CTO Newsletter
News and analysis of offset and countertrade, twice a month, 24 times a year. Log in and search our archives to find the trade intelligence you need.
Our online database provides 24 months’ worth of issues. Researchers and long-term subscribers who would like to access older issues are welcome to reach out at subs@cto-offset.com.
Please note that the search bar does NOT recognise spaces. Please use _ instead. For instance, Saudi Arabia may be searched as Saudi_Arabia.
Volume 2010
Main headlines from this issue
Vincent Tchenguiz designs a billion dollar offset fund
The Consensus Business Group (CBG), an offset service provider reported to have withdrawn from the offset scene in 2008, is preparing to resume operations. Under the chairmanship and executive control of Vincent Tchenguiz, those operations appear to be significant in scale.
Multi-billion dollar defence deals prompt France to support Indian bid for UN Security Council seat
The French declaration comes against a background of several multi-billion dollar defence deals that India will soon award.
Malaysia’s MAC council aims to augment country’s aerospace manufacturing industry
The Malaysian Aerospace Council (MAC) has held a discussion to review challenges facing the country’s aerospace industry. The working committee discussed ways Malaysia could improve its strategies and consolidate its growth in the field of aerospace manufacturing.
South Africa’s SDP offset programme and external offset packages – “a study in ambiguity”
A presentation on South Africa’s offset process to a public procurement workshop in Istanbul, Turkey, last month, apparently made a lasting impression.....
Poland’s PZL promises assembly for India’s Mahindra
In some positive news for Indian private sector companies, PZL, Airbus Military's subsidiary in Poland, has signed a preliminary MoU with Mahindra and several other Indian companies for aircraft assembly on a tender for 75 aircraft.
Main headlines from this issue
New Turkish offset directive will bring major changes
Turkey’s Undersecretariat for Defence Industries (SSM) is working on a new industrial participation and offset directive. The document, which is scheduled for release before the end of this year, will...........
Turkey endorses a civil procurement offset policy
Turkey’s Undersecretariat for Defence Industries (SSM) has petitioned for the introduction of a civil offset policy to be applied to government procurements. The appeal, we are told, has the backing of the Prime Minister and the Cabinet.
Kuwait: “We don’t need the money, we need the management”
Kuwait’s recent National Offset Company (NOC) boardroom sweep has led to the introduction of significant reforms in offset implementation. Obligors have to brace themselves for a new way of thinking.
Minister sets a quota for Indonesia’s ad hoc defence offset policy
Indonesia will now insist on binding all military procurements from foreign companies to technology transfer and joint production projects, the Deputy Defence Minister, Sjafrie Sjamsoeddin, has declared. The seller would have to propose.......
How Alenia Aeronautica contended with a high attrition rate in Turkey
Pierluigi Parolin, Alenia Aeronautica’s Senior Advisor for Offset, offered Izmir conference delegates a revealing look at the high attrition rate in Turkey between offset planning and implementation.......
Main headlines from this issue
Offset gives Ferrostaal starring role in Nelson Mandela movie
South Africa’s Department of Trade and Industry (DTI) has been forced to answer opposition concerns about the \moral appropriateness\" of accepting an investment by Ferrostaal in a R260m ($36m) movie depicting the life of Nelson Mandela. The investment qualified for offset credits.
"South Africa’s NIPP review describes progress but “hides figures”
\The National Industrial Participation Programme (NIPP) is working and it is working by and large along the lines intended\" the Department of Trade and Industry (DTI) said in the NIPP Performance Review 2009.
"Offsets cost South African Airways 3-5 percent – was it worth it?
South African Airways (SAA) recently disclosed to the South African Parliament's Public Enterprises Committee that it paid 3 to 5 percent above market price for its aircraft.
Ukraine looks to offset to boost defence industry
Ukraine and Russia have reached agreement on the key characteristics of a further plan for the joint production of the An-70 military-transport aircraft..... Ukraine’s new government is showing great interest in defence projects and military-technical cooperation...
Mexico: domestic facility swings it for Eurocopter
The Mexican MoD has signed an agreement with Eurocopter for the purchase of a further six EC725 helicopters at a cost of about $212m.
Main headlines from this issue
Will India missive misfire? Trade Associations’ letter to India’s defence minister not welcomed
A letter sent to India’s Defence Minister, A.K. Anthony on August 25, 2010, on behalf of the aerospace trade associations of the U.S.A., Canada, UK, France, Germany, and the U.S.-India Business Council has generated a stormy atmosphere in India’s MoD. We reprint the letter in full.
Indonesia revives obsolete countertrade policy
Indonesia has introduced mandatory counterpurchase clauses in the tender documents of at least two large projects in the power generation sector. The bid documents say the terms of the countertrade guidelines enacted in 1982 must be followed.
UK prepares for IP policy changes and possible withdrawal from EDA
Britain’s MoD has decided to review its industrial participation policy to ensure that it meets the new objectives of the coalition government. The review will be part of a Green Paper.
Greece submits bill for amnesty on offset defaults
The Greek MoD has submitted legislation before Parliament to address conflicts between the ministry and obligors over expired offset contracts and their penalties.
Poland promises technology transfer for India
Poland has offered technology transfer and a joint venture with Indian industry as part of a bid to supply tank recovery vehicles to India.
Main headlines from this issue
Canada offers obligors limited credit banking
Industry Canada is to permit a limited form of banking of Industrial and Regional Benefit (IRB) transactions in advance of an upcoming procurement and in the event of overachievement of IRB credits. The policy is not straightforward.
Offset mix-up puts Siemens out of Israel Railways bid
Siemens has been eliminated from a major tender of Israel Railways because it misunderstood the terms of reference and failed to present a detailed industrial cooperation implementation plan.
Thai chickens return as corruption indictments are dropped
Thailand’s Attorney-General has defended his decision not to indict three former politicians accused of corruption in connection with the purchase of fire trucks and boats at a cost of 6.8bn baht ($217m).
Bulgaria signs off second offset contract
Bulgaria has successfully completed the indirect offset obligations for the Textron commitment. Textron had a 110 percent commitment, 70 percent of which was indirect and 30 percent direct, contracted under the previous regulations when Bulgaria used multipliers.
Chile and Colombia to participate in production of Embraer’s transport aircraft
Chile will buy six Embraer KC-390 military transport aircraft and will join Brazil in the planes’ development. Chile anticipates that Chilean industry will take part in the production of a major component.
Main headlines from this issue
Peru publishes offset guidelines – with a flexible approach to the basics
Peru has launched an official offset policy. The 23-page ‘directive,’ currently available only in Spanish, requires offsets for defence procurements and services exceeding $7m in value.
Pressure builds on India’s MoD as Air Chief Marshal and international defence associations protest…
...about offset policy and agencies. India’s Air Chief Marshal and Chairman of the Chiefs of Staff Committee has reportedly appealed to Defence Minister A.K. Antony to ensure that the Defence Offset Facilitation Agency (DOFA) will become fit for purpose. A coordinated letter on behalf of international aerospace trade associations is ready to be sent to the MoD expressing concerns about the difficulties in complying with India’s offset regulations.
Israel: Pfizer signs to industrial cooperation agreement as mandatory healthcare requirement comes into play
International pharmaceutical companies and manufacturers of medical equipment are now required to enter into industrial cooperation agreements......
China denies demanding “technology for market access”
A senior Chinese executive has denied claims that China forces foreign companies to transfer technologies when they win contracts for work on the country's high-speed rail network and refuted claims that China had pressed foreign companies to transfer their technologies in return for market access.
North Korea forced to barter as sanctions cut off money inflows
North Korea is asking for barters or cash transactions as it exports minerals, resulting in deals collapsing in the final stage of negotiations.
Main headlines from this issue
Kuwait’s NOC receives new board of directors, new focus
A new Board of Directors has been appointed to run Kuwait’s National Offset Company (NOC).........His appointment is bringing a new focus to the NOC’s offset policies, particularly with regard to technology transfer.
Development of Malaysian ‘regional hub’ to be funded by existing and future offset obligations
The Malaysian government has appointed Blenheim Capital Partners in partnership with Masterplan Consulting Sdn. Bhd to support and promote a Malaysian Defence, Science, and Technology Park (MDSTP) through ‘innovative financial solutions’ and offsets.
President Sarkozy says warship deal is certain – but Admiral Vysotsky says it is not
France will build at least two advanced warships for the Russian navy, President Nicolas Sarkozy announced. Admiral Vladimir Vysotsky said: “We do not need the ship but we do need its possibilities”.
Pressure mounts on Canadian government – “more regional benefits if there was competition”
Hostility to Canada’s JSF purchase is gathering pace. The Industrial and Regional Benefits (IRB) so far accruing to the programme are described as meagre compared to those achievable through a competitive process.
Howls of anguish as European MPs condemn Greece and Portugal over “market-distorting” acquisitions
Members of the European Parliament (MEPs) and defence experts are calling on the EU Commission to go after “market-distorting, corrupt side-deals” to major defence contracts between member states. They are citing German submarine sales to Portugal and Greece as examples of malpractice.
Main headlines from this issue
German MOD regards offset as a contradiction to its principle economic policy of maintaining a market economy
Official Position:
“German MOD regards offset as a contradiction to its principle economic policy of maintaining a market economy”
Actual Practice:
Germany demands offset from German subsidiary in Switzerland
Jordan looks to the gulf for an offset policy
Jordan is making local production a condition of defence procurement “as much as possible.” The Kingdom might waive the obligation however if...
Airbus puts the squeeze on South Africa
Airbus Military has threatened to pull out of an industrial partnership that would be implemented should the company win an order to supply South Africa with eight A400M heavy-lift freight planes. The order was cancelled last November. Airbus continues to hold on to the deposit.
China accepts Malaysia’s countertrade and technology transfer terms
Malaysia’s MoD is considering the acquisition of more weapons from China under the 10th Malaysian Plan. Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi said that his ministry was now more willing to purchase arms from China.
