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Future of the Peruvian Defense Industry – Market

Attractiveness, Competitive Landscape and

Forecasts to 2020

Future of the Peruvian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020

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Summary

“Future of the Peruvian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts

to 2020” report offers the reader detailed analysis of the defense budget over the next five years. Alongside

it offers insights into the market opportunities and entry strategies adopted by foreign OEMs (original

equipment manufacturers) to gain a market share in the Peruvian defense industry.

The report provides detailed analysis of the current industry size and growth expectations during 2016–

2020, including highlights of the key growth stimulators. It also benchmarks the industry against key global

markets and provides detailed understanding of emerging opportunities in specific areas.

Key Findings

The Peruvian defense budget values US$XX billion in 2015, and recorded a CAGR of XX% during the

historic period. Expenditure is anticipated to grow at a CAGR of XX% over the forecast period to value

US$XX billion in 2020. The Peruvian defense budget is mainly driven by the modernization efforts to

replace its aging military hardware, threats from the Shining Path separatist group, the country’s

participation in international peacekeeping missions, and volatile relationships with its neighbors, especially

Chile. In addition, capital expenditure is expected to record a CAGR of XX% over the forecast period to

value US$XX million in 2020. On a cumulative basis, the country is estimated to spend USXX billion on the

procurement of defense equipment during 2016-2020. Over the forecast period, demand for equipment is

expected to mainly revolve around frigates, multi-role aircraft, submarines, and main battle tanks. The

remaining budget will be allocated to revenue expenditure, which includes salaries of personnel,

operational expenses, and training and development.

Key Features and Benefits

The report provides detailed analysis of the Peruvian defense industry during 2011–2020, including the

factors that influence the military expenditure. It provides detailed expectations of growth rates and

projected total expenditure.

It provides the manufacturers with insights on market opportunities along with industry structure and

dynamics prevalent in the country. In addition, the report focuses on the regulations governing the Peruvian

defense industry and the potential market entry strategies with an expert analysis of the competitive

structure.


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1. Market Attractiveness and Emerging Opportunities

1.1. Defense Market Size Historical and Forecast

1.1.1. Peruvian defense expenditure expected to register a CAGR of XX% over the forecast period

In 2015, Peruvian defense expenditure values US$XX billion and registered a CAGR of XX% during the

historic period. It is estimated to grow at a CAGR of XX% over the forecast period to value US$XX billion in

2020. Increasing threats from narco-terrorists, the maritime territorial dispute with Chile, participation in

peacekeeping missions, and modernization of its armed forces are anticipated to drive Peruvian defense

expenditure over the forecast period. Cumulatively, defense expenditure is expected to value US$XX billion

during 2016–2020.

The following table and figure show the Peruvian defense expenditure during the historic period:

Table 1: Peruvian Defense Expenditure ( US$ Billion), 2011–2015

Year Defense expenditure (US$ bn)

Defense growth percentage

2011

2012

2013

2014

2015

CAGR 2011–2015

Source: Ministry of Defense and SDI analysis © SDI

Figure 1: Peruvian Defense Expenditure (US$ Billion), 2011–2015


-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

1

2

3

4

5

6

2011 2012 2013 2014 2015

Gro

wth

rate

(%)

Def

ense

exp

end

itu

re (U

S$

Bill

ion

)

Defense expenditure (US$ bn) Defense growth percentage


4

The following table and figure show projected defense expenditure of Peru over the forecast period:

Table 2: Peruvian Defense Expenditure (US$ Billion), 2016–2020

Year Defense expenditure (US$ bn)

Defense growth percentage

2016

2017

2018

2019

2020

CAGR 2016–2020


Figure 2: Peruvian Defense Expenditure (US$ Billion), 2016–2020


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

1

2

3

4

5

6

7

2016 2017 2018 2019 2020G

row

th r

ate

(%

)

De

fen

se

ex

pe

nd

itu

re (

US

$ B

illi

on

)

Defense expenditure (US$ bn) Defense growth percentage


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1.2. Analysis of Defense Budget Allocation

1.2.1. Share of capital expenditure expected to increase over forecast period

The Peruvian Ministry of Defense (MoD) allocated an average of XX% of its total defense budget to capital

expenditure and the remaining XX% to revenue expenditure during 2011–2015. Capital budget allocation is

expected to increase slightly to an average of XX% during the forecast period, as the government is

expected to procure weapons primarily to counter the threat posed by the Shining Path group and narco-

terrorism. The increase in capital expenditure is also due to the country’s defense modernization program

and its efforts to develop a military deterrence capability, in light of its volatile relationship with Chile. The

share of revenue expenditure is expected to average XX% of the total Peruvian defense expenditure over

2016–2020.

