866-997-4948(US-Canada Toll Free)

Future of the Colombian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

Published By :

Strategic Defence Intelligence

Published Date : Sep 2013

Category :

Defense and Security

No. of Pages : 114 Pages


Product Synopsis

This report is the result of SDI\'s extensive market and company research covering the Colombian defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

Introduction and Landscape

Why was the report written?

The Future of the Colombian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Colombian defense industry.

What is the current market landscape and what is changing?

The Colombian defense industry is expected to register strong growth in the next five years due to the rise of both external and internal security threats. The significant reasons behind the rise of military expenditure are the threats from Venezuela and rebel forces to internal security and the fight against drug trafficking. This increase is required for the purchase of helicopters, battle tanks, UAVs, and air defense systems as, even though the country allocated an average of 4.4% of its GDP for defense during the review period, the majority of the budget was allocated to revenue expenditure.

What are the key drivers behind recent market changes?

Threat from Venezuela, high crime levels, military modernization, threats from rebel groups, and drug trafficking set to increase defense expenditure

What makes this report unique and essential to read?

The Future of the Colombian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

Key Features and Benefits

  • The report provides detailed analysis of the current industry size and growth expectations from 2014to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
  • The report includes trend analysis of imports and exports, together with their implications and impact on the Colombian defense industry.
  • The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
  • The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
  • The report helps the reader to understand the competitive landscape of the defense industry in Colombia. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Key Market Issues

  • Recently, the Colombian MoD acknowledged that cocaine smugglers and leftist rebels had infiltrated senior levels of the Colombian Army, impeding efforts to defeat guerrilla organizations and combat the drug trade. The Army discovered classified military information in computer files of guerrillas from the FARC rebel group, which led the MoD to believe senior military officials may be sharing information in exchange for bribes. In another incident, Diego Montoya, who is the perceived head of the Norte del Valle cartel and has been accused of exporting hundreds of tons of cocaine to the US, is believed to have recruited Army officers to provide him with protection and help his brother, Eugenio Montoya, to escape from a high-security prison.
  • The total Colombian defense budget was US$6.8 billion in 2013, of which only US$1.2 billion was allocated for capital expenditure purposes. Currently, domestic defense firms meet the majority of defense requirements in the low technology area, while foreign procurement is undertaken when the adequate sophistication and technology is not available in the domestic market. Many foreign OEMs consider such a low level of defense expenditure as an unfavorable condition in which to enter the Colombian defense industry. Furthermore, the Colombian government does not currently allow foreign investment in its defense industry, which further prevents foreign OEMs from entering the industry.

Key Highlights

  • Threat from Venezuela: Following the independence of Colombia and its neighbor Venezuela in the 19th century, problems with border security up until the late 1980s triggered serious diplomatic conflicts and overshadowed important bilateral trade. Colombia\'s relations with Venezuela underwent a substantial change in the 1990s, when both countries began to perceive the other as a threat. During the last decade, under the leadership of the Venezuelan president, Hugo Chavez, and Colombian president, Álvaro Uribe, political and diplomatic relations between the two countries ranged between periods of mutual understanding and tension. Colombia\'s close relationship with the US also triggered distrust between Colombia and Venezuela. In 2009, the US and Colombia signed a 10-year bilateral defense agreement, which gave the US increased access to seven military bases in Colombia for counter-narcotics and counter-terrorism co-operation. However, Venezuela claims that the US intends to use Colombia as a strategic platform to potentially invade Venezuela. Finally, in July 2010, Venezuela broke off diplomatic relations with Colombia soon after President Uribe accused Venezuela of harboring 1,500 leftist Colombian rebels in its territory, a charge Venezuela strongly denied. Venezuela and Colombia agreed to restore diplomatic relations the following August, and increase security along the shared border to prevent Marxist guerrillas and drug traffickers from mounting attacks or hiding in dense jungle. However, this was viewed as a temporary solution, rather than a long-term peace agreement.
  • High crime levels: In addition to the external threat from Venezuela, Colombia suffers from a high threat level of indigenous terrorism and crime, and has the highest homicide rate in the world. Although the security situation has improved in most urban areas in recent years, compared to the situation a decade ago, crimes such as muggings, assaults, burglaries, theft, and credit card fraud all remain major problems. Despite the government\'s efforts to ensure internal security during the last 10 years, several criminal groups still operate in Colombia such as Rastrojos, ERPAC, Paisas, Oficina de Envigado, Urabeños, and El Loco. These criminal groups are involved in drug production and its illicit trade, arms trafficking, money laundering, kidnapping, and extortion.
  • The Colombian defense industry is underdeveloped and, therefore, has limited manufacturing and technological capabilities. Indeed, most of the country\'s defense requirements are met through imports, as the majority of domestic firms cater to low-end defense equipment. In 2013, the Colombian government was planning to develop its domestic defense industry as a source of revenue. However, although the Colombian government has recognized this challenge, it is expected that significant time will be needed to adequately develop the domestic defense industry to be capable of competing with foreign OEMs. Moreover, the country does not have a large number of defense companies that could collectively engage in research and development, or a significant defense research organization under the MoD. Without an established defense industry, the majority of the country\'s defense requirements will be fulfilled by imports over the forecast period. With the country planning to modernize its military, imports are expected in the areas of military hardware including aircraft, armored vehicles and small arms.
Table of Content

