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Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 Product Synopsis This report is the result of SDI's extensive market and company research covering the Ukrainian 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 Ukrainian 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 Ukrainian defense industry. What is the current market landscape and what is changing? Ukraine, Europe's second-largest country, is anticipated to invest US$22.7 billion to strengthen its armed forces during the forecast period. The country's total defense expenditure, which recorded a CAGR of 4.26% during the review period, is expected to record a CAGR of 20% over the forecast period. This expected increase is primarily the result of the country's security and defense forces transformation strategy adopted by Ukraine in 2013. The first phase of the defense transformation extends upto 2017 and the second phase upto 2023. Other factors contributing to the increase in defense expenditure are growing tension between Ukraine and Russia, the modernization of existing weapon systems, and participation in international peacekeeping missions. Also, as a percentage of GDP, Ukraine's defense expenditure is expected to increase from 1.05% in 2013 to 2.4% by 2018, in accordance with the country's security and defense transformation strategy. The country's homeland security expenditure is projected to record a CAGR of 8.11% over the forecast period, a consequence of an increase in organized crime and maritime security threats. What are the key drivers behind recent market changes? Conflict with Russia, military modernization, and the upgrade of existing systems to drive defense expenditure. What makes this report unique and essential to read? Reform and development program of the armed forces, tensions with Russia, acquisition of new military hardware systems, and participation in peacekeeping missions expected to drive Ukrainian defense expenditure. Key Features and Benefits The report provides detailed analysis of the current industry size and growth expectations from 2014 to 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 Ukrainian 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 Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 landscape of the defense industry in Ukraine. 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 Although Ukraine is expected to invest a total of US$22.7 billion in its armed forces over the forecast period, an average of 19.2% of this total is expected to be invested in the modernization of the country's defense equipment, limiting the opportunities available for both foreign OEMs and domestic defense companies. Additionally, despite Ukraine offering skilled labor at a lower cost than the majority of European countries, foreign OEMs are unable to make significant investments in the country's defense industry due to the prohibition of FDI in defense. With the exception of the government's military modernization plans, expansion of the country's domestic defense industry has been postponed in the wake of the global financial crisis. This lack of commitment to defense innovation increases the reluctance of foreign investors to enter the industry. However, the country has initiated a defense transformation program to be implemented in two phases (upto 2017 and upto 2023) and UAH131 million (US$16.3 billion) has been allocated for the first phase. The defense modernization plan is expected to increase Ukraine's market attractiveness in the coming years. Despite possessing both a strong technological base and skilled labor, the Ukrainian defense industry has so far been unable to produce modern technological hardware such as advanced fighter planes, submarines, and warships. Instead, growth of the country's domestic defense industry has stalled as the majority of reforms to modernize the country's defense industry have been postponed, while only 20% of state-run programs for the development of the country's defense complex were implemented in 2010. In 2009, the defense complex of Ukraine received very few orders and the country did not have the financial resources to revamp its production facilities. Furthermore, in 2009, the Ukrainian government owed the domestic defense industry US$400 million. As a result of these factors, Ukraine's domestic defense industry is unable to improve its infrastructure and enhance its capabilities. Almost half of the country's defense facilities do not fulfill modern strategic requirements and need revamping. However, in 2013, the country's defense industry started to see profit. Ukraine's state defense holding company, UkrOboronProm, that unites 125 domestic defense enterprises registered profits of US$51.2 million in the first half of 2013. Coupled with the budget funding from the