The following table and chart display the Peruvian defense budget share of capital and revenue expenditure

during the historic period:

Table 3: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015

Year Capital Expenditure Share Revenue Expenditure Share

2011

2012

2013

2014

2015

Source: Ministry of Defense, Peru and SDI analysis © SDI

Figure 3: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015

Def

ense

Bud

get

Spl

it (%

)

Capital Expenditure Share Revenue Expenditure Share


6

The following table and chart display the Peruvian defense budget share of capital and revenue expenditure

over the forecast period:

Table 4: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020

Year Capital Expenditure Share Revenue Expenditure Share

2016

2017

2018

2019

2020

Source: Ministry of Defense, Peru and SDI analysis © SDI

Figure 4: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017 2018 2019 2020

Defe

nse B

ud

get

Sp

lit

(%)

Capital Expenditure Share Revenue Expenditure Share


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1.3. Homeland Security Market Size and Forecast

1.3.1. Peruvian homeland security expected to grow at a steady pace

Peru’s homeland security (HLS) expenditure consists of maintaining internal security, law enforcement, and

crime prevention. The country’s HLS budget, which is driven by the need to police cocaine trafficking and

organized crime, values US$XX billion in 2015 and registered a CAGR of XX% during the historic period.

Moreover, it is anticipated to value US$XX billion in 2020, and register a CAGR of XX% during the forecast

period. In 2014, allocations were made for the acquisition of patrol vehicles, helicopters, anti-riot gear, anti-

riot vehicles, and digital communication equipment for the police units deployed in narco-terrorism prone

areas such as the VRAEM. In the forecast period, the HLS budget is expected to be driven by the

government’s plans to almost double the number of police in the country, from 33,000 in 2012 to 60,000 by

2016. Furthermore, the military is expected to play a larger role in internal policing to deal with the issue of

narco-terrorism.

The table and chart below show the Peruvian homeland security expenditure during the historic period:

Table 5: Peruvian Homeland Security Expenditure (US$ Billion), 2011–2015

Year Homeland expenditure (US$

million) % Growth

2011

2012

2013

2014

2015

Source: Ministry of Finance, Peru and SDI analysis © SDI

Figure 5: Peruvian Homeland Security Expenditure (US$ Billion), 2011–2015

Source: Ministry of Finance, Peru and SDI analysis © SDI

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

1

2

3

4

5

6

7

2011 2012 2013 2014 2015

Gro

wth

rate

(%)

Hom

elan

d Se

curit

y ex

pend

iture

(US$

Bill

ion)

Homeland Security Budget (US$ bn) Growth rate (%)


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2. Industry Dynamics - Porter’s Five Forces Analysis

Figure 4: Industry Dynamics – Porter’s Five Forces Analysis

Source: SDI analysis © SDI

Intensity of Rivalry Bargaining Power of Supplier

Bargaining Power of Buyer

Barrier to Entry

Threat of Substitute


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Report Methodology

SDI’s dedicated research and analysis teams consist of experienced professionals with a background in

industry research and consulting in the defense sector. The following research methodology is followed for all

databases and reports:

Secondary Research

The research process begins with exhaustive secondary research to source reliable qualitative and

quantitative information related to the defense market. The secondary research sources that are typically

referred to include, but are not limited to:

Industry associations

National government documents and statistical databases

Company websites, annual reports, financial reports, broker reports, investor presentations

Industry trade journals and other literature

Internal and external proprietary databases

News articles, press releases, and webcasts specific to the companies operating in the market

Primary Research

SDI conducts hundreds of primary interviews a year with industry participants and commentators in order to

validate its data and analysis. A typical research interview fulfills the following functions:

