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Industry Overview: Modernization of Asian Military
Mr. Subhranshu Sekhar Das
Director – Defense & Security Practice
Frost & Sullivan Asia Pacific
Training & Simulation to Drive Military Modernization in APAC
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Training and Simulation to Drive Modernization of Asian
Military Forces
Most Military modernization expenditure is expected to be driven by spending in training
and simulation.
Globally, The military Training & Simulation Industry is expected to grow at a CAGR of 2.5
per cent to gain $9.21 billion from 2012 to 2021.
The APAC region is expected to witness one of the highest rates of military modernization
primarily being driven by spending in training and simulation.
Of all three departments of military forces (Army, Navy, and Air Force), most expenditure in
training and simulation is expected to be witnessed by the Air Force in the APAC region.
Spending will be driven by adoption of significant, complex combat platforms, increasing
fleet sizes, and new procurements in Asia-Pacific, the Middle East, and Central Asia.
Source: Frost & Sullivan analysis.
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Significance of Training & Simulation in Military
Modernization – Key Takeaways
Increasing Geo-Political Instabilities and demand for military modernization to better deal
with threats in the region.
Rise of Asymmetric warfare and a need to enhance situational awareness expected to
create demand for technology adoption in Air Force. Example: Augmented Reality to be a
key technology adoption by many countries’ armed forces.
Adoption of newer platforms within Air Force and Naval forces are driving a demand for
Training & Simulation across countries’ armed forces.
Shortage of qualified Air Force Personnel and Pilots brings to light the increasing
requirement to train military personnel.
A number of military modernization programs being undertaken by certain APAC countries
involve introduction of newer technologies which require personnel to be trained.
Source: Frost & Sullivan analysis.
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Military
Military Training and Simulation Industry
End Users
Training
Types
Live
Capability
Types:
Training
Application
Support
Platforms
Live, Virtual, and
Constructive (LVC)
Maintenance
Systems
Constructive
Virtual
Definitions & Scope
Source: Frost & Sullivan analysis.
Armed forces operating across the Army, Navy and Air Force divisions of Military.
Platform based training for ab initio (or initial), conversion, and mission training intended
for pilots, crew, drivers, etc.
Systems-based training includes training for Strategic Training, involving C4ISR
missions, and Tactical Training, involving Weapon Systems, Dismounted Soldier Training
Systems, Counter Improvised Explosive Devices (IEDs) training, etc.
Maintenance training is intended for military technicians to be trained to maintain and
repair platform and related sub-systems, such as avionics, either for routine and/or
unexpected maintenance activities, such as damage control.
Training accomplished by real people, on real equipment and actual devices, in real
environments or mock landscapes. Eg. Training exercises performed with aircraft
produced specifically for training pilot.
Training accomplished by real operators on simulators or in a simulated environment. Eg.
Training performed with Flight simulators, part tasks trainers including flight deck, bridge,
platform procedures, etc.
Training based on computer generated forces, mostly desktop based. Eg. Real time
radar software, computer 2D/3D virtual reality war gaming, etc.
Training combining live, virtual, and constructive procedures into an Integrated
Architecture, with linking different simulators and software
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Asia-Pacific—Industry Drivers and RestraintsIn
du
str
y D
rivers
Ind
us
try R
estr
ain
ts
The region at large has undertaken the modernisation
and expansion of most of its platform fleets, which are
expected to comprise new, complex systems and sub-
systems
There is a general trend to reduce armed forces
personnel and to rationalise defence budgets to face
global economic challenges
Lack of skilled armed forces personnel first have
to be adapted to new military structures with a
joint decision-making process mindset
There is strong interest for integrated and
constructive training to train armies in shorter
turnaround times
Military Training and Simulation Industry: Key Industry Drivers and Restraints, Asia-Pacific, 2013–2021
Due to geographical constraints, improving naval
training will be at the forefront of regional strategic
priorities
Preferences for low-cost, indigenous
programmes and restrictive offsets policies
impede the compatibility of fully immersive and
integrated training solutions
Source: Frost & Sullivan analysis.