country's newly started defense transformation program, Ukraine may improve its defense infrastructure in the forecast period. Key Highlights Reform and development program: Ukrainian defense expenditure is expected to driven by reform and development program of its armed forces. The transformation of Ukraine's security and defense sector will be implemented in two stages - the first stage up to 2017 and the second stage up to 2023. In 2013, the Ukrainian Cabinet approved the Army reform state program 2013-2017, with an aim of transforming its defense forces into a fully professional Army, similar to the modern European armed forces that are small in number but well-trained and well-equipped. The Ukrainian Minister of Defense allocated UAH131 billion (US$16.3 billion) for reforms of the armed forces up to 2017. Ukraine plans to achieve its transformation goals by reducing the number of personnel without compromising the country's fighting capacity. Ukraine is expected to increase the fund allocation towards capital expenditure and training up to 2023. Organized crime: Criminal activity such as the illegal drugs trade, human trafficking, robbery, thefts, murders, street crime, and cybercrime is rapidly increasing in Ukraine. The crime situation in Ukraine is worsened due to corruption within the government and insufficient law enforcement. Although Ukraine is not a major consumer or producer of drugs, a large number of illegal substances are trafficked through the country to Central and Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 Western European countries such as Germany, France, Spain, and the UK. Before entering Ukraine, these drugs are trafficked from Afghanistan and pass through Russia, the Caucasus, Turkey, Romania, Moldova, and Poland. Drugs rings also commonly utilize Ukraine's seaports and rivers as part of the “Balkan Route” for smuggling drugs into Western European countries. In order to control increasing levels of drugs smuggling, the Ukrainian government is expected to invest in explosive detection systems (EDS) including trace chemical detectors (TCD) capable of tracing drug residue, and machines with the capability to screen items through the use of X-rays or millimetric wave imaging. As a direct consequence of the global economic crisis, Ukrainian arms exports registered a decline in 2008-2009. However, in 2010, it regained momentum and registered a 36% growth over 2009. During 2008-2012, the country's defense exports registered a CAGR of 38.34%. Ukrspecexport, which is Ukraine's state-owned arms exporter, and its subsidiaries saw sales increase by 2% over 2011 to value US$1.02 billion in 2012. As domestic procurement is negligible, Ukraine's domestic defense industry is heavily dependent on arms exports. The country is expected to export weapons worth more than US$5 billion over the forecast period. 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. Ukrainian Defense Expenditure Expected To Record A Cagr Of 20% During The Forecast Period 3.1.2. Reform And Development Program, Strained Relationship With Russia, Acquisition Of New Military Hardware Systems, And Peacekeeping Missions Expected To Drive Ukrainian Defense Expenditure 3.1.3. Defense Expenditure Expected To Be 2.4% Of Gdp By 2018 3.2. Analysis Of Defense Budget Allocation 3.2.1. Capital Expenditure Allocation Of Overall Defense Budget Expected To Witness An Increase During The Forecast Period 3.2.2. The Ukrainian Air Force Accounts For The Majority Of The Country's Defense Expenditure 3.2.3. Ukrainian Army Expenditure Expected To Register A Cagr Of 11.69% During The Forecast Period 3.2.4. Ukrainian Navy Allocation Of Overall Defense Budget Expected To Increase 3.2.5. Ukraine Expected To Invest Us$1.6 Billion In Its Air Force Over The Forecast Period Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 3.2.6. Direct Subordination Units (dsu) Expenditure Projected To Record A Cagr Of 9.42% Over The Forecast Period 3.2.7. Per Capita Defense Expenditure Expected To Increase Over The Forecast Period 3.3. Homeland Security Market Size And Forecast 3.3.1. Homeland Security Expenditure Expected To Record A Cagr Of 8.11% During The Forecast Period 3.3.2. Organized Crime, Maritime Security Threats, And Ethnic Tensions Expected To Encourage Investment In The Procurement Of Homeland Security Equipment 3.3.3. Ukraine Considered At 'some Risk' Of Terrorist Attack 3.4. Benchmarking With Key Global Markets 3.4.1. During The Forecast Period, Ukraine Is Expected To Continue To Exercise Limited Influence In The International Arms Market 3.4.2. Ukrainian Military Expenditure Is Limited Compared To World's Leading Defense Spenders 3.4.3. In Comparison With The World's Leading Defense Spenders, Ukrainian Defense Expenditure, As A Percentage Of Gdp, Is Moderate 3.4.4. According To The Sdi Terrorism Index, Ukraine