Provides first-hand information on market size, market trends, growth trends, competitive landscape,

and future outlook

Helps to validate and strengthen secondary research findings

Further develops the analysis team’s expertise and market understanding

Primary research involves e-mail interactions, telephone interviews, and face-to-face interviews for

each market category, division, and sub-division across geographies

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers,

and national sales managers

External experts: investment bankers, valuation experts, research analysts, and key opinion leaders

specializing in defense markets

Conventions

Currency conversions are performed on the basis of average annual conversion rate format

calculations

All the values in tables, with the exception of compounded annual growth rate (CAGR) and

compounded annual rate of change (CARC), are displayed to one decimal place; therefore, due to

this rounding method, growth rates may appear inconsistent with absolute values

The forecasted values are projected on the basis of nominal values; the inflation was not taken into account


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TABLE OF CONTENTS

1. Introduction ........................................................................................................................... 9

1.1. What is this Report About? ........................................................................................................... 9

1.2. Definitions ...................................................................................................................................... 9

1.3. Summary Methodology .................................................................................................................11

1.4. SDI Terrorism Index ......................................................................................................................12

1.5. About Strategic Defence Intelligence ..........................................................................................12

2. Executive Summary ............................................................................................................ 13

3. Market Attractiveness and Emerging Opportunities ........................................................ 15

3.1. Defense Market Size Historical and Forecast..............................................................................16

3.1.1. Defense expenditure to grow at a CAGR of XX% over the forecast period ............................................. 16

3.1.2. Threat of narco-terrorism, defense reforms & modernization, border disputes, and peacekeeping

operations to drive defense expenditure ............................................................................................................... 20

3.1.3. Defense budget as a percentage of GDP is anticipated to average XX% during the forecast period ..... 22

3.2. Analysis of Defense Budget Allocation .......................................................................................24

3.2.1. Revenue expenditure accounts for the majority of the Peruvian defense budget .................................... 24

3.2.2. Peruvian defense capital expenditure is expected to grow at a CAGR of XX% during the forecast

period .................................................................................................................................................................. 26

3.2.3. Per capita defense expenditure expected to increase during the forecast period ................................... 30

3.3. Homeland Security Market Size and Forecast ............................................................................32

3.3.1. Homeland security expenditure is expected to grow at a CAGR of XX% during the forecast period ...... 32

3.3.2. Measures to prevent cocaine trafficking and organized crime to drive HLS expenditure ........................ 36

3.3.3. Peru considered at ‘some risk’ of terrorist attack ..................................................................................... 37

3.3.4. Peru experiences low levels of terrorist activity ........................................................................................ 39

3.4. Benchmarking with Key Global Markets .....................................................................................41

3.4.1. Peruvian defense budget expected to register marginal growth in the forecast period ........................... 41

3.4.2. Peru’s military expenditure is limited compared to countries with the largest defense expenditure ........ 43

3.4.3. Peru allocates a low percentage of GDP to defense ................................................................................ 44

3.5. Market Opportunities: Key Trends and Growth Stimulators ......................................................45

3.5.1. Frigates ..................................................................................................................................................... 45

3.5.2. Multi-role Aircraft ....................................................................................................................................... 46

3.5.3. Submarine ................................................................................................................................................ 47

3.5.4. Main Battle Tank ....................................................................................................................................... 48

4. Defense Procurement Market Dynamics ........................................................................... 49

4.1. Import Market Dynamics ...............................................................................................................50

4.1.1. Defense imports expected to increase during the forecast period ........................................................... 50


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4.1.2. Russia to account for the majority of Peru’s defense imports during the forecast period ........................ 51

4.1.3. Aircraft and missiles are the most imported military hardware ................................................................. 52

5. Industry Dynamics .............................................................................................................. 53

5.1. Five Forces Analysis.....................................................................................................................53

5.1.1. Bargaining power of supplier: low to medium ........................................................................................... 54

5.1.2. Bargaining power of buyer: medium to high ............................................................................................. 54

5.1.3. Barriers to entry: medium ......................................................................................................................... 54

5.1.4. Intensity of rivalry: medium to high ........................................................................................................... 54

5.1.5. Threat of substitution: medium to high ..................................................................................................... 54

