Thailand - Country Commercial Guide
Defense and Security

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-08-15

Overview

The Thai military and law enforcement agencies set the agenda for Thailand’s National Security Strategy, which primarily focuses on maintaining combat readiness to sufficiently safeguard the nation, strengthening the armed forces to protect the country’s interests, neutralizing the regional arms race among ASEAN, and modernizing the country’s armed forces. The Thai government also plans to develop its domestic defense industry to reduce the country’s dependence on imports, promote technology transfer, and strengthen national security. Demand for military and defense equipment from allied countries remains high. The United States has been one of Thailand’s largest sources of defense equipment.

The nature of security threats in Thailand include potential political unrest, occasional border disputes, domestic terrorist and separatist group activities in the troubled southern provinces, natural disasters, human smuggling, illicit drug trafficking, and, recently, the COVID-19 pandemic.

Thailand has continued to maintain defense spending with its annual defense budget of around $7 billion since 2018. In 2021, the Thai government allocated one percent of the country’s GDP to defense, which is approximately $6.9 billion. An estimated 49 percent of the defense budget is assigned to the Royal Thai Army, another 20 percent is allocated to the Royal Thai Navy, and 18 percent is for the Royal Thai Air Force. The remaining funds are distributed to the Office of the Permanent Secretary, Royal Thai Armed Forces Headquarters, and Defence Technology Institute (DTI).

Table: Thailand’s Defense Budget (Millions USD)

 

2019

2020

2021

2022 (Estimated)

Defense Budget

7,326.66

7,475.65

6,920.34

7,044.91

Gross Domestic Product (GDP)

566,451.61

503,554.84

 531,251.61

540,814.14

Defense Budget in% to GDP

1.29%

1.48%

1.30%

1.30%

Annual Increase

3.95%

7,475.65

6,920.34

7,044.91

Exchange Rates

31

31

31

31

Source: The Budget Bureau, Thailand’s Ministry of Finance

Leading Sub-Sectors

  • Security and safety equipment (SEC)
  • Airport and ground support equipment (APG)
  • Aircraft and parts (AIR)
  • Aviation services (AVS)

Opportunities

Thailand’s policy focus for the Thai defense sector is on technology transfer and defense modernization to increase its defense capabilities by promoting the local defense industry. Local defense industry developments have been given high priority and integrated into the 20‐year national strategy known as thethe 12th National Economic and Social Development Plan. The Thai defense industry is one of twelve industry sectors under Thailand’s EEC initiative, which includes the establishment of the country’s Defense Industrial Zone (DFIZ) to promote self‐sufficiency where defense equipment infrastructure will be developed under a PPP between the Thai government, local and foreign companies.

Government and military expenditures drive the Thai defense and equipment market, and increased budgets since 2014 have expanded the market. The factors that drive defense expenditures are the threat levels and equipment maintenance, replacement, and overhaul or refurbishment requirements. There is a potential for growth in the Thai military budget since levels have been less than two percent of the national GDP.

Moreover, the Thai Ministry of Defense introduced a military reform and restructuring plan for 2017 to 2026 that emphasizes research and development along with a focus on purchases of munitions, weapons, military vehicles, training aircraft, electronics, and communication devices. To upgrade military capabilities, the Thai military will invest in additional purchases of helicopters, armored vehicles, and utility vehicles to counter a southern insurgency and strengthen its border security.