UAE Defense Sector Opportunity Analysis
Over the past few years UAE's defense industry has achieved significant progress and considerable traction, as a result of the guidance and directives from the country’s leadership to broad-base its economic structure and resources to be able to reduce dependence on oil by 2030. While the larger focus is on developing local industries and manufacturing, the development of the defense industry is a specific but crucial aspect of that wider vision.
In the gulf region the UAE is at the forefront of defense and military industries and defense procurement. While UAE’s military supplies are mostly imported, its defense industries have established an international reputation with multiple capabilities with respect to army, navy, air force related capabilities and manufacturing. They have sophisticated, high tech capabilities, derived from joint ventures with major international companies and the resultant technology transfer and this has helped to put them on the road to defense self-sufficiency.
“UAE Defense Sector Opportunity Analysis” research report by KuicK Research gives comprehensive insight on following issues pertaining to development of defense market in UAE:
- Defense market Overview
- Defense Market Dynamics
- Emerging Market Trends
- Defense Contracts & Equipment Procurement
- Defense Contract & Offset Policy
1.1 Current Market Scenario
1.2 Defense Spending
2. DEFENSE MARKET DYNAMICS
2.1 Favorable Market Indicators
2.2 Challenges to be Resolved
2.3 Future Growth Opportunity
3. EMERGING MARKET TRENDS
3.1 Focus on Local Manufacturing of Defense Equipment
3.2 Strategic Partnership with International Companies
3.3 Air Force & Defense Command Modernization
3.4 Demand for Early Warning & Interceptor System
3.5 Domestically Developed Unmanned Drone Passes Test Flight
4. DEFENSE CONTRACTS & EQUIPMENT PROCUREMENT
5. UAE AS REGIONAL DEFENSE PRODUCTION HUB
6. DEFENSE CONTRACT & OFFSET POLICY
6.1 Requirements of the Offset Program
6.2 Hybrid Model – Input & Output
6.3 Elements of the Offset Policy
6.4 Rationale for Implementing Offset Policy
6.5 Policy
7. COMPETITIVE LANDSCAPE
7.1 Advanced Military Maintenance Repair and Overhaul Centre
7.2 Tawazun Advanced Defense Systems
7.3 Abu Dhabi Aircraft Technologies
7.4 Abu Dhabi Autonomous Systems Investment
7.5 Advanced Integrated Systems
7.6 Burkan Munitions Systems
7.7 GA Land Systems
Figure 1-1: UAE Defence Spending, 2006-2011 (US$ Billion)
Figure 1-2: Defence spending as % of GDP, 2006-2011
Figure 1-3: Share of UAE in Global Defence Imports, 2008-2012
Figure 1-4: Share of UAE in GCC Arms Transfer Agreements, 2008-2012
Figure 1-5: Share of UAE in GCC Arms Delivery, 2008-2012
Figure 1-6: UAE & Oshkosh Corp – Mine Resistant All Terrain Vehicle Deal (US$ Million)
Figure 2-1: UAE Defence Spending, 2013-2018 (US$ Billion)
Figure 2-2: Share of UAE in GCC Arms Delivery, 2018
Figure 2-3: UAE – UAV Market Opportunity, 2015 & 2018 (US$ Million)
Figure 3-1: UAE - Fighter & Trainer Jet Market Potential
Figure 3-2: UAE - AWACS & Maritime Patrol Aircraft Market Potential
Figure 3-3: Spending on Terminal High Altitude Area Defence (THAAD) System (US$ Billion), 2011 & 2012
In an attempt to develop its own defense industry, the United Arab Emirates is stepping up efforts and increasing its expenditure on defense products. This has come about with the partnership with international defense companies to set up high-tech projects as part of the conditions of lucrative arms contracts. This has also helped to diversify the economy from its dependence on oil and gas exports.
By spending billions of dollars on buying Western weapons systems, the country has created a modernized army besides bringing in offset defense manufacturing projects in Abu Dhabi and Dubai.
The UAE is the world's fourth largest arms importer and spent nearly US$ xx billion in 2011. In the next three years the country is expected to spend nearly US$ xx billion on defense. UAE’s defense expenditure was US$ xx billion (1.8% of Gross Domestic Product) in 1999 and US$ xx billion (0.8% of Gross Domestic Product) in 2000. This grew to US$ xx billion (1.0% of Gross Domestic Product) in 2005 and US$ xx billion in 2010. UAE was ranked in the fourth place worldwide in total arms between 2005 and 2009, with spending of US$ xx billion (Dh23.9bn) behind only China, India and South Korea. The UAE is amongst the top ten in the list of the world’s biggest weapons importers. It is expected to augments its hi-tech defensive capabilities, with a view to protecting its territorial integrity and handle its internal and external situations while maintaining a defensive posture. In the list of major arms importers for the period 2008-12, UAE figures amongst the top ten with a share of about xx%.
Between 2007 and 2011, UAE was the largest importer of arms in the Middle East. Its total volume of annual purchases rose by xx percent in 2011 to xx billion units.
UAE is the third-largest weapons client of the US and the US is the biggest supplier of arms to the UAE while France exports its maximum quantity of weapons to the UAE. UAE spends the most on aircrafts from the US and France, and also missiles and air defense systems.
The supplies from France and US included xx Mirage 2000 combat aircraft and xx F-16 fighters respectively, between 2005 and 2009. Other import supplies include the delivery of Patriot-3 surface to air missile systems as well as transport aircraft and other missile-defense systems from the US, France and Russia.
UAE’s defense spending is on one hand driven by the need to maintain its security while it also needs to procure the latest arms, being one of the most active GCC countries that participate in international operations. This includes deployment of troops and planes in Afghanistan making transport planes an essential purchase.
While the United Arab Emirates has increased its defense equipment procurement and its efforts to establish itself as a regional player in defense equipment manufacturing, the country has also diversified its procurement base. It has done this by buying defense equipment from a diverse range of markets including the US, the UK, France and Italy while exporting its products to wider markets in the Middle East and North Africa region.
Going forward, it is expected that UAE's defense spending would increase by about xxxx% annually to reach AED xx Billion in 2017 so that the defense spending per capita would be about AED xx. UAE’s defense spending as a percent of national GDP has risen from xx% in 2008, to xx% in 2012 and this proportion is expected to rise to xx% by the end of 2017.