Faces Some Risk Of Terrorist Threat 3.4.5. During The Review Period, Ukraine Was The World's Ninth-largest Arms Exporter 3.5. Market Opportunities: Key Trends And Drivers 3.5.1. Maritime Defense Equipment Expected To Experience Increased Demand In The Forecast Period 3.5.2. Market Opportunities For Air Defense Systems Expected To Increase 3.5.3. Border Security And Critical Infrastructure Protection Equipment Will Experience Increased Demand 3.5.4. Demand For Aircraft And Helicopters To Rise In The Forecast Period 3.5.5. Digital Communication Systems Present Attractive Opportunities 4 Defense Procurement Market Dynamics 4.1. Import Market Dynamics 4.1.1. A Relatively Small Defense Budget Limits Ukraine's Defense Imports 4.2. Export Market Dynamics 4.2.1. Ukrainian Arms Exports Increased During 2008-2012 4.2.2. The Ukrainian Defense Industry Has A Diverse Consumer Base 4.2.3. The Majority Of Ukrainian Defense Exports Consist Of Armored Vehicles And Ships 5 Industry Dynamics 5.1. Five Forces Analysis 5.1.1. Bargaining Power Of Supplier: Low To High 5.1.2. Bargaining Power Of Buyer: Low 5.1.3. Barrier To Entry: High 5.1.4. Intensity Of Rivalry: Low To High 5.1.5. Threat Of Substitution: High 6 Market Entry Strategy Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 6.1. Market Regulation 6.1.1. Ukraine Follows Prohibitive Defense Industry Fdi Policy 6.2. Market Entry Route 6.2.1. Joint Development Of Defense Goods Provides Investors With A Market Entry Opportunity 6.2.2. Foreign Investors Can Enter The Industry Through Direct Sales 6.3. Key Challenges 6.3.1. Small Defense Budget Offers Equipment Manufacturers Limited Investment Potential 6.3.2. Lack Of Necessary Infrastructure Impedes Growth Of Domestic Defense Industry 6.3.3. Corruption And A Lack Of Transparency Discourages Investors From Entering The Market 7 Competitive Landscape And Strategic Insights 7.1. Competitive Landscape Overview 7.2. Key Public Sector Companies 7.2.1. Antonov Astc: Overview 7.2.2. Antonov Astc: Products And Services 7.2.3. Antonov Astc: Recent Announcements And Strategic Initiatives 7.2.4. Antonov Astc: Alliances 7.2.5. Antonov Astc: Recent Contract Wins 7.2.6. Rpc Fort: Overview 7.2.7. Rpc Fort: Products And Services 7.2.8. Rpc Fort: Alliances 7.2.9. Rpc Fort: Recent Contract Wins 7.2.10. Kmdb: Overview 7.2.11. Kmdb: Products And Services 7.2.12. Kmdb: Recent Announcements And Strategic Initiatives 7.2.13. Kmdb: Recent Contract Wins 7.2.14. Malyshev Plant: Overview 7.2.15. Malyshev Plant: Products And Services 7.2.16. Malyshev Plant: Recent Announcements And Strategic Initiatives 7.2.17. Malyshev Plant: Recent Contract Wins 7.2.18. Avtokraz Holding Company: Overview 7.2.19. Avtokraz Holding Company: Products And Services 7.2.20. Avtokraz Holding Company: Recent Announcements And Strategic Initiatives 7.2.21. Avtokraz Holding Company: Recent Contract Wins 7.2.22. Motor Sich: Overview 7.2.23. Motor Sich: Products And Services 7.2.24. Motor Sich: Recent Announcements And Strategic Initiatives 7.2.25. Motor Sich: Alliances 7.2.26. Motor Sich: Recent Contract Wins 7.2.27. Aviant State Enterprise Kyiv Aviation Plant: Overview 7.2.28. Aviant State Enterprise Kyiv Aviation Plant: Products And Services 7.2.29. Aviant State Enterprise Kyiv Aviation Plant: Recent Announcements And Strategic Initiatives Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 7.2.30. Aviant State Enterprise Kyiv Aviation Plant: Alliances 7.2.31. Aviant State Enterprise Kyiv Aviation Plant: 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 % Of Gdp 8.2.19. Goods Imports As % Of Gdp 8.2.20. Goods Balance As % Of Gdp 8.2.21. Services Imports As % Of Gdp 8.2.22. Services Exports As % 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 8.2.27. International Reserves, Including Gold (us$ Billion) 8.2.29. External Debt As % Of Gdp 8.3. Energy And Utilities 8.3.1. Total Conventional Thermal Electricity Net Generation 8.3.2. Hydroelectricity Net Generation 8.3.3. Nuclear Electricity Net Generation 8.3.4. Total Conventional Thermal Electricity Installed Capacity 8.3.5. Total Electricity Exports (billion Kilowatt Hours) Future of the Ukrainian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 8.3.6. Total Electricity Imports (billion Kilowatt Hours) 8.3.7. Proved Reserves Of Natural Gas 8.3.8. Total Petroleum Consumption 8.3.9. Crude Oil Proved Reserves 8.3.10. Total Non-hydro Renewable Electricity Net Generation (billion Kilowatts) 8.4. Infrastructure Quality And Availability 8.4.1. Roads, Total Network 8.4.2. Rail Lines (total Route), Total Network 8.4.3. Air Transport (freight) 8.4.4. 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 ResearchMoz(http://www.researchmoz.us/) is the one stop online destination to find and buy market research reports & Industry Analysis. 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