1 Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Colombian defense expenditure expected to reach US$9.3 billion by 2018
3.1.2. Threat from Venezuela, threats from rebel groups and development of domestic industry set to increase defense expenditure
3.1.3. Defense expenditure as a percentage of GDP expected to be 1.8% by 2018
3.2. Analysis of Defense Budget Allocation
3.2.1. Majority of defense budget allocated for revenue expenditure
3.2.2. Army accounts for majority of defense budget
3.2.3. Budget allocation for Army higher than remaining military divisions
3.2.4. The country\'s expenditure on its Navy to reach US$1.3 billion by 2018
3.2.5. Expenditure on Air Force estimated to increase at a CAGR of 6.78% over the forecast period
3.2.6. Other expenses constitute a substantial amount of the total defense budget
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security market to grow steadily during 2014-2018
3.3.2. High crime levels and drug trafficking expected to increase homeland security expenditure
3.3.3. SDI Terrorism Index rates Colombia to be a “highly affected” region
3.3.4. Columbia scores 1.9 on the terrorism index
3.4. Benchmarking with Key Global Markets
3.4.1. Colombian defense expenditure forecast to grow faster than the majority of the largest global defense budgets
3.4.2. Colombian defense expenditure is one of the highest in South America
3.4.3. Colombia spends 1.8% of its GDP on defense
3.4.4. Colombia is “highly affected” by acts of terrorism
3.5. Market Opportunities: Key Trends and Drivers
3.5.1. Transport and Utility Aircraft
3.5.2. Main Battle Tank
3.5.3. Software Infrastructure
3.5.4. Armored Personnel Carriers

4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Limitations of the domestic defense industry will support arms imports
4.1.2. Defense imports have grown significantly over the last five years
4.1.3. Aircraft account for majority of defense imports
4.1.4. US and Israel continue to be major arms suppliers
4.2. Export Market Dynamics
4.2.1. Colombia is not a major defense exporting country

5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of the supplier: low to medium
5.1.2. Bargaining power of the Buyer: high to medium
5.1.3. Barrier to entry: low to high
5.1.4. Intensity of rivalry: low
5.1.5. Threat of Substitution: medium

6 Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset guidelines are channeled to benefit industrial and social sectors
6.1.2. FDI in defense sector is closed
6.2. Market Entry Route
6.2.1. Direct selling is the preferred market entry route for foreign OEMs
6.3. Key Challenges
6.3.1. Corruption, bribery, and influence of anti-state elements damages the credibility of the military
6.3.2. Low capital expenditure discourages both foreign and domestic firms

