Denel Asia, the State-owned defence industry conglomerate’s venture into Asian military markets, is a done deal according to the Denel annual report.
Denel board chairman, Lugisani Daniel Mantsha, writes in his report: “In growing Denel’s order book and in view of the potential opportunities presented by the Asian market, the board approved the establishment of a company in Asia through a strategic partnership with VR Laser Asia, called Denel Asia LLC”.
“Subsequent to finalising due approval processes, this company was established in Hong Kong [on 29 January 2016].”
“This partnership brings access to markets in a region where Denel had been blacklisted for more than a decade, as well as the ever so important funding for business development activities.”
Acting chief executive Zwelakhe Ntshepe in his group chief executive officer’s report writes: “The Asia/Pacific market is the fastest growing outside the United States with defence industry experts estimating half of future global defence sales will come from Asia/Pacific markets”.
“In the 2015/16 financial year Denel’s export revenue accounted for 58% (2014/15 52%) of its total revenue with the primary markets emanating from Asia/Pacific, Europe, Middle East and South America.
“Within this region Denel is positioning itself for major programmes in India. There are a number of opportunities Denel Asia will be pursuing in this market, mainly in the artillery domain.”
Denel Asia will focus its marketing attention on countries such as India, Singapore, Cambodia, Indonesia, Pakistan, Vietnam and the Philippines, which have all announced their intentions to embark on major new defence acquisitions and grow their research and development budgets in the next four years.
The Denel Asia partnership’s existence is also acknowledged as one of seven strategic equity partnerships listed in the report directly following an organisational structure organogram.
The partnerships are with Airbus Defence and space, International Golden Group, Rheinmetall Defence, Pamodzi, Safran, Tawazun and VR Laser Asia Ltd.
The establishment of Denel Asia has drawn heated comment from the Democratic Alliance with the party’s shadow public enterprises minister, Natasha Mazzone, seeking clarification from Minister Lynne Brown on the alleged involved of the Gupta family in what has been termed another example of “state capture”.
The Denel board issued a statement earlier this year intimating that National Treasury had overstepped the mark when it said the state-owned defence industry group had not complied with all legal prescriptions in the creation of Denel Asia. It has been reported that Minister Brown has prohibited Denel Asia from trading until such time as the dispute regarding its establishment has resolved.