6. Market Entry Strategy ......................................................................................................... 55

6.1. Market Regulation .........................................................................................................................55

6.1.1. Offset policy aids development of domestic defense industry.................................................................. 55

6.1.2. Peru allows 100% FDI in defense industry ............................................................................................... 55

6.2. Market Entry Route .......................................................................................................................56

6.2.1. The country’s biennial defense exhibition provides an attractive entry route ........................................... 56

6.2.2. Direct selling is the preferred market entry route for foreign OEMs ......................................................... 56

6.3. Key Challenges .............................................................................................................................57

6.3.1. Small defense budget and limited technological capability limits the market entry of foreign companies 57

6.3.2. Lack of transparency hampers the growth of the Peruvian defense industry .......................................... 57

7. Competitive Landscape and Strategic Insights ................................................................ 58

7.1. Competitive Landscape Overview ...............................................................................................58

7.2. Key Domestic Companies ............................................................................................................58

7.2.1. Los Servicios Industriales de la Marina (SIMA): overview ....................................................................... 58

7.2.2. Los Servicios Industriales de la Marina (SIMA): products and services .................................................. 58

7.2.3. Los Servicios Industriales de la Marina (SIMA): recent announcements and strategic initiatives ........... 59

7.2.4. Los Servicios Industriales de la Marina (SIMA): alliances ........................................................................ 59

7.2.5. Los Servicios Industriales de la Marina (SIMA): recent contract wins ..................................................... 60

7.2.6. The Army Ammunition Factory (FAME): overview ................................................................................... 60

7.2.7. The Army Ammunition Factory (FAME): products and services .............................................................. 60

7.2.8. The Army Ammunition Factory (FAME): recent announcements and strategic initiatives ....................... 61

7.2.9. Desarrollos Industriales Casanave: overview........................................................................................... 61

7.2.10. Desarrollos Industriales Casanave: products and services ...................................................................... 62

7.2.11. Desarrollos Industriales Casanave: recent announcements and strategic initiatives .............................. 63

7.2.12. Desarrollos Industriales Casanave: alliances ........................................................................................... 63

8. Business Environment and Country Risk ......................................................................... 64

8.1. Demographics & Social Statistics ................................................................................................64

8.1.1. Total Rural Population .............................................................................................................................. 64


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8.1.2. Total Urban Population ............................................................................................................................. 65

8.1.3. Number of Households ............................................................................................................................. 66

8.2. Economic Performance ................................................................................................................67

8.2.1. GDP Per Capita ........................................................................................................................................ 67

8.2.2. GDP, Current Prices (US$ Billion) ............................................................................................................ 68

8.2.3. Exports of goods and services, current prices (US$ billion) ..................................................................... 69

8.2.4. Imports of goods and services, current prices (US$ billion) ..................................................................... 70

8.2.5. Manufacturing Output (US$ billion) .......................................................................................................... 71

8.2.6. Consumer Price Index .............................................................................................................................. 72

8.2.7. Wholesale Price Index .............................................................................................................................. 73

8.2.8. Local Currency Unit per US$ (period average) ........................................................................................ 74

8.2.9. Local Currency Unit per EUR (period average) ........................................................................................ 75

8.2.10. Lending Rate (%) ...................................................................................................................................... 76

8.2.11. Deposit Rate (%) ...................................................................................................................................... 77

8.2.12. Real Interest Rate (%) .............................................................................................................................. 78

8.2.13. Market Capitalization of Listed Companies (US$ Billion) ......................................................................... 79

8.2.14. Market Capitalization of Listed Companies (% of GDP) ........................................................................... 80

8.2.15. Total Government Cash Surplus/ Deficit (LCU Billion) ............................................................................. 81

8.2.16. Government Cash Surplus/ Deficit as % of GDP (LCU) ........................................................................... 82

8.2.17. Goods Exports as % of GDP .................................................................................................................... 83

8.2.18. Goods Imports as % of GDP .................................................................................................................... 84

8.2.19. Goods Balance as % of GDP ................................................................................................................... 85

8.2.20. Services Imports as % of GDP ................................................................................................................. 86

8.2.21. Services Exports as % of GDP ................................................................................................................. 87