7 Competitive landscape and Strategic Insights
7.1. Competitive landscape Overview
7.2. Key Public Sector Companies
7.2.1. Industria Militar: Overview
7.2.2. Industria Militar: Major Products and Services
7.2.3. Industria Militar: Recent Announcements and Strategic Initiatives
7.2.4. Industria Militar: Alliances
7.2.5. Industria Militar: Recent Contract Wins
7.3. Key Private Sector Companies
7.3.1. Sudamin Aeronautica y Defensa S.A.: Overview
7.3.2. Sudamin Aeronautica y Defensa S.A.: Major Products and Services
7.3.3. Sudamin Aeronautica y Defensa S.A.: Recent Announcements and Strategic Initiatives
7.3.4. Sudamin Aeronautica y Defensa S.A.: Alliances
7.3.5. Cotecmar: Overview
7.3.6. Cotecmar: Major Products and Services
7.3.7. Cotecmar: Recent Announcements and Strategic Initiatives
7.3.8. Cotecmar: Alliances
7.3.9. Cotecmar: Recent Contract Wins

8 Business Environment and Country Risk
8.1. Demographics and Social Statistics
8.1.1. Total Rural Population
8.1.2. Total Urban Population
8.1.3. Number of Households
8.2. Economic Performance
8.2.1. GDP Per Capita
8.2.2. GDP, Current Prices (US$ Billion)
8.2.3. Exports of Goods and Services, Current Prices (US$ billion)
8.2.4. Imports of goods and services, current prices (US$ billion)
8.2.5. Gross National Disposable Income
8.2.6. Manufacturing Output (US$ Billion)
8.2.7. Consumer Price Index
8.2.8. Wholesale Price Index
8.2.9. Local Currency Unit Per US$ (period average)
8.2.10. Local Currency Unit Per EUR (period average)
8.2.11. Lending Rate (%)
8.2.12. Deposit Rate (%)
8.2.13. Real Interest Rate (%)
8.2.14. Market Capitalization of Listed Companies (US$ Billion)
8.2.15. Market Capitalization of Listed Companies (% of GDP)
8.2.16. Total Government Cash Surplus/ Deficit (LCU Billion)
8.2.17. Government Cash Surplus/ Deficit as % of GDP (LCU)
8.2.18. Goods Exports as a % of GDP
8.2.19. Goods Imports as % of GDP
8.2.20. Goods Balance as a % of GDP
8.2.21. Services Imports as a % of GDP
8.2.22. Services Exports as a % of GDP
8.2.23. Services Balance as % of GDP
8.2.24. Foreign Direct Investment, net (BoP, current US$ Billion)
8.2.25. Net Foreign Direct Investment as % of GDP
8.2.26. International Reserves, Including Gold (US$ Billion)
8.2.27. External Debt as % of GDP
8.3. Energy and Utilities
8.3.1. Total Conventional Thermal Electricity Net Generation (Billion Kilowatt Hours)
8.3.2. Hydroelectricity Net Generation (Billion Kilowatt Hours)
8.3.3. Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts)
8.3.4. Total Electricity Exports (Billion Kilowatt Hours)
8.3.5. Proved Reserves of Natural Gas (Trillion Cubic Feet)
8.3.6. Total Petroleum Consumption
8.3.7. Crude Oil Proved Reserves
8.3.8. Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts)
8.4. Infrastructure Quality and Availability
8.4.1. Roads, total network
8.4.2. Air Transport (freight)
8.4.3. Overall Construction
8.5. Minerals
8.5.1. Mining, Manufacturing, Utilities Output
8.6. Technology
8.6.1. Research and Development Expenditure
8.6.2. Patents Granted
8.7. Telecommunication
8.7.1. Telephone Lines
8.7.2. Telephone Lines Penetration Rate

