This report is the result of ICD Research / SDI's extensive market and company research covering the Thai defense industry. It provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news..
Introduction and Landscape
Why was the report written?
The Thai defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017, offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Thai defense industry.
What is the current market landscape and what is changing?
Thailand, the third largest country in Southeast Asia, has one of the fastest-growing defense markets in the world, and as a consequence of years of defense budget underfunding, Thailand's military spending is anticipated to increase during the forecast period as the country's armed forces undergo an extensive modernization program and, as a result, the country's military expenditure as a percentage of GDP is projected to increase. Thai defense expenditure is expected to be driven by factors such as security threats, modernization plans, border disputes, and an ongoing arms race within the Southeast Asian region.
What are the key drivers behind recent market changes?
Modernization initiatives, security threats, an arms race with neighboring countries, and border disputes are expected to drive defense spending. Thai defense expenditure witnessed a steady decline during 1997-2006 as a result of a national financial crisis, and low levels of defense spending during this period created the need to significantly upgrade defense systems such as fighter aircraft, submarines, armored vehicles, and battle vehicles. The country faces a separatist insurgency in its southernmost provinces, mainly comprising the Malay Pattani region of the country. Rapid economic growth across Asia-Pacific has led to an arms race among countries such as Singapore, Malaysia, Indonesia, and Thailand; owing to the competitive acquisition of defense systems within the region, total weapons purchases in Southeast Asia doubled between 2005 and 2009. Thailand is engaged in a border dispute with Myanmar, and with Cambodia, which has been ongoing since Cambodia won its independence in the early 1950s.
What makes this report unique and essential to read?
The Thai Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
Key Report Features
The report provides a detailed analysis of the current industry size and growth expectations from 2013 to 2017, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.
The report includes trend analysis of imports and exports, together with their implications and impact on the Thai defense industry.
The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
The report helps the reader to understand the competitive landscape of the defense industry in Thailand. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Key Market Issues
Excessive corruption within the government's procurement process hampers the entry of foreign investors into the Thai defense industry, and sometimes, foreign investors have resorted to paying bribes in order to win a contract, and these factors discourage foreign OEMs from entering the market.
Even though Thailand has an offset policy in order to enhance domestic defense capabilities, it accepts indirect offsets as an eligible activity; furthermore, the nation allows counter-purchase, according to which, foreign suppliers can buy non-defense-related goods such as fruit and rice in exchange for defense equipment. Additionally, a lack of multipliers within the country's offset policy fails to encourage foreign OEMs to provide technology transfers or jointly develop defense equipment with the country, and consequently, foreign suppliers are not incentivized to invest in the Thai defense sector.
Even though Thailand has an offset policy in order to enhance domestic defense capabilities, it accepts indirect offsets as an eligible activity; furthermore, the nation allows counter-purchase, according to which, foreign suppliers can buy non-defense-related goods such as fruit and rice in exchange for defense equipment. Additionally, a lack of multipliers within the country's offset policy fails to encourage foreign OEMs to provide technology transfers or jointly develop defense equipment with the country, and consequently, foreign suppliers are not incentivized to invest in the Thai defense sector.
Even though Thailand has an offset policy in order to enhance domestic defense capabilities, it accepts indirect offsets as an eligible activity; furthermore, the nation allows counter-purchase, according to which, foreign suppliers can buy non-defense-related goods such as fruit and rice in exchange for defense equipment. Additionally, a lack of multipliers within the country's offset policy fails to encourage foreign OEMs to provide technology transfers or jointly develop defense equipment with the country, and consequently, foreign suppliers are not incentivized to invest in the Thai defense sector.
Even though Thailand has an offset policy in order to enhance domestic defense capabilities, it accepts indirect offsets as an eligible activity; furthermore, the nation allows counter-purchase, according to which, foreign suppliers can buy non-defense-related goods such as fruit and rice in exchange for defense equipment. Additionally, a lack of multipliers within the country's offset policy fails to encourage foreign OEMs to provide technology transfers or jointly develop defense equipment with the country, and consequently, foreign suppliers are not incentivized to invest in the Thai defense sector.
Key Highlights
Thai military spending, estimated at US$5.4 billion in 2012, increased at a CAGR of 5.44% during the review period and is projected to register a CAGR of 8.5% during the forecast period, to reach US$8.2 billion by 2017. Along with an increase in the overall defense budget, Thai military spending as a percentage of GDP is anticipated to increase from an estimated 1.5% in 2012 to 1.9% in 2017. Overall, the nation is expected to spend an estimated US$35.3 billion on its armed forces during the forecast period, out of which US$12.2 billion will be earmarked for capital expenditure.