8.2.22. Services Balance as % of GDP ................................................................................................................ 88

8.2.23. Foreign Direct Investment, net (BoP, current US$ Billion) ....................................................................... 89

8.2.24. Net Foreign Direct Investment as % of GDP ............................................................................................ 90

8.2.25. International Reserves, including Gold (US$ Billion) ................................................................................ 91

8.2.26. External Debt as % of GDP ...................................................................................................................... 92

8.3. Energy and Utilities .......................................................................................................................93

8.3.1. Total Conventional Thermal Electricity Net Generation ........................................................................... 93

8.3.2. Hydroelectricity Net Generation ................................................................................................................ 94

8.3.3. Total Conventional Thermal Electricity Installed Capacity ....................................................................... 95

8.3.4. Proved Reserves of Natural Gas .............................................................................................................. 96

8.3.5. Total Petroleum Consumption .................................................................................................................. 97

8.3.6. Crude Oil Proved Reserves ...................................................................................................................... 98

8.3.7. Total Non-Hydro Renewable Electricity Net Generation (Billion kW) ....................................................... 99


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8.4. Infrastructure Quality and Availability ....................................................................................... 100

8.4.1. Air Transport (freight) .............................................................................................................................. 100

8.4.2. Overall Construction ............................................................................................................................... 101

8.5. Minerals ....................................................................................................................................... 102

8.5.1. Mining, Manufacturing, Utilities Output ................................................................................................... 102

8.6. Technology .................................................................................................................................. 103

8.6.1. Patents Granted ...................................................................................................................................... 103

8.7. Telecommunication .................................................................................................................... 104

8.7.1. Telephone Lines ..................................................................................................................................... 104

8.7.2. Telephone Lines Penetration Rate ......................................................................................................... 105

9. Appendix ............................................................................................................................ 106

9.1. About SDI ..................................................................................................................................... 106

9.2. Disclaimer .................................................................................................................................... 106


