Future of the Thailand Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the Thailand Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

Thailand, the second-largest economy in Southeast Asia, witnessed defense budget growth of 1.11% over 2013-2017. The country aims to modernize its military equipment in order to sustain its military capabilities and maintain acceptable readiness levels in line with other countries around the world. The escalation of the arms race in the ASEAN region (Association of Southeast Asian Nations), due to massive military expenditure by China and India, and territorial conflicts with adjoining nations, are the key factors driving Thailands defense expenditure. With this trend expected to continue over the forecast period, the countrys defense expenditure is projected to reach US$7.7 Billion by 2022.

Defense capital expenditure is expected to increase to US$3.5 Billion over the forecast period till 2022. The countrys defense revenue expenditure is expected to grow at a CAGR of 4.00% over the forecast period to reach US$4.2 Billion by 2022. Thailand is expected to allocate half of its total budget to its army, with expenditure on the navy, air force, and others sectors accounting for an average of 19.6%, 18.6%, and 12.2% respectively.

Thailand also aims to increase its homeland security expenditure in order to counter threats posed by terrorists, pirates, and internal rebel groups. Thailands homeland security expenditure cumulatively valued US$23.9 Billion between 2013 and 2017; and is predicted to increase to US$29.3 Billion over the forecast period. Over the forecast period, demand for equipment is mainly expected to revolve around military IT networking, main battle tanks, infrastructure construction, multi-role aircraft, naval vessels, submarine, helicopters, armored vehicles, unmanned aerial vehicles (UAVs), and surveillance equipment.

The report Future of the Thailand Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022 offers detailed analysis of the Thailand defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following -
- The Thailand defense industry market size and drivers: Detailed analysis of the Thailand defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the countrys expenditure and modernization patterns.
- Budget allocation and key challenges: Insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country.
- Porters Five Force analysis of the Thailand defense industry: Analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry.
- Import and Export Dynamics: Analysis of prevalent trends in the countrys imports and exports over the last five years.
- Market opportunities: Details of the top five defense investment opportunities over the next 10 years.
- Competitive landscape and strategic insights: Analysis of the competitive landscape of the Thailand defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Companies mentioned in this report: Saab, Airbus Helicopters, Sikorsky, Northrop Grumman Corp., Lockheed Martin Corp., Leonardo, Daewoo Ship Building & Marine Engineering (DSME) and Enstrom Helicopters.