9 Appendix
9.1. About SDI
9.2. Disclaimer

List of Table


Table 1: Colombian Defense Expenditure(US$ Billion), 2009-2013
Table 2: Colombian Defense Expenditure(US$ Billion), 2014-2018
Table 3: Colombian GDP Growth vs. Defense Expenditure Growth, and Defense Expenditure as Percentage of GDP Growth, 2009-2013 
Table 4: Colombian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2014-2018 
Table 5: Colombian Defense Budget Split Between Capital and Revenue Expenditure (%), 2009-2013 
Table 6: Colombian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2018 
Table 7: Colombian Defense Expenditure Breakdown (%), 2009-2013 
Table 8: Colombian Defense Expenditure Breakdown (%), 2014-2018 
Table 9: Colombian Defense Expenditure for the Army(US$ billion), 2009-2013 
Table 10: Colombian Defense Expenditure for the Army (US$ billion), 2014-2018 
Table 11: Colombian Defense Expenditure for the Navy (US$ billion), 2009-2013 
Table 12: Colombian Defense Expenditure for the Navy (US$ billion), 2014-2018 
Table 13: Colombian Defense Expenditure for the Air Force (US$ billion), 2009-2013
Table 14: Colombian Defense Expenditure for the Air Force (US$ billion), 2014-2018
Table 15: Colombian Defense Expenditure for Other Expenses (US$ billion), 2009-2013 
Table 16: Colombian Defense Expenditure for Other Expenses (US$ billion), 2014-2018 
Table 17: Colombian Homeland Security Expenditure, 2009-2013 
Table 18: Colombian Homeland Security Expenditure, 2014-2018 
Table 19: Benchmarking with Key Markets - 2009-2013 vs. 2014-2018 
Table 20: SDI Terrorism Index 
Table 21: Offset Regulations in Colombia 
Table 22: Industria Militar - Major Products and Services 
Table 23: Industria Militar - Alliances 
Table 24: Industria Militar - Recent Contract Wins 
Table 25: Sudamin Aeronautica y Defensa S.A. - Major Products and Services 
Table 26: Sudamin Aeronautica y Defensa S.A. - Alliances 
Table 27: Cotecmar - Major Products and Services 
Table 28: Cotecmar - Alliances 
Table 29: Cotecmar - Recent Contract Wins