Thai HLS expenditure registered a CAGR of 11.97% during the review period and is expected to witness a CAGR of 10.11% during the forecast period, to reach an estimated US$11.86 billion in 2017. The country's internal security budget is expected to increase due to a rise in terrorist attacks, cross border infiltration, and mass protests, and furthermore, the nation has a vast coastline of 2,815 km, making it susceptible to attacks from pirates, the illicit drug trade, and illegal immigration. Over the forecast period, HLS equipment manufacturers will witness a surge in demand for equipment capable of preventing terrorist attacks and managing mass protests.
Thailand's defense industrial base is largely underdeveloped and the country's domestic defense capabilities are limited to the production of small arms and ammunition; as a result, the government is highly dependent on foreign defense systems manufacturers to fulfill the majority of its military requirements. Even though the government is encouraging domestic suppliers such as Avia Satcom Co. Ltd. to form strategic alliances with foreign defense firms such as Saab, the country's defense sector continues to be dominated by foreign companies. Moreover, the country's defense budget registered an increase in 2007 after witnessing a steady decline during 1997-2006. During the forecast period, arms imports by Thailand are anticipated to increase due to the domestic defense industry's limited capabilities.
Thailand's defense industrial base is largely underdeveloped and the country's domestic defense capabilities are limited to the production of small arms and ammunition; as a result, the government is highly dependent on foreign defense systems manufacturers to fulfill the majority of its military requirements. Even though the government is encouraging domestic suppliers such as Avia Satcom Co. Ltd. to form strategic alliances with foreign defense firms such as Saab, the country's defense sector continues to be dominated by foreign companies. Moreover, the country's defense budget registered an increase in 2007 after witnessing a steady decline during 1997-2006. During the forecast period, arms imports by Thailand are anticipated to increase due to the domestic defense industry's limited capabilities.
Thailand's defense industrial base is largely underdeveloped and the country's domestic defense capabilities are limited to the production of small arms and ammunition; as a result, the government is highly dependent on foreign defense systems manufacturers to fulfill the majority of its military requirements. Even though the government is encouraging domestic suppliers such as Avia Satcom Co. Ltd. to form strategic alliances with foreign defense firms such as Saab, the country's defense sector continues to be dominated by foreign companies. Moreover, the country's defense budget registered an increase in 2007 after witnessing a steady decline during 1997-2006. During the forecast period, arms imports by Thailand are anticipated to increase due to the domestic defense industry's limited capabilities.
Table of Contents
Table of Contents
1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Thai defense expenditure expected to increase at a CAGR of XX% during the forecast period
3.1.2. Modernization initiatives, security threats, an arms race with neighboring countries, and border disputes are expected to drive defense spending
3.1.3. Military spending as a percentage of GDP is expected to increase over the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. The share of capital expenditure in the overall defense budget is expected to increase during the forecast period
3.2.2. The army accounts for the largest share of defense expenditure
3.2.3. The country is expected to spend US$XX billion on its army over the forecast period
3.2.4. Naval budget projected to grow at a CAGR of XX% during the forecast period
3.2.5. Air force budget expected to be US$XX billion by 2017
3.2.6. Thailand to spend US$XX billion on support services over the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security (HLS) expenditure expected to grow at a CAGR of XX% during 2013-2017
3.3.2. HLS expenditure to be driven by the country's efforts to counter security threats and civil unrest
3.3.3. Thailand faces a high level of threat from foreign terrorist organizations
3.4. Benchmarking with Key Global Markets
3.4.1. Thai defense expenditure is expected to remain modest during the forecast period
3.4.2. Thailand has a low per capita defense expenditure
3.4.3. Thailand faces a high level of threat from foreign terrorist organizations
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Demand for naval defense equipment expected to increase
3.5.2. Modernization of the armed forces will create demand for advanced defense systems
3.5.3. Demand for land-based defense systems expected to increase
3.5.4. Potential demand for frigates and its MRO services