1–2 Years 3–4 Years 5–9 Years
High Medium-High Medium LowLow-Medium
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Asia-Pacific—Industry Challenges
Projected
Impact
High
Low
CertaintyLow High
The Unexpected The Expected
Regional interest to
acquire significant
C4ISR systems
Regional opportunities
increase Industry
consolidation
Large available
incomes for new
advanced
platforms and
systems
programmes
Fast growing
economies, not yet
significantly impacted
by the global
economic turmoil
Growing concerns in
regards to territorial
disputes
Critical need to
improve naval warfare
capabilities
Regional OEMs increasingly
gaining Industry shares
US engagement
into the Chinese
disputed islands
conflicts
---- Main Challenges
Source: Frost & Sullivan analysis.
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Military Training Demand
(Industry Size)
Industry
Growth
(CAGR)
Low
0%–3%Low
<10 $Billion
High
>150 $Billion
Latin
America
Europe
Middle
East High
Attractiveness
Low
Attractiveness
High
3%–5%Asia-
Pacific
North
America
Africa
Region CAGR
Africa 0.03%
Asia-Pacific 4.3%
Central Asia 3.5%
Europe 1.8%
Latin America 3.0%
Middle East 3.9%
North America 1.0%
Central
Asia
Total Military Training and Simulation Industry: Industry
Attractiveness Map, Global, 2012–2021
Regional Industry Attractiveness Map
Source: Frost & Sullivan analysis.
Key Takeaway: The Asia Pacific region is expected to witness the highest growth of Military Training
and Simulation spending..
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Military Training and Simulation Industry—Expenditures
Forecast by End Users
• Total Military Training and Simulation
spending is expected to reach USD
46.09 Billion by 2021 from USD 36.88
Billion in 2012.
• APAC military Training and Simulation
spending is expected to increase from
USD 8.78 Billion in 2012 to USD 12.90
Billion by 2021.
• APAC Military Training and Simulation
Expenditure is expected to increase at
a CAGR of 4.3 % from 2012 to 2021.
• The forecast demand across land
forces is mainly steady, stimulated by
strong new procurements, but are
slightly less important due to regional
geographic constraints and regional
willingness to increase their force
projection capabilities.
Source: Frost & Sullivan analysis.
0%
20%
40%
60%
80%
100%
2012 2021
Global 76.2% 72.0%
Asia-Pacific 23.8% 28.0%
Ind
ustr
y S
hare
(%
)
Military Training & Simulation Percentage Industry Share Trend,
2012-2021
9M8FB-16
Source: Frost & Sullivan analysis.
Air Force Military Training and Simulation Industry—
Expenditures Forecast by End Users
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
APAC 4,175.6 4,338.1 4,505.9 4,743.9 4,958.7 5,185.3 5,423.9 5,716.1 5,986.3 6,301.1
Global 18,269.6 18,638.6 19,019.1 19,627.9 20,095.4 20,562.0 21,071.6 21,868.1 22,514.0 23,301.2
0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
Exp
en
dit
ure
s (
$ M
illio
n)
Year
Air Force Military Training and Simulation Industry: Expenditures Forecast by End Users, 2012‒2021
Key Takeaway: Air Force Military Training and Simulation spending is expected to be driven by the
APAC countries.
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Air Force Military Training and Simulation Industry—
Industry Share Evolution
Source: Frost & Sullivan analysis.
• APAC Air Force Training and
Simulation spending is expected to
reach USD 6.30 Billion by 2021 from
USD 4.17 Billion in 2012.
• The APAC Air Force Training and
Simulation Industry which comprises
22.9% of Global Air Force Training
and Simulation spending is expected
to contribute to 27.0% by 2012.
