Saudi Arabia is, and is expected to remain, one of the major defence markets in the world, dedicating up to 10% of GDP to this sector, with a significant part of this spent on external procurement. An Understanding Document was signed on 21 December 2005 between the UK and Saudi Arabian governments, outlining plans to modernise the capabilities of the Saudi armed forces. These modernisation activities are underway, helping to develop a greater indigenous capability in the Kingdom.
The Australian government has committed to an increase in defence spending of 3% p.a. (real) until 2015–16, on an annual budget of A$22 billion. Its stated preference is to maintain a strong local defence capability which will underpin strong market growth. It has also released the Defence Capability Plan 2006–2016, which outlines the major capital equipment outlays over this time frame. A total of A$74.6bn is forecast to be spent on capital investment over the next decade, reflecting the government’s commitment to growth in defence spending.
South Africa, with one of the best trained and equipped militaries in sub-Saharan Africa, is spending between 1.2% and 1.6% p.a. of its GDP on defence. It is currently undergoing a major re-equipment programme as a result of defence procurements approved by the government in 1999.
The Swedish military is also undergoing reform as it changes from a force for defence against invasion to one that is more flexible and mobile. Since the beginning of this process, defence spending fell from 2% of GDP to 1.4% in 2006. Over the same period there has been government encouragement for the industry to move towards greater participation in international collaborative programmes.
To enhance its positions in these markets and optimise its ability to execute its home market strategy, the Company intends to establish home market advisory boards in those markets where it would benefit from advice focused on in-country business development and industrial partnering.
