2014-02-04 03:34:04 - Future of the Saudi Arabian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - a new market research report on companiesandmarkets.com
Saudi Arabia is estimated to have the fourth largest defense budget in the world, behind the US, China, and Russia. Valued at US$52.9 billion in 2013, the country´s defense expenditure is at the seventh position among the top 10 military spenders and is expected to grow at a CAGR of 7.92% to reach US$77.3 billion by 2018. Saudi Arabia´s military expenditure as a percentage of GDP will from its current 7.3% to 9.1% by 2018 due to slowing economic growth over the forecast period. An underdeveloped domestic defense industry coupled with the country´s high spending power presents ample opportunities for foreign OEMs to enter the market through an alliance route.
A strained relationship with Iran, high spending power, and the need
to develop a skilled military force to be key factors driving defense expenditure. The Saudi Arabian government´s hopes of strengthening its defense infrastructure in order to emerge as the most powerful nation in the Middle East have been supported by many years of high oil prices and strong economic growth.
The rivalry between Saudi Arabia and Iran in the Middle East is a regional power struggle for influence, in which both sides have aimed at steering the course of events, shaping developments, and influencing decisions in the region according to their political preferences and interests. The fact that the Saudi´s average defense expenditure as a percentage of GDP during the review period measured a significant 7.9% implies it has the purchasing power to procure state of the art defense equipment. In fact the country registered a figure of 7.3% with regards to its defense expenditure as a percentage of GDP, which was the highest among the world´s largest military spenders for 2012.
Bribery and corruption have been prevalent in Saudi defense procurement for many years, largely due to the monopolistic status exercised by the government over the purchase decisions of its armed forces. According to Transparency International, Saudi Arabia has insufficient safeguards against corruption in the defense industry. For example, corruption charges were leveled against a unit of EADS UK with regards to US$3.3 billion communication contract and being investigated by the UK Serious Fraud Office over bribery allegations in the country.
Foreign investors may be deterred from entering the Saudi Arabian defense market because of scarcity of skilled labor, induced by the lack of industrial capabilities within the country. Nitaqat law makes it mandatory for the companies to have a minimum of 10% local employees and scarcity of skilled labor complicates the business environment for foreign companies. Although the government is focusing on making amendments, the non-employment rate has increased in recent years resulting in internal conflicts adding to the foreign companies´ woes.
Click for report details: www.companiesandmarkets.com/Market/Defence/Market-Research/Futur ..
Browse all Defence Market Research Reports www.companiesandmarkets.com/Market/Defence/Market-Research?aCode ..
Browse all Defence Company Profile Reports www.companiesandmarkets.com/Market/Defence/Company-Profile?aCode ..
Browse all Latest Market Research Reports www.companiesandmarkets.com/Market/All/Market-Research?aCode=f3f ..
Companiesandmarkets.com is a leading online business information aggregator with over 300,000 market reports and company profiles available to our clients. Our extensive range of reports are sourced from the leading publishers of business information and provide clients with the widest range of information available. In terms of company profiles, Companiesandmarkets.comâs online database allows clients access to market and corporate information to over 100,000 different companies. We provide clients with a fully indexed database of information where clients can find specific market reports on their niche industry sectors of interest.