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LIST OF FIGURES

Figure 1: Peruvian Defense Expenditure (US$ Billion), 2011–2015 .................................................................................................................... 16 Figure 2: Peruvian Defense Expenditure (US$ Billion), 2016–2020 .................................................................................................................... 17 Figure 3: Peruvian Defense Expenditure (PEN Billion), 2011–2015 .................................................................................................................... 18 Figure 4: Peruvian Defense Expenditure (PEN Billion), 2016–2020 .................................................................................................................... 19 Figure 5: Peruvian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2011–2015...................... 22 Figure 6: Peruvian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2016–2020...................... 23 Figure 7: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 .............................................................. 24 Figure 8: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 .............................................................. 25 Figure 9: Peruvian Capital Budget Allocation (US$ Million), 2011–2015 ............................................................................................................. 26 Figure 10: Peruvian Capital Budget Allocation (US$ Million), 2016–2020 ........................................................................................................... 27 Figure 11: Peruvian Capital Budget Allocation (PEN Billion), 2011–2015 ............................................................................................................ 28 Figure 12: Peruvian Capital Budget Allocation (PEN Billion), 2016–2020 ............................................................................................................ 29 Figure 13: Peruvian Per Capita Defense Expenditure (US$), 2011–2015 ........................................................................................................... 30 Figure 14: Peruvian Per Capita Defense Expenditure (US$), 2016–2020 ........................................................................................................... 31 Figure 15: Peruvian Homeland Security Budget (US$ billion), 2011–2015 .......................................................................................................... 32 Figure 16: Peruvian Homeland Security Budget (US$ billion), 2016–2020 .......................................................................................................... 33 Figure 17: Peruvian Homeland Security Budget (PEN Billion), 2011–2015 ......................................................................................................... 34 Figure 18: Peruvian Homeland Security Budget (PEN Billion), 2016–2020 ......................................................................................................... 35 Figure 19: SDI Terrorism Heat Map, 2015 .......................................................................................................................................................... 37 Figure 20: SDI Terrorism Index, 2015 ................................................................................................................................................................. 38 Figure 21: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020 .......................................................................................................... 42 Figure 22: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2015 and 2020 ........................................................... 43 Figure 23: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2015 ..................................................................... 44 Figure 24: Frigates Market Size (US$ Million), 2015–2025 ................................................................................................................................. 45 Figure 25: Multi-role Aircraft Market Size (US$ Million), 2015–2025 .................................................................................................................. 46 Figure 26: Submarines Market Size (US$ Million), 2015–2025 ........................................................................................................................... 47 Figure 27: Main Battle Tank Market Size (US$ Million), 2015–2025 ................................................................................................................... 48 Figure 28: Peruvian Defense Import Trend, 2010–2014 (TIV values) .................................................................................................................. 50 Figure 29: Peruvian Defense Imports by Country (%), 2010–2014...................................................................................................................... 51 Figure 30: Peruvian Defense Imports by Category (%), 2010–2014 .................................................................................................................... 52 Figure 31: Industry Dynamics Porter’s Five Forces Analysis ............................................................................................................................... 53 Figure 32: Peruvian Rural Population (In Millions), 2015–2024 ........................................................................................................................... 64 Figure 33: Peruvian Urban Population (In Millions), 2015–2024 .......................................................................................................................... 65 Figure 34: Peruvian Number of Households (In Millions), 2008–2017 ................................................................................................................. 66 Figure 35: Peruvian GDP Per Capita, 2015–2024 .............................................................................................................................................. 67 Figure 36: Peruvian GDP at Current Prices (US$ Billion), 2015–2024 ................................................................................................................ 68 Figure 37: Peruvian Exports of Goods and Services, Current Prices (US$ Billion), 2002–2011 .......................................................................... 69 Figure 38: Peruvian Imports of Goods and Services, Current Prices (US$ Billion), 2002–2011 ........................................................................... 70 Figure 39: Peruvian Manufacturing Output (US$ Billion), 2002–2011 ................................................................................................................. 71 Figure 40: Peruvian Consumer Price Index, 2015–2024 ..................................................................................................................................... 72 Figure 41: Peruvian Wholesale Price Index, 2003–2012 ..................................................................................................................................... 73 Figure 42: Local Currency Unit per US$, 2015–2024 .......................................................................................................................................... 74 Figure 43: Local Currency Unit per EUR, 2015–2024 ......................................................................................................................................... 75 Figure 44: Peruvian Lending Rate (%), 2003–2012 ............................................................................................................................................ 76 Figure 45: Peruvian Deposit Rate (%), 2003–2012 ............................................................................................................................................. 77 Figure 46: Peruvian Real Interest Rate (%), 2003–2012 ..................................................................................................................................... 78 Figure 47: Market Capitalization of Listed Companies in Peru (US$ Billion), 2003–2012 .................................................................................... 79 Figure 48: Market Capitalization of Listed Companies in Peru (% of GDP), 2002–2011 ...................................................................................... 80 Figure 49: Peruvian Government Cash Surplus/ Deficit (LCU Billion), 2002–2011 .............................................................................................. 81 Figure 50: Peruvian Government Cash Surplus/ Deficit as % of GDP (LCU), 2002–2011 ................................................................................... 82 Figure 51: Peruvian Goods Exports as % of GDP, 2001–2010 ........................................................................................................................... 83 Figure 52: Peruvian Goods Imports as % of GDP, 2001–2010 ........................................................................................................................... 84 Figure 53: Peruvian Goods Balance as % of GDP, 2001–2010 .......................................................................................................................... 85 Figure 54: Peruvian Services Imports as % of GDP, 2001–2010 ........................................................................................................................ 86 Figure 55: Peruvian Services Exports as % of GDP, 2001–2010 ........................................................................................................................ 87


