BMI's Executive Summary

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BMI's newly-released Thailand Defence and Security Report Q1 2008 provides insight into Thailand's tenuous internal security situation and how this will impact on defence expenditure. The insurgency in the south continued to escalate in Q407, with attacks occurring almost on a daily basis. Targeted assassinations became the primary modus operandi for insurgents, combined with large-scale bomb attacks on critical infrastructure in 2007. The deterioration of the security situation in Pattani, Yala, Narathiwat and Songkhla in 2007 was in part due to the refinement of insurgent strategies and the security force's operational inertia. In Q407, the Thai government implemented a combination of increased cordon-and-search operations as well as development plans. The aim is to undercut the operational freedom of the insurgents by imposing more random checks, as well as improving economic development in the south. The lack of employment opportunities is believed to be a major factor in fostering the Thai Muslim community's ongoing discontent with the Thai government.

The current military-led government is keen to revive Thailand's armed forces, whose material capabilities stagnated somewhat under the former Thaksin government. The Surayud government is committed to boosting defence expenditure from 1.4% of GDP to 1.7% of GDP. It is likely that the majority of funding will go to boosting surveillance capabilities to control the violence in the south of Thailand. In Q407, the Thai government confirmed the allocation of US$240mn for the procurement of defence equipment from the Ukraine, China and Israel. The money will be accessed from the 2007-2008 defence budgets and will be allocated in installments. The funds were available due to budget underspends by the Thai armed forces. It is expected that the majority of the funds will be used to procure items to combat the escalating insurgency in southern Thailand.

Overall, Thailand faces some significant challenges ahead in dealing with the insurgency in the south, as well as ensuring that a democratically elected government can rule in Thailand. The current military-led government is keenly aware that its credibility rests on when elections are called. As such, it has tentatively scheduled elections for December 2007. In the immediate term, the public will support the new government, which will make the task slightly easier. There is more unease amongst the international community at Thailand's actions, and they will be watching closely to see who is elected into government.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Thailand Security SWOT

Thailand Defence Industry SWOT

Thailand Economic SWOT

Thailand Political SWOT

Thailand Business Environment SWOT

Chapter 3 - Political Overview

Domestic Political Outlook

Chapter 4 - Security Risk Analysis

BMI’s Security Ratings

Table: Regional Security Ratings

Table: State Terrorism Vulnerability Index

Regional Security: South East Asia and Pacific Q406

Overview

Inter-State Conflicts

Internal Conflicts

Thailand Terrorism Risk

Thailand Physical Safety Risk

Thailand Conflict Risk

Chapter 5 - Security Overview

Internal Security Situation

Recent Developments

Southern Thai Muslim Insurgency

National Revolutionary Front Coordinate (Barisan Revolusi Nasional Koordinasi, BRN-K)

GMIP/PULO

Table: Thai Muslim Insurgents

External Security Situation

Chapter 6 - Defence Industry

Armed Forces

Table: Thailand Regional Armed Forces

International Deployments

Weapons of Mass Destruction

Market Overview and Structure

Chapter 7 - Industry Trends & Developments

Competitive Landscape

Table: Thailand Military Key Players

Arms Trade Overview

Procurement Trends And Developments

Chapter 8 - Industry Forecast Scenario

Army Enlargements

Government Expenditure On Defence Industry

Table: Thailand Defence Sector Historical Data & Forecasts

Chapter 9 - Macroeconomic Forecast

Feeling The Political Drag

Table: GDP, Output & Population

Chapter 10 - Company Profiles

Loxley

Asian Marine Services

Thai-Italian Interarms Company

Minebea

Chapter 11 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 12 - Appendix A: Risk Ratings Methodology

Conflict Risk

Terrorism Risk

Physical Safety Risk

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for Asia Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's Asian Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: