Risk 85

8.1. Economic Performance 85

8.1.1. GDP per Capita 85

8.1.2. Gross Domestic Product 86

8.1.3. Exports of Goods and Services (LCU Billion) 87

8.1.4. Imports of Goods and Services (LCU Billion) 88

8.1.5. Gross National Disposable Income 89

8.1.6. LCU per US$ (Period Average) 90

8.1.7. Market Capitalization of Listed Companies 91

8.1.8. Market Capitalization of Listed Companies as a Percentage of GDP 92

8.1.9. Total Government Cash Surplus/Deficit as a Percentage of GDP 93

8.1.10. Goods Exports as a Percentage of GDP 94

8.1.11. Goods Imports as a Percentage of GDP 95

8.1.12. Services Imports as a Percentage of GDP 96

8.1.13. Services Exports as a Percentage of GDP 97

8.1.14. Net Foreign Direct Investment 98

8.1.15. Net Foreign Direct Investment as a Percentage of GDP 99

8.1.16. Mining, Manufacturing, Utilities Output 100

9. Appendix 101

9.1. About SDI 101

9.2. Disclaimer 101

List of Tables

Table 1: Singapore – Army Strength, 2018 17

Table 2: Singapore – Air Force Strength, 2018 19

Table 3: Singapore – Navy Strength, 2018 20

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

Table 5: Singapore – Future Procurement Programs, 2018 22

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

Table 7: Singapore – Defense Expenditure (SGD Billion & US$ Billion), 2014-2023 26

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

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

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

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

Table 12: Singapore Homeland Security Expenditure (SGD Billion & US$ Billion), 2014-2023 38

Table 13: Terrorism Index, 2018 43

Table 14: Benchmarking with Key Markets, 2014-2018 vs. 2019-2023 45

Table 15: Top Singapore Defense Sectors by Value (US$ Million), 2018-2023 49

Table 16: Singapore Budget Process 63

Table 17: Top Defense Suppliers in Singapore Defense Industry – By Value (US$ Million) 2018-2023 66

Table 18: Boeing. – Products 67

Table 19: Boeing – Alliances 68

Table 20: Boeing – Recent Contract Wins 68

Table 21: ThyssenKrupp Marine Systems – Product Focus 69

Table 22: ThyssenKrupp Marine Systems – Recent Contract Wins 69

Table 23: Thales – Products 70

Table 24: Thales – Alliances 71

Table 25: Thales – Recent Contract Wins 71

Table 26: Singapore Technologies Aerospace – Products and Services 72

Table 27: Singapore Technologies Aerospace – Alliances 73

Table 28: Singapore Technologies Aerospace – Recent Contract Wins 74

Table 29: Singapore Technologies Marine – Products 75

Table 30: Singapore Technologies Marine – Alliances 76

Table 31: Singapore Technologies Marine – Recent Contract Wins 77

Table 32: Singapore Technologies Electronics – Products and Services 78

Table 33: Singapore Technologies Electronics – Alliances 79

Table 34: Singapore Technologies Electronics – Recent Contract Wins 80

Table 35: Singapore Technologies Kinetics – Products and Services 81

Table 36: Singapore Technologies Kinetics – Alliances 83

Table 37: Singapore Technologies Kinetics – Recent Contract Wins 84

List of Figures

Figure 1: Singapore Defense Expenditure (SGD Billion), 2014-2023 27

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

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

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

Figure 5: Singapore Defense Capital Expenditure (SGD Million), 2014-2023 35

Figure 6: Singapore Defense Capital Expenditure (US$ Million), 2014-2023 35

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

Figure 8: Singapore’s Homeland Security Expenditure (SGD Billion), 2014-2023 39

Figure 9: Singapore’s Homeland Security Expenditure (US$ Billion), 2014-2023 39

Figure 10: Terrorism Heat Map, 2018 41

Figure 11: Terrorism Index, 2018 42

Figure 12: Benchmarking with Key Global Markets, 2014-2018 vs. 2019-2023 46

Figure 13: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2018 and 2023 47

Figure 14: Benchmarking with Large Defense Spenders as a Percentage of GDP – 2018 48

Figure 15: Critical Infrastructure Protection (CIP) – Physical Security Market Size (US$ Million), 2018-2023 50

Figure 16: C4ISR – Land Based Security Market Size (US$ Million), 2018-2023 51

Figure 17: Military Infrastructure and Logistics – Infrastructure Construction Market Size (US$ Million), 2018-2023 52

Figure 18: Top Singapore Defense Procurements in Terms of Supplier Relationships 53

Figure 19: Singapore Defense Import Trend, 2013-2017 (TIV values) 54

Figure 20: Singapore Defense Imports by Country (%), 2013-2017 55

Figure 21: Singapore Defense Imports by Weapon Category (%), 2013-2017 56

Figure 22: Singaporean Defense Exports by Value, 2013-2017 57

Figure 23: Singaporean Defense Exports by Country (US$ million), 2013-2017 58

Figure 24: Singaporean Defense Exports by Category (%), 2013-2017 59

Figure 25: Industry Dynamics – Porter’s Five Forces Analysis 60

Figure 26: Singapore GDP per Capita (US$), 2015-2025 85

Figure 27: Singapore GDP (current US$ Billion), 2015-2025 86

Figure 28: Singapore Exports of Goods and Services (LCU Billion), 2005-2014 87

Figure 29: Singapore Imports of Goods and Services (LCU Billion), 2005-2014 88

Figure 30: Singapore Gross National Disposable Income (US$ Billion), 2005-2013 89

Figure 31: Singapore LCU per US$, 2015-2024 90

Figure 32: Singapore Market Capitalization of Listed Companies (US$ Billion), 2005-2012 91

Figure 33: Singapore Market Capitalization of Listed Companies (% of GDP), 2005-2012 92

Figure 34: Singapore Total Government Cash Surplus/Deficit (% of GDP), 2005-2012 93

Figure 35: Singapore Goods Exports (% of GDP), 2005-2014 94

Figure 36: Singapore Goods Imports (% of GDP), 2005-2014 95

Figure 37: Singapore Services Imports (% of GDP), 2005-2014 96

Figure 38: Singapore Services Exports (% of GDP), 2005-2014 97

Figure 39: Singapore Net Foreign Direct Investment (US$ Billion), 2005-2014 98

Figure 40: Singapore Net Foreign Direct Investment (% of GDP), 2005-2014 99

Figure 41: Mining, Manufacturing, Utilities Output (LCU Billion), 2005-2014 100