The ‘Open to Business’ initiative announced by the Danish government will yield positive results in boosting the country’s defence exports, says a report by Strategic Defence Intelligence (SDI).
Titled ‘Future of the Danish Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022’, the report states that the nation already witnessed a comparative increase in exports to Brazil and Brunei during 2011-2012, while the Open to Business initiative announced in 2012 will yield positive results.
The Danish Ministry of Defence (MoD) started assisting domestic defence manufacturers to gain access to advanced technology through its offset programme, after the announcement of the initiative. It will result in enhancement of capabilities of domestic manufacturers, which will mean lower defence imports.
Denmark imports majorly from the Netherlands and the US, with the two countries accounting for 69.1% of the nation’s total imports during 2011-2015. The Netherlands has taken over the US as a major arms supplier to the Danish armed forces recently, accounting for 38.8% of the imports during 2011-2015, while the US trailed with 30.3% share.
Further, Denmark has a defence offset policy that mandates a minimum offset of 100% of the contract value, which enhances business opportunities for domestic companies.
Foreign companies willing to participate in the country’s defence industry can benefit from Denmark’s policy of allowing 100% foreign direct investment (FDI) in defence sector. Such companies can either acquire a domestic company or establish a subsidiary in the country.
New entrants other than those from the US or the Nordic region will, however, have expect challenges as Denmark prefers to buy from the US and Nordic countries, cautions the report.