Overview

Thailand’s National Security Strategy 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.  Thailand, the second-largest economy in Southeast Asia, has continued to maintain defense spending with its annual defense budget at around USD 6 billion during COVID-19 pandemic, and is expected to reach USD 7 billion post-pandemic.

The major drivers of the defense and security industry are illegal immigrant smugglings, occasional border conflicts, ongoing violence from the insurgency in the southern provinces of Pattani, Yala, Narathiwat, and threats in Bangkok and other parts of the country from political unrests.  Defense budget cut to reallocate the funds to assist with the COVID-19 pandemic has also impacted Thailand’s defense and security industries.

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.

Like other ministries, Thailand’s Ministry of Defense budget has been transferred to be used in the government’s COVID-19 economic stimulus program; however, it has been maintained at around $7 billion since 2020.  In 2022, the Thai government allocated slightly more than one percent of the country’s GDP to defense.  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 19 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 Defense Technology Institute (DTI).

Table: Thailand’s Defense Budget (Millions USD)

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

Leading Sub-Sectors

• Security and safety equipment (SEC)
• Defense electronics
• Defense equipment (DFN)

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 the 12th National Economic and Social Development Plan.  The Thai defense industry is one of twelve ‘S-curve’ 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 Public-Private-Partnership (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.   The growth highlight in the Thai defense industry are the unmanned vehicles for military applications.  There are opportunities for sales and joint development of unmanned platforms for air, land, and sea applications.

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, armed training aircraft, electronic warfare, air-defense radars, 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.