UkrOboronProm, Ukraine’s state-owned weapons producer, on April 13 signed a joint memorandum on cooperation with the League of Defense Industries of Ukraine, an association of privately owned weapons producers.
In a statement, UkrOboronProm said the memorandum “will begin a new history of cooperation between the state-run and privately held domestic defense companies, as well as between all of the ventures that had previously cooperated with Ukroboronprom.”
“Thus, 558 of the country’s enterprises will act as one unit,” UkrOboronProm said.
By uniting the state and private sectors of Ukraine’s weapons industry, the country is creating a defense hub that the best producers, engineers, and investors will concentrate around, Ukroboronprom said.
Up to 134 UkrOboronProm subsidiary companies, 30 enterprises from the league and also 394 ventures affiliated with Ukroboronprom under import substitution programs will cooperate together, Ukroboronprom said.
According to the memorandum, UkrOboronProm is to involve private businesses in fulfilling state defense procurement orders, initiate the joint development of new weapons, and help promote private companies’ products at international arms exhibitions. Also, restructuring the country’s production facilities for providing Ukraine’s Armed Forces with weaponry meeting NATO standards was announced as the high priority goal.
The League of Private Defense Industries of Ukraine was created in late December 2016 by about 30 private businesses that develop and produce military-purpose products – mostly complex components for aircraft and ground vehicles, military electronic devices, equipment, and drones.
According to Ukraine’s Ministry of Defense, approximately 150 private weapons companies, including ones from the league, last year fulfilled state defense procurement orders worth up to Hr 13.3 billion ($495 million). Ukroboronprom, the state-run concern of 112 enterprises, fulfilled Hr 4.4 billion ($163 million) worth.
More than half of the companies that fulfilled state defense procurement orders in 2016 were privately owned, the ministry said.
The association said its primary goals in signing the memorandum were to seek broader access to the domestic market under fairer terms of competition with UkrOboronProm and to gain better access to weapons exports markets.
The league estimates Ukraine’s overall arms export potential at $3 billion per year. Meanwhile, according to the Stockholm International Peace Research Institute, which researches the global arms market, Ukraine in 2016 exported $528 million worth of weapons, making it the world’s 10th biggest arms exporter.