Scope

- The Thailand government has been steadily increasing its defense budget 2015 - 2017. Defense expenditure registered a CAGR of 1.11% over 2013-2017. The country allocated US$5.9 billion to its defense sector in 2013, which increased to US$6.2 billion in 2017. This trend is expected to continue during the forecast period, owing to the governments well-defined military modernization plans to better equip its armed forces.
- Revenue expenditure allocation decreased from 57.2% in 2013 to 55.6% in 2017. Conversely, the countrys capital expenditure declined from 42.8% to 44.4% during the historic period. Over the forecast period, Bangladesh is expected to allocate an average of 45.1% of its defense budget to capital expenditure, while the remainder will be assigned to revenue expenditure.
- The MoD is expected to invest in acquisition of main battle tanks, diesel engine submarine and military IT networking.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Thailand defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Thailand defense industry covering sections including demand drivers, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 8
1.1. What is this Report About? 8
1.2. Definitions 8
1.3. Summary Methodology 10
1.4. About Strategic Defence Intelligence 11
2. Executive Summary 12
3. Market Attractiveness and Emerging Opportunities 14
3.1. Current Market Scenario 15
3.1.1. Primary Threat Perception 15
3.1.2. Military Doctrine & Strategy 17
3.1.3. Military Fleet Size 19
3.1.4. Procurement Programs 24
3.1.5. Social, Political and Economic Environment & Support for Defense Projects 25
3.1.6. Political and Strategic Alliances 26
3.2. Defense Market Size Historical and Forecast 27
3.2.1. Thailands defense budget is expected to surge at a CAGR of 4.46% over the forecast period 27
3.2.2. Arms race with other Asian countries, border conflicts, modernization of armed forces, and political volatility drives Thailands defense expenditure 29
3.2.3. Defense expenditure as a percentage of GDP to average 1.4% over the forecast period 31
3.3. Analysis of Defense Budget Allocation 33
3.3.1. Average capital expenditure allocation anticipated to remain at 45.1% of the total defense budget over the forecast period 33
3.3.2. Need to replace obsolete equipment to drive defense capital expenditure 35
3.3.3. Expenditure on the army to increase at a CAGR of 4.46% over 2018-2022 37
3.3.4. Budget allocation on Army expected to remain highest over the forecast period 39
3.3.5. Per capita defense expenditure is expected to increase during the forecast period 43
3.4. Homeland Security Market Size and Forecast 45
3.4.1. Homeland security expenditure is expected to grow at a CAGR of 4.71% over the forecast period 45
3.4.2. Counter terrorism and maritime security to drive Thailands homeland security expenditure 47
3.4.3. Thailand faces a high level of threat from foreign terrorist organizations 48
3.4.4. Thailand faces moderate risk from acts of terrorism 49
3.4.5. Thailand has a terrorism index score of 6.7 51
3.5. Benchmarking with Key Global Markets 52
3.5.1. Thailands defense expenditure is expected to increase at a slower rate than other Asian countries over the forecast period 52
3.5.2. Thailands defense expenditure is relatively small when compared to other Asian countries 54
3.5.3. Thailands defense budget as a percentage of GDP is expected to remain the same over the forecast period 55
3.6. Market Opportunities: Key Trends and Growth Stimulators 56
3.6.1. Military IT - Networking 56
3.6.2. Main Battle Tank (MBT) 57
3.6.3. Diesel Electric Submarine 58
4. Defense Procurement Market Dynamics 59
4.1. Import Market Dynamics 59
4.1.1. Thailands defense imports are expected to increase over the forecast period 59
4.1.2. Ukraine and Sweden to remain the key arms suppliers to Thailand 60
4.1.3. Aircraft and armored vehicles dominate Thailands arms imports 61
4.2. Export Market Dynamics 62
4.2.1. Negligible defense exports in Thailand 62
5. Industry Dynamics 63
5.1. Five Forces Analysis 63
5.1.1. Bargaining Power of Supplier: Low 64
5.1.2. Bargaining Power of Buyer: High 64
5.1.3. Barrier to Entry: Low to Medium 64
5.1.4. Intensity of Rivalry: Medium to High 64
5.1.5. Threat of Substitution: High 65
5.2. Market Regulation 65
5.2.1. Thailands defense industry is largely driven by the governments offset policy 65
5.2.2. Thailands defense sector is partially regulated 66
5.3. Market Entry Route 67
5.3.1. Budgeting Process 67
5.3.2. Defense exhibitions can be used as a direct entry route into Thailands defense industry 68
5.3.3. Foreign defense organizations venture into the market by partnering with a domestic defense firm 68
5.3.4. Foreign Military Sales (FMS) in Thailand 69
5.4. Key Challenges 70
5.4.1. Negligible defense exports pose a major challenge for domestic defense companies 70
5.4.2. Limited defense budget allocation by Thailands government discourages investors from market entry 70
5.4.3. Corruption and lack of transparency hinder the growth of Thailands defense industry 70
5.4.4. Presence of indirect offset hampers the growth of the domestic defense sector 70
6. Competitive Landscape and Strategic Insights 72
6.1. Competitive Landscape Overview 72
6.1.1. Saab: Overview 73
6.1.2. Saab: Products and Services 73
6.1.3. Saab: Recent Announcements and Strategic Initiatives 73
6.1.4. Saab: Alliances 74
6.1.5. Saab: Recent Contract Wins 75
6.1.6. Airbus Helicopters: Overview 76
6.1.7. Airbus Helicopters: Products and Services 76
6.1.8. Airbus Helicopters: Recent Announcements and Strategic Initiatives 76
6.1.9. Airbus Helicopters: Recent Contract Wins 77
6.1.10. Sikorsky: Overview 78
6.1.11. Sikorsky: Products and Services 78
6.1.12. Sikorsky: Recent Announcements and Strategic Initiatives 78
6.1.13. Sikorsky: Recent Contract Wins 79
6.1.14. Northrop Grumman Corp. Overview 80
6.1.15. Northrop Grumman Corp.: Products and Services 80
6.1.16. Northrop Grumman Corp.: Recent Contract Wins 81
6.1.17. Lockheed Martin Corp. Overview 82
6.1.18. Lockheed Martin Corp.: Products and Services 82
6.1.19. Lockheed Martin Corp.: Recent Announcements and Strategic Initiatives 82
6.1.20. Lockheed Martin Corp.: Recent Contract Wins 82
6.1.21. Leonardo: Overview 83
6.1.22. Leonardo-: Products and Services 83
6.1.23. Leonardo-: Recent Announcements and Strategic Initiatives 83
6.1.24. Leonardo-: Recent Contract Wins 84
6.1.25. Daewoo Shipbuilding & Marine Engineering: Overview 85
6.1.26. Daewoo Shipbuilding & Marine Engineering: Products and Services 85
6.1.27. Daewoo Shipbuilding & Marine Engineering: Recent Announcements and Strategic Initiatives 85
6.1.28. Daewoo Shipbuilding & Marine Engineering: Recent Contract Wins 85
6.1.29. Enstrom Helicopter Corporation: Overview 86
6.1.30. Enstrom Helicopter Corporation: Products and Services 86
6.1.31. Enstrom Helicopter Corporation: Recent Announcements and Strategic Initiatives 86
6.1.32. Enstrom Helicopter Corporation: Recent Contract Wins 86
7. Business Environment and Country Risk 87
7.1. Economic Performance 87
7.1.1. Nominal GDP per Capita 87
7.1.2. GDP at Current Prices (US$ Billion) 88
7.1.3. Exports of Goods and Services (THB billion) 89
7.1.4. Imports of Goods and Services (THB billion) 90
7.1.5. Gross National Disposable Income (US$ billion) 91
7.1.6. LCU per US$ (period average) 92
7.1.7. Market Capitalization of Listed Companies (US$ Billion) 93
7.1.8. Market Capitalization of Listed Companies (% of GDP) 94
7.1.9. Government Cash Surplus/Deficit as a Percentage of GDP (THB) 95
7.1.10. Goods Exports as a Percentage of GDP 96
7.1.11. Goods Imports as a Percentage of GDP 97
7.1.12. Services Imports as a Percentage of GDP 98
7.1.13. Service Exports as a Percentage of GDP 99
7.1.14. Foreign Direct Investment, net (BoP, current US$ bn) 100
7.1.15. Net Foreign Direct Investment as a % of GDP 101
7.1.16. Mining, Manufacturing, Utilities Output (THB Billion) 102
8. Appendix 103
8.1. About SDI 103
8.2. Disclaimer 103