• Adoption and implementation of such
solutions will be driven by the
modernisation of military capabilities
in Japan, New Zealand, and
Australia.
• Rising demand for cost-efficient
training solutions will drive Air Force
Training and Simulation in APAC.
0%
20%
40%
60%
80%
100%
2012 2021
Global 77.1% 73.0%
APAC 22.9% 27.0%
Mark
et
Sh
are
(%
)
Air Force Training and Simulation Industry: Expenditures Forecast,
APAC vs. Global 2012 - 2021
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APAC Military Training and Simulation Industry—
Expenditures Forecast by End Users
Source: Frost & Sullivan analysis.
Key Takeaway: Air forces are expected to hold most of the training Industry opportunities as
countries with emerging industries increase their air fleets with advanced and complex platforms.
0
5000
10000
15000
2012 2021
Naval 2,603.9 3746.2
Land 2004.8 2848.3
Air 4175.6 6301.1
Exp
en
dit
ure
s (
$ M
illio
n)
Military Training and Simulation Industry: Expenditures Forecast by End
Users, 2012‒2021 APAC
0%
20%
40%
60%
80%
100%
2012 2021
Naval 29.6% 29.1%
Land 22.8% 22.1%
Air 47.5% 48.9%
Ind
ustr
y S
hare
(%
)
Military Training & Simulation Percentage Industry Share Trend,
2012-2021 APAC
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Source: Frost & Sullivan analysis.
APAC Military Training and Simulation Industry—
Expenditures Forecast by End Segments
• As market demand is mainly
dominated by air and naval
platform-based training, majority of
expenditure will be driven by live
training, expecting to reach USD
10.09 billion by 2021.
• However, end users’ demand for
virtual and constructive training will
both grow at CAGRs of 4.1 per cent
and 4.2 per cent, stimulated by
Australian, Bruneian, Malaysian,
and Indonesian demand.
• Nonetheless, local and cost-
affordable training solutions explain
why the constructive training will
constitute a lesser portion of overall
spending by 2021.
0%
20%
40%
60%
80%
100%
2012 2021
LVC 1.5% 1.3%
Constructive 8.1% 7.9%
Virtual 12.7% 12.5%
Live 77.8% 78.3%
Mark
et
Sh
are
(%
)
APAC Military Training & Simulation Percentage Market
Share Trend, 2012-2021
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Source: Frost & Sullivan analysis.
APAC Military Training and Simulation Industry—
Expenditures Forecast by Capabilities
6%
24%
70%
Military Training and Simulation Industry: Expenditures Forecast
by Capabilities, APAC 2013
Maintenance Systems Platforms
• While the region is significantly extending its military
capabilities, demand will stay largely focused on
platform-based training to enable regional armed
forces to operate new, advanced platforms, hence
generating a strong CAGR of 4.5 per cent.
• Maintenance platform-based training is also
expected to increase during the forecast period, as
militaries need to train their personnel to maintain
larger, complex fleets, as is the case in Malaysia and
Indonesia.
• Reluctance to outsource maintenance to foreign
OEMs will also be responsible for maintenance
platform based training.
• With the exception of Australia and New Zealand,
systems training remains a nascent trend in Asia-
Pacific, with an early integration of advanced C4ISR
capacities in India, China, and South Korea.
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Asia-Pacific—Major Training and Simulation Programmes
(non-exhaustive list)
Programmes Quantity Timeline Cost Description
Platform Acquisition
programme with
Transfer of
Technology
3 submarines 2013–onward $1.1 B
South Korean Daewoo Shipbuilding and Marine
Engineering will deliver three 1,400-ton class diesel-
powered submarines to the Indonesian Navy. Under this
agreement, Daewoo will train naval crews and technicians.
G2B Platform
acquisition
programmes
28 T-50 2012 Circa $840 M
Korean Aerospace Industries is expected to deliver 16 T-
50s to Indonesia and potentially12 to Philippines, as both
countries have expressed interest to acquire this supersonic
advanced trainer, jointly developed with Lockheed Martin.
