Dubai: Paramount Group, a South African defence company, is expecting to see a 15-16 per cent increase in its turnover from the Middle East in 2018 as governments in the region amp up their defence budgets.
Ivor Ichikowitz, chairman of Paramount Group, said he excepted to see “significant growth in the future” from both the Middle East and Asia, and that the company is currently looking at establishing manufacturing facilities in more than one country in the region.
“The ongoing ideological conflict in a number of Middle Eastern countries has a big impact on Europe and the United States, and Middle Eastern governments are taking this very seriously, and that’s growing defence budgets,” Ichikowitz told Gulf News in an interview.
According to a May 2018 report from the Stockholm International Peace Research Institute, an independent institute that does research on conflict and arms control, military expenditure in the Middle East grew by 6.2 per cent in 2017.
For Paramount, one of the areas that is seeing the most demand from governments in the Middle East is land forces equipment, with growth opportunities in aircraft as well.
The company manufactures armoured vehicles, military vessels, and military aircraft, and currently operates in over 30 countries globally, including in some Middle Eastern countries.
“We produce some of the most advanced mine-protected and ballistically-protected armoured vehicles in the world. Today, there is a big demand for our land forces equipment throughout the region. In addition to that, the Mwari aircraft is very much in demand,” Ichikowitz said.
Talks with Saudi Arabia
In the Gulf region specifically, Paramount is in discussions with the Saudi Arabian government about setting up a manufacturing facility there, but the chairman said there is still a long way to go in the negotiations.
“There are many areas of potential for collaboration. Saudi is one of the largest defence markets in the world, and we intend to become as a big a player there as the opportunities present,” he said.
Figures from the Stockholm International Peace Research Institute say Saudi Arabia had the third highest military expenditure in the world in 2017. The latest report from the Institute said that military spending in Saudi Arabia in 2017 reached $69.4 billion, up 9.2 per cent, following a drop in 2016.
The Middle East currently accounts for 20-25 per cent of sales for Paramount, the chairman said.
Opportunities in the US
Away from the region, Paramount sees opportunities in the US as the Donald Trump-led administration focuses on boosting its defence capabilities.
“The United States could be a very significant market for us into the future. It could change the scale of our activities very dramatically,” Ichikowitz said.
He added that Paramount is in advanced discussions with the US, and is currently talking “to a number of states” and looking at the viability of different locations to set up production facilities.
Paramount has 11 manufacturing facilities around the world, and while none of those are in the US now, Ichikowitz is interested in manufacturing aircraft there and sees “a lot of activities ahead of us in the US in the next couple of years.”
Asked about overall outlook for the company’s performance in 2018, Ichikowitz said he expected to see year-on-year growth. Paramount saw turnover growth of 15-20 per cent per annum over the last couple of years, he added.
“The peacekeeping market in Africa has become very active. We have a number of initiatives in Central Asia that have been affected negatively by lower oil prices, but we’re seeing a resurgence in these markets, so overall, we’re expecting a good 2018 — an improvement over 2017.”