15

Figure 56: Peruvian Services Balance as % of GDP, 2001–2010 ....................................................................................................................... 88 Figure 57: Peruvian Foreign Direct Investment, net (BoP, current US$ Billion), 2001–2010 ................................................................................ 89 Figure 58: Peruvian Net Foreign Direct Investment as % of GDP, 2001–2010 .................................................................................................... 90 Figure 59: Peruvian International Reserves, including Gold (US$ Billion), 2002–2011 ........................................................................................ 91 Figure 60: Peruvian External Debt as % of GDP, 2001–2010 ............................................................................................................................. 92 Figure 61: Peruvian Total Conventional Thermal Electricity Net Generation (Billion Kilowatt Hours), 2002–2011................................................ 93 Figure 62: Peruvian Hydroelectricity Net Generation (Billion Kilowatt Hours), 2002–2011 ................................................................................... 94 Figure 63: Peruvian Total Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001–2010 .................................................... 95 Figure 64: Peruvian Proved Reserves of Natural Gas (Trillion Cubic Feet), 2004–2013...................................................................................... 96 Figure 65: Peruvian Total Petroleum Consumption (Thousand Barrels Per Day), 2003–2012............................................................................. 97 Figure 66: Peruvian Crude Oil Proved Reserves (Million Barrels), 2004–2013 .................................................................................................... 98 Figure 67: Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts), 2002–2011 ...................................................................... 99 Figure 68: Air Transport (Freight), Million ton-km, 2002–2011 ...........................................................................................................................100 Figure 69: Overall Construction (US$ Million), 2007–2016 .................................................................................................................................101 Figure 70: Mining, Manufacturing, Utilities Output (USD Billion), 2002–2011 .....................................................................................................102 Figure 71: Patents Granted, 2003–2012 ............................................................................................................................................................103 Figure 72: Telephone Lines in Peru (in Millions), 2003–2012 .............................................................................................................................104 Figure 73: Telephone Lines Penetration Rate in Peru (per 100 people), 2003–2012 .........................................................................................105


16

LIST OF TABLES

Table 1: Peruvian Defense Expenditure (US$ Billion), 2011–2015 ..................................................................................................................... 16 Table 2: Peruvian Defense Expenditure (US$ Billion), 2016–2020 ..................................................................................................................... 17 Table 3: Peruvian Defense Expenditure (PEN Billion), 2011–2015 ..................................................................................................................... 18 Table 4: Peruvian Defense Expenditure (PEN Billion), 2016–2020 ..................................................................................................................... 19 Table 5: Peruvian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2011–2015 ....................... 22 Table 6: Peruvian GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2016–2020 ....................... 23 Table 7: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2011–2015 ............................................................... 24 Table 8: Peruvian Defense Budget Split Between Capital and Revenue Expenditure (%), 2016–2020 ............................................................... 25 Table 9: Peruvian Capital Budget Allocation (US$ Million), 2011–2015 .............................................................................................................. 26 Table 10: Peruvian Capital Budget Allocation (US$ Million), 2016–2020............................................................................................................. 27 Table 11: Peruvian Capital Budget Allocation (PEN Billion), 2011–2015 ............................................................................................................. 28 Table 12: Peruvian Capital Budget Allocation (PEN Billion), 2016–2020 ............................................................................................................. 29 Table 13: Peruvian Per Capita Defense Expenditure (US$), 2011–2015 ............................................................................................................ 30 Table 14: Peruvian Per Capita Defense Expenditure (US$), 2016–2020 ............................................................................................................ 31 Table 15: Peruvian Homeland Security Budget (US$ billion), 2011–2015 ........................................................................................................... 32 Table 16: Peruvian Homeland Security Budget (US$ billion), 2016–2020 ........................................................................................................... 33 Table 17: Peruvian Homeland Security Budget (PEN Billion), 2011–2015 .......................................................................................................... 34 Table 18: Peruvian Homeland Security Budget (PEN Billion), 2016–2020 .......................................................................................................... 35 Table 19: SDI Terrorism Index, 2015 .................................................................................................................................................................. 39 Table 20: Benchmarking with Key Markets – 2011–2015 vs. 2016–2020............................................................................................................ 41 Table 21: Defense Offset Regulations in Peru .................................................................................................................................................... 55 Table 22: Los Servicios Industriales de la Marina (SIMA)– Products and Services ............................................................................................. 58 Table 23: Los Servicios Industriales de la Marina (SIMA): Alliances ................................................................................................................... 59 Table 24: Los Servicios Industriales de la Marina (SIMA) - Recent Contract Wins .............................................................................................. 60 Table 25: The Army Ammunition Factory (FAME)– Product Focus ..................................................................................................................... 60 Table 26: Desarrollos Industriales Casanave– Product Focus ............................................................................................................................ 62 Table 27: Desarrollos Industriales Casanave: Alliances ...................................................................................................................................... 63

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