4. Defense Procurement Market Dynamics
4.1.1. Undeveloped domestic defense industry drives imports
4.1.2. Defense imports expected to increase during the forecast period
4.1.3. Sweden and Ukraine dominated Thai defense imports during 2011
4.1.4. Aircraft accounted for a majority of defense imports during 2011
4.2. Export Market Dynamics
4.2.1. Thailand has limited export capabilities
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low
5.1.2. Bargaining power of buyer: high
5.1.3. Barrier to entry: low to medium
5.1.4. Intensity of rivalry: high
5.1.5. Threat of substitution: high
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offsets are mandatory for all procurements exceeding US$9.5 million
6.1.2. The Thai defense sector is partially regulated
6.2. Market Entry Route
6.2.1. Biennial defense exhibition provides an attractive entry route
6.2.2. Foreign equipment manufacturers enter the market through direct commercial sales
6.2.3. Foreign defense organizations venture into the market by partnering with a domestic defense firm
6.3. Key Challenges
6.3.1. Corruption and a lack of transparency impedes the growth of Thailand's defense industry
6.3.2. Presence of indirect offset hampers the growth of the domestic defense sector
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Avia Saab Technologies Co. Ltd.: overview
7.2.2. Avia Saab Technologies Co. Ltd.: products
7.2.3. Avia Saab Technologies Co. Ltd: recent announcements and strategic initiatives
7.2.4. Avia Saab Technologies Co. Ltd.: recent contract wins
7.2.5. Avia Saab Technologies: financial analysis
7.2.6. Avia Satcom: overview
7.2.7. Avia Satcom: products and services
7.2.8. Avia Satcom: alliances
7.2.9. Avia Satcom: recent contract wins
7.2.10. Infowave (Thailand) Co. Ltd.: overview
7.2.11. Infowave (Thailand) Co. Ltd.: defense products and services
7.2.12. Infowave (Thailand) Co., Ltd.: alliances
8. Business Environment and Country Risk
8.1. Demographics and Social Statistics
8.1.1. Population - Female
8.1.2. Population - Male
8.2. Economic Performance
8.2.1. Business Confidence index
8.2.2. Construction Output, Current Prices, Local Currency
8.2.3. Construction Output, Current Prices, US Dollars
8.2.4. Current Account Balance as Percentage of GDP
8.2.5. Debt-Service Ratio
8.2.6. Debt-Service Ratio
8.2.7. Exports of Goods and Services, Current Prices
8.2.8. External Debt as a percentage of GDP
8.2.9. Fiscal Balance as a percentage of GDP
8.2.10. Foreign Direct Investment
8.2.11. GDP at Purchasing Power Parity
8.2.12. GDP, Constant Prices(Local Currency)
8.2.13. GDP, Constant Prices (US$ Billion)
8.2.14. GDP, Current Prices(Local Currency)
8.2.15. GDP, Current Prices (US$ billion)
8.2.16. General Government Final Consumption Expenditure
8.2.17. Gross Fixed Capital Formation, Current Prices
8.2.18. Imports of goods and services
8.2.19. Inflation, Average Consumer Prices
8.2.20. Interest Rate (Lending)
8.2.21. Manufacturing Output, Current Prices (Local Currency Bn)
8.2.22. Manufacturing Output, Current Prices (US$ Billions)
8.2.23. Market Cap of Stock Exchange
8.2.24. US$- Exchange Rate (Annual Average)
8.2.25. US$- Exchange Rate (EoP)
8.2.26. Wholesale Price Index
8.3. Energy and Utilities
8.3.1. Hydroelectricity Installed Capacity
8.3.2. Crude Oil Distillation Capacity
8.3.3. Natural Gas Consumption
8.3.4. Natural Gas Imports
8.3.5. Natural Gas Production
8.3.6. Net Conventional Thermal Electricity Generation
8.3.7. Net Geothermal, Solar, Wind, and Wood Electric Power Generation
8.3.8. Net Hydroelectric Power Generation
8.3.9. Petroleum, Consumption
8.3.10. Petroleum, Production
8.4. Minerals
8.4.1. Coal Consumption
8.4.2. Coal Production
8.5. Social and Political Risk
8.5.1. Political Stability Index
8.5.2. Transparency Index
8.6. Technology
8.6.1. Fixed Broadband Internet Subscribers
8.6.2. Gross Domestic Expenditure on Research and Development as % of GDP
Figure 66: Thai Net Geothermal, Solar, Wind, and Wood Electric Power Generation (Billion Kilowatt hours), 2001-2010
Figure 67: Thai Net Hydroelectric Power Generation(Billion Kilowatt hours), 2001-2010
Figure 68: Thai Petroleum Consumption (Thousand Barrels Per Day), 2002-2011
Figure 69: Thai Petroleum Production (Thousand Barrels Per Day), 2002-2011
Figure 70: Thai Coal Consumption (Thousand Short Tons), 2001-2010
Figure 71: Thai Coal Production (Thousand Short Tons), 2001-2010
Figure 72: Thai Political Stability Index, 2002-2010
Figure 73: Thai Transparency Index, 2002-2011
Figure 74: Thai Fixed Broadband Internet Subscribers (Thousands), 2001-2010
Figure 75: Gross Domestic Expenditure on Research and Development as % of GDP, 2000-2009
Figure 76: Patents Granted, 2002-2011
XX Commercial in Confidence.
The Thai Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 published by ICD Research in September 28, 2012. This report consists of Pages: 113 and the price starts from US $ 1250.
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