List of Chart


Figure 1: Colombian Defense Expenditure(US$ Billion), 2009-2013
Figure 2: Colombian Defense Expenditure(US$ Billion), 2014-2018
Figure 3: Colombian GDP Growth vs. Defense Expenditure Growth, and Defense Expenditures  Percentage of GDP Growth, 2009-2013 
Figure 4: Colombian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as  Percentage of GDP Growth, 2014-2018 
Figure 5: Colombian Defense Budget Split Between Capital and Revenue Expenditure (%), 2009-2013 
Figure 6: Colombian Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2018 
Figure 7: Colombian Defense Expenditure Breakdown (%), 2009-2013 
Figure 8: Colombian Defense Expenditure Breakdown (%), 2014-2018 
Figure 9: Colombian Defense Expenditure for the Army(US$ billion), 2009-2013 
Figure 10: Colombian Defense Expenditure for the Army(US$ billion), 2014-2018 
Figure 11: Colombian Defense Expenditure for the Navy (US$ billion), 2009-2013 
Figure 12: Colombian Defense Expenditure for the Navy (US$ billion), 2014-2018 
Figure 13: Colombian Defense Expenditure for the Air Force (US$ billion), 2009-2013
Figure 14: Colombian Defense Expenditure for the Air Force (US$ billion), 2014-2018
Figure 15: Colombian Defense Expenditure for Other Expenses (US$ billion), 2009-2013 
Figure 16: Colombian Defense Expenditure for the Other Expenses (US$ billion),2014-2018 
Figure 17: Colombian Homeland Security Expenditure, 2009-2013 
Figure 18: Colombian Homeland Security Expenditure, 2014-2018 
Figure 19: SDI Terrorism Heat Map, 2013 
Figure 20: SDI Terrorism Index, 2013 
Figure 21: Benchmarking with Key Markets - 2009-2013 vs. 2014-2018 
Figure 22: Defense Expenditure of the World\'s Largest Military Spenders (US$ Billion), 2013 and 2018 
Figure 23: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2013 
Figure 24: Attack Aircraft MRO Market Size (US$ Billion), 2013-2023 
Figure 25: Main Battle Tank Market Size (US$ Billion), 2013-2023 
Figure 26: Software infrastructure Market Size (US$ Billion), 2013-2023
Figure 27: Armored Personnel Carriers Market Size (US$ Billion), 2013-2023
Figure 28: Colombian Defense Import TIV value (US$ Million),2008-2012 
Figure 29: Colombian Defense Imports by Category (%), 2008-2012 
Figure 30: Colombian Defense Imports by Country (%), 2008-2012 
Figure 31: Industry Dynamics - Porter\'s Five Forces Analysis
Figure 32: Total Rural Population (In Millions), 2009-2018 
Figure 33: Colombian Urban Population (In Millions), 2009-2018 
Figure 34: Number of Households (In Millions), 2008-2017 
Figure 35: Colombian GDP Per Capita, 2008-2017 
Figure 36: Colombian GDP at Current Prices (US$ Billion), 2008-2017
Figure 37: Colombian Exports of Goods and Services, Current Prices (US$ Billion), 2002-2011 
Figure 38: Colombian Imports of Goods and Services, Current Prices (US$ billion), 2002-2011 
Figure 39: Colombian Gross National Disposable Income (USD Billion), 2002-2011
Figure 40: Colombian Manufacturing Output (US$ Billion), 2002-2011
Figure 41: Colombian Consumer Price Index, 2008-2017 
Figure 42: Colombian Wholesale Price Index, 2002-2011 
Figure 43: Colombian Local Currency Unit Per US$ (period average), 2009-2018 
Figure 44: Colombian Local Currency Unit Per EUR (period average), 2008-2017 
Figure 45: Colombian Lending Rate (%), 2002-2011 
Figure 46: Colombian Deposit Rate (%), 2002-2011 
Figure 47: Colombian Real Interest Rate (%), 2002-2011 
Figure 48: Market Capitalization of Listed Companies in Colombia (US$ Billion), 2003-2012
Figure 49: Market Capitalization of Listed Companies in Colombia (% of GDP), 2002-2011 
Figure 50: Total Government Cash Surplus/ Deficit (LCU Billion), 2002-2011 
Figure 51: Government Cash Surplus/ Deficit as % of GDP (LCU), 2001-2010 
Figure 52: Colombian Goods Exports as % of GDP, 2002-2011 
Figure 53: Colombian Goods Imports as % of GDP, 2002-2011 
Figure 54: Colombian Goods Balance a % of GDP, 2002-2011 
Figure 55: Colombian Services Imports as % of GDP, 2002-2011 
Figure 56: Colombian Services Exports as a % of GDP, 2002-2011 
Figure 57: Colombian Services Balance as % of GDP, 2002-2011 
Figure 58: Colombian Foreign Direct Investment, net (BoP, current US$ Billion) , 2002-2011 
Figure 59: Colombian Net Foreign Direct Investment as % of GDP, 2002-2011
Figure 60: Colombian International Reserves, including Gold (US$ Billion), 2002-2011 
Figure 61: Colombian External Debt as % of GDP, 2001-2010 
Figure 62: Total Conventional Thermal Electricity Net Generation (Billion Kilowatt Hours), 2002-2011 
Figure 63: Colombian Hydroelectricity Net Generation (Billion Kilowatt Hours), 2002-2011 
Figure 64: Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 
Figure 65: Colombian Total Electricity Exports (Billion Kilowatt Hours), 2001-2010 
Figure 66: Colombia\'s Proved Reserves of Natural Gas (Trillion Cubic Feet), 2004-2013 
Figure 67: Colombian Total Petroleum Consumption (Thousand Barrels Per Day), 2003-2012 
Figure 68: Colombian Crude Oil Proved Reserves (Million Barrels), 2004-2013 
Figure 69: Colombian Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts), 2001-2010 
Figure 70: Roads, Total Network (Km), 2000-2009 
Figure 71: Air Transport (Freight), Million ton-km, 2002-2011 
Figure 72: Overall Construction (US$ Million), 2007-2016
Figure 73: Mining, Manufacturing, Utilities Output (USD Billion), 2002-2011 
Figure 74: Colombian Research and Development Expenditure (Local Currency Thousands), 2001-2010 
Figure 75: Patents Granted, 2003-2012 
Figure 76:Telephone Lines in Colombia (in Millions), 2002-2011 
Figure 77: Telephone Lines Penetration Rate in Colombia (per 100 people), 2002-2011

Make an enquiry before buying this Report

Please fill the enquiry form below.

  • Full Name *
  • Your Email *
  • Job Title
  • Company
  • Phone No. * (Pls. Affix Country Code)
  • Message
  • Security Code *