Memorandum of
Understanding
Platform and
C4ISR simulators2012 NA
The Turkish Company Havelsan has signed with the
Pakistani Air and Land Forces to provide C4ISR training
and flight simulators for the F-17 Thunder, F-16 Fighting
Falcon, C-130 Hercules, Mil Mi-17, Super Mushak, artillery,
and driving simulators.
G2B System and
training Programme
Japanese MCH-
101 fleet2012–onward NA
The Japanese Maritime Self Defence Force has awarded a
contract to Science Applications International Corporation to
provide Mine Warfare and tactical training for this helicopter
Airborne Mine Countermeasures (AMCM), which includes
the AN/AQS-24A mine hunting side scan sonar, the
AN/AES-1 airborne laser mine detection system, and the
MK-104 acoustic minesweeping system.
Training CentreAir, Land, & Naval
Australian Forces2012–onward NA
Rheinmetall Group is opening a simulation-based training
centre in Adelaide.
Joint Venture
Between CAE and
Bruneian Air Force
Multi-purpose
Training Centre 2012–onward
At least $169 M
training contract
included
The Ministry of Finance of Brunei will partner with CAE
within a 60:40 joint venture and has already given an award
to the Canadian training firm for the Sikorsky S-70i, Pilatus
PC-7, and Sikorsky S-92.
Source: Frost & Sullivan analysis.
15M8FB-16
Asia-Pacific—Training and Simulation Next Mega Trend
• Domestic Asia-Pacific defence companies have recently become noteworthy challengers and are gaining
market share against leading global OEMs, both regionally and globally.
• Across the Air Training Segment:
o Korean Aerospace Industries has successfully managed to procure its KT-1 light attack trainer to
Indonesia, Turkey, and Peru; meanwhile the Royal Thai Air Force has chosen the Singapore-based
company ST Electronics, to deliver F16A simulators, at a total estimated value of $18 Million.
o China is developing the Lead-In Fighter Trainer, the Hongdu L15, in collaboration with the Russian
Yak Aircraft Corporation; apart from the People’s Liberation Air Force in China, this programme could
also interest Pakistan and Latin American countries, such as Bolivia and Venezuela.
• Regarding the Naval Segment:
o Daewoo Shipbuilding Marine and Engineering Co., which delivered naval vessels to Indonesia and
Bangladesh, is currently developing training vessels, which could catch Malaysian and Israeli navies’
interests.
o Because the company is consolidating its market share though US FMS, as seen in the Fast Missile
Craft being built for the Egyptian Navy, ST Electronics is expanding its training products range with
innovative and immersive solutions, such as the Fleet Instrumented Sea Training System (FISTSTM).
• Although this nascent market penetration is mainly benefiting from affordable, high training technology and
COTS procurement approaches, these regional companies are slowly increasing their global presence and
have already positioned themselves with less expensive and efficient cyber and LVC training products,
which could significantly reduce market opportunities for traditional leading OEMs.
Source: Frost & Sullivan analysis.
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The Last Word—Overall Predictions
2Augmented Reality will revolutionise platform-based training and platform
maintenance training by significantly reducing operating costs while improving
soldiers’ task specialisation.
3Global financial and political instability to challenge the current training business
models, mostly affecting outsourcing, contract duration, and quantity, putting
existing contract renewals at risk and restricting new contract opportunities.
1While the APAC region is significantly extending its military capabilities, demand
will stay largely focused on platform-based training to enable regional armed
forces to operate new, advanced platforms.
Source: Frost & Sullivan analysis.
4
With the exception of Australia and New Zealand, systems training remains a
nascent trend in Asia-Pacific, with an early integration of advanced C4ISR
capacities in India, China, and South Korea, explaining a lower, but relative
CAGR of 3.9 per cent.
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