Oil-for-loans swap provides China with a greater share of Ecuador’s oil
China and Ecuador are set to deepen their energy relations with the signing of an oil-for-loans swap that will see Ecuador receive a $1bn credit line from the China Development Bank in exchange for 36,000 barrels per day of oil.
Main headlines from this issue
Procurement famine – so Bulgaria re-writes the rule book
How do you generate offset projects during a procurement famine? Bulgaria believes it has the answer. The government has introduced pre-offsets that will be valid for seven years...
Greek MoD has eureka moment
The Greek MoD has for the first time disclosed details of its offset contracts. The ministry has signed 117 contracts since the policy was introduced in the 1980s. Of these, 32 are active and 85 offset contracts have expired.
UAE’S guidelines: a little more light
Particulars of the new UAE offset guidelines are becoming clearer, though different people seem to have different versions, depending on what they have discussed with Offset Programme Bureau (OPB) executives. What is clear is that the new hybrid input/output policy...
Australia’s Defence Priority Capabilities outlined in policy document – “offsets are costly and counterproductive”
Government papers are rarely brief, and their titles are invariably lengthy. The Australian government has outlined in great detail within a 122-page defence policy statement its Priority and Strategic Industry Capabilities.
MALAYSIA: ‘MIGHT’ sees many opportunities for reciprocal benefits in non-defence sectors
Malaysia currently has potential offsets or counter-purchase programmes from at least ten procurement projects. The purchases include the acquisition of electric railway systems and military vehicles, as well as ...
Main headlines from this issue
UAE’S new guidelines introduce a hybrid credit model – but the substance is confidential
The UAE’s Offset Programme Bureau has announced new guidelines, but has not formally released complete details. The guidelines enable defence contractors to customize their programmes by selecting credit-generating components from both input and output activities.
Romania lightens up on pre-offsets
Romania has extended the validity — and the value — of pre-offset credits. Previously, foreign contractors were able to bank pre-offset credits for projects completed in Romania for only three years. The credits are now valid for...
Another India defence study finds export benefits appear too small
With much of India’s defence equipment obsolete and in need of replacement, a Deloitte study finds the current timelines for procurement are preventing SMEs from entering the market.
Philippines: another PITC Appointment
The chaotic countertrade programme of the Philippines International Trading Corporation (PITC) is showing modest signs of movement following the appointment last month of another executive to run the countertrade division, the third such appointment in two years.
Peru selects Isdefe as offset mentor
Peru has selected Isdefe-Gerencia de Cooperación Industrial (Isdefe) to provide a training course in offsets...
Main headlines from this issue
Privately owned Indonesian company agrees $10bn countertrade deal with China’s Avic
PT Merukh Enterprises, a privately owned Indonesian company, has signed a $10bn countertrade MoU with China's state-owned Avic International Holding Corp. The agreement represents a diversification into aviation and shipping by the Indonesian company, effectively trading millions of tons of metals in exchange for airplanes and ships.
$6BN Chinese deal with Congo faces turbulence as funds go missing – hedge fund grabs deposits
It sounds like an adventure in Wonderland, but this fairytale is heading for a bad ending. A huge block of compensation deals by China with the Democratic Republic of Congo, has been hit by charges of corruption, a court case, and a barrage of criticism.
Transparency International: How to avoid going to jail for under the counter trade
The kinetic Mark Pyman, Director of Transparency International’s project to eliminate corruption in defence deals, has raised the profile of this delicate subject significantly by speaking to audiences at several offset conferences lately...
Malaysia’s national countertrade policy has been settled – details given of the new offset focus
Dr. Kogila Balakrishnan, Undersecretary at Malaysia’s Defence Industry Division of the MoD, said the national offsets policy which the country has been struggling with for the past two years has now been finalised.
Korean offsets: KOTRA spells out FDI requirement
Ahn Sang-Keun, who is in charge of KOTRA’a Investment Promotion Department, told conference delegates that KOTRA will participate in offset negotiations whenever FDI is required.
Main headlines from this issue
Australia: Industry Policy Statement
Our article entitled ‘Australia and the Accidental Global Supply Chain’ attracted an unusual amount of interest. Greg Combet, Australia’s Minister for Defence Materiel and Science, was particularly concerned about our statement that Australia’s new defence procurement battle lines have been re-drawn.
Greek penalty crisis improving, but when will words become deeds?
The Greek offset and industrial participation statute is a fearsome warrior with a troubled past. Addressing its future, Thanasis Potsis, an executive with the European Finance Associates (EFA) Group, told conference delegates ....
Blenheim: Risk mitigation and’Offset Generation II’ – The revolution has started
Grant Rogan, founder of the Blenheim Capital Group, injected a bolt of energy and optimism into proceedings with a prediction that four countries within the Gulf Cooperation region will procure some $123bn of military equipment within the next five years.
Kuwait eases formalities in preparation for key procurements
Kuwait is moving to the next phase of its offset programme with plans for a bureaucratic meltdown and a blitz of new legislation.
Spain’s low threshold generates an offset blizzard
Isdefe-Gerencia de Cooperación Industrial (Isdefe), which administers the offset policy on behalf of Spain’s General Directorate of Armament and Material (DGAM), approved more than 14,600 offset transactions between ....