Outlook: Thailand’s Defense, Aerospace, and Security Market 2024

The Royal Thai Armed Forces have a long history of close cooperation and alignment with the United States and other Western governments, as well as with Defense, Aerospace, and Security suppliers and contractors.

Both the Royal Thai Armed Forces and the Royal Thai Police desire to achieve best global standards of performance and excellence. They are keen to engage and partner with western suppliers, contractors, and governments to modernize their infrastructure, resources, practices, and procedures.

Thailand’s Defense Spending

Thailand’s defense spending since 2000 has ranged between 1.1% and 1.8% of GDP, with 2023 spending at 1.1% of GDP valued at US$ 5.86 billion. In 2020 Thailand’s GDP contracted 6.1%, and consequently defense spending was cut by 0.63%, 8.95%, and 13.50% YoY in 2020, 2021, and 2022 to maintain spending in alignment with its budgetary constraints. Thailand’s GDP grew at 1.5%, 2.6%, and 2.7% in 2021 through 2023, enabling the government to boost its defense spending budget in 2023 by 2.37%.

GlobalData forecasts the Thailand defense budget to grow by more than 5% CAGR during the period 2024 through 2028. Capital spending is expected to focus on the acquisition of aircraft, submarines, and naval vessels. However, major defense capital projects can pose challenges. For example, in late October 2023 Thailand cancelled its purchase of a Chinese S26T Yuan-class attack submarine when the developer was unable to provide the specified German-made diesel engine due to a European Union arms embargo imposed on China. In lieu of the submarine, the Thai Navy has proposed purchasing a frigate for anti-submarine warfare, or a new offshore patrol vessel.

Average defense spending in ASEAN is 1.9% of GDP, with five ASEAN countries currently exceeding the average. Private analyses expect increased Thai and ASEAN defense spending, up to 4% of individual country GDP, driven by territorial disputes in APAC, military modernization programs, and implementation of new defense technologies such as fifth generation C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance).

Thailand Defense Industrial Park

The Thailand Ministry of Defense (MoD) has established a Defense Industrial Estate in the Bo Phloi district of Kanchanaburi province, 175 km northwest of Bangkok. The Defense Industrial Estate is a Public Private Partnership (PPP) in collaboration with local and foreign companies. The purpose of the Defense Industrial Estate is to boost Thailand’s self-sufficiency.

During the initial phase of the Defense Industrial Estate, the MoD is developing infrastructure and facilities on 165 hectares (408 acres). The total land allocated to the Defense Industrial Estate is 480 hectares (1,200 acres). The MoD plans to relocate some of its military-owned arms and battery factories to the Defense Industrial Estate. The MoD currently has 37 arms factories plus a battery factory. The Defense Ministry has indicated that the United States, China, and Czechia have  expressed an interest in investing at the Defense Industrial Estate.

The MoD plans to build factories at the Defense Industrial Estate to manufacture armor-clad vehicles, unmanned aerial vehicles, firearms, and communication devices, plus a weaponry maintenance center.

The Thailand MoD has announced a goal for the establishment of five to seven defense companies in Thailand from 2024 through 2027.

U-Tapao International Airport Regional Aerospace Hub

The U-Tapao International Airport, located 42 km south of Pattaya City, is being transitioned into a regional aerospace hub. The anchor of the aerospace hub will be the “Eastern Airport City” which is a public-private partnership (PPP) project with a total investment value of US$ 8.9 billion. The Eastern Airport City will be located 6 km north of the U-Tapao International Airport and is one of the strategic projects of Thailand’s Eastern Economic Corridor (EEC). It will feature a high-speed rail network linking Thailand’s Suvarnabhumi and Don Mueang International Airports in Bangkok, existing recently completed interstate highway access, smart city infrastructure, and mixed-use multifunctional lifestyle development.

U-Tapao airport, originally constructed as a B-52 base to support U.S. involvement in the Vietnam War, will be upgraded with a second parallel runway, a modern new International Terminal with an ultimate capacity of 60 to 75 million passengers per year, a free trade zone, a flight training center, and an aircraft maintenance, repair and overhaul (MRO) center. The existing MRO facilities at Don Mueang airport have been in use for more than 50 years, and limited space prevents any future expansion of MRO activities. Thai Airways’ plans to relocate its MRO activities to U-Tapao were delayed due to the Covid pandemic.

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Authored by

Frank Timmons is a Senior Manager based in Thailand.