Turkey's Unique Geo-strategic Position Influences the Country's Defence Procurement Policies, Says Frost & Sullivan
- Frost & Sullivan forecasts indicate that Turkey's defence budget will continue to rise steadily
LONDON, Dec. 17, 2012 /PRNewswire/ -- Turkey is 15th among the global top military spenders and 6th in Europe, accounting for 1.1 per cent of global military spending for the year 2011. The state's unique geo-political condition, where both domestic and foreign security threats remain a genuine concern, has encouraged sustained military spending in contrast to global trends. However, Turkey's main procurement agency, the Undersecretariat of Defence (SSM), has expressed its commitment to reducing Turkey's dependence on foreign procurement and that the modernisation trends should be considered within this context.
Frost & Sullivan's recent study on "Revenue Opportunity & Stakeholder Mapping - Turkey Defence Market," finds that the market earned revenues of USD 18.76 billion in 2012 and estimate it to reach USD 24.70 billion in 2021. The Compound Annual Growth Rate (CAGR) is calculated at 3.29 per cent (2011-2020).
"Turkey's bilateral position as a North Atlantic Treaty Organisation (NATO) member with significant West Asian associations is being leveraged to drive growth in its domestic defence market," says Frost & Sullivan Research Analyst Yasha Izadpanah, one of the authors of the study. "Investment in domestic manufacturing infrastructure is the principal trend in the Turkish Defence Market at present. This will continue, buoyed by Turkey's steady economy and political intent to establish a self-reliant defence industry."
The Turkish market is dominated by the Turkish Armed Forces Foundation (TAFF), a governmental organisation that owns a full or partial share in 18 of Turkey's leading defence companies. As the domestic market becomes increasingly self sufficient it can be expected that Turkish companies will become globally competitive, particularly through the exportation of the four key national projects; the Altay Battle Tank, the ANKA MALE UAV, T-129 Attack Helicopter and the Milgem Corvette.
"However, Turkey lacks much of the technology and infrastructure required to fulfill its new military ambitions, which is what makes good business opportunities for companies with advanced capabilities, particularly in air and naval programs," adds Frost & Sullivan Research Analyst Koray Ozkal, co-author of the research. Entry to the Turkish market should be supported by a partnership with local companies looking to raise their expertise and industrial infrastructure.
"Frost & Sullivan research indicates that C4ISR and air platforms make 66 per cent of military imports as a result of Turkey's lack of infrastructure. However, the time to build this cooperation is now as the opportunities for partnership will diminish as indigenous technical capability continues to grow in Turkey," he notes.
As budget reduction continues in the US and Europe, the defence industry is required to look toward new markets. Turkey's increasing ventures beyond its borders, act as a bridge to potentially lucrative new markets. This element of the Turkish market should be considered for long term investments.
"Turkey will potentially become a major exporter to GCC and ASEAN countries; and, TAF will play an increasingly integral military role in the Middle East and beyond, requiring next generation technologies," concludes Koray Ozkal. "The Turkish market, however difficult to enter and operate, is an attractive target for companies otherwise dependent on other European and North American Markets."
Frost & Sullivan study on "Revenue Opportunity & Stakeholder Mapping- Turkey Defence Market" (M77B-16) will be available soon. If you would like to obtain more information about this report, please contact Joanna Lewandowska, Corporate Communications, at joanna.lewandowska@frost.com. Please include your full contact details in the query.
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