List Of Tables


Table 1: Thailand Ground Forces Strength 19
Table 2: Thailand Air Force Strength 21
Table 3: Thailand Navy Strength 22
Table 4: Thailand - Ongoing Development and Procurement Programs 24
Table 5: Thailand - Future Procurement Programs 24
Table 6: Thailand Defense Expenditure (THB Billion & US$ Billion), 2013-2022 27
Table 7: Thailand GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2013-2022 31
Table 8: Thailand Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 33
Table 9: Thailand Defense Capital Expenditure (THB Billion & US$ Billion), 2013-2022 35
Table 10: Thailand Defense Budget Split Between Military Services (Army, Air Force, Navy and Others) (%), 2013-2022 38
Table 11: Thailand Defense Budget in THB Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 39
Table 12: Thailand Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 41
Table 13: Thailand Per Capita Defense Expenditure (US$), 2013-2022 43
Table 14: Thailand Homeland Security Expenditure (THB Billion & US$ Billion), 2013-2022 45
Table 15: Terrorism Index, 2017 49
Table 16: Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 52
Table 17: Thailand Defense Offset Regulations 65
Table 18: Thailand Budget Formation Timetable 67
Table 19: FMS Deals in Thailand 69
Table 20: Saab - Product Focus 73
Table 21: Saab - Alliances 74
Table 22: Saab - Recent Contract Wins 75
Table 23: Airbus Helicopters - Product Focus 76
Table 24: Airbus Helicopters - Recent Contract Wins 77
Table 25: Sikorsky - Product Focus 78
Table 26: Sikorsky - Recent Contract Wins 79
Table 27: Northrop Grumman Corp. - Product Focus 80
Table 28: Northrop Grumman Corp.- Recent Contract Wins 81
Table 29: Lockheed Martin Corp. - Product Focus 82
Table 30: Lockheed Martin Corp.- Recent Contract Wins 82
Table 31: Leonardo-- Product Focus 83
Table 32: SME: Leonardo-- Recent Contract Wins 84
Table 33: Daewoo Shipbuilding & Marine Engineering - Product Focus 85
Table 34: Daewoo Shipbuilding & Marine Engineering - Recent Contract Wins 85
Table 35: Helicopter Corporation- Product Focus 86
Table 36: Helicopter Corporation- Recent Contract Wins 86

List Of Figures


Figure 1: Thailand Defense Expenditure (THB Billion), 2013-2022 28
Figure 2: Thailand Defense Expenditure (US$ Billion), 2013-2022 28
Figure 3: Thailand GDP Growth vs. Defense Expenditure as Percentage of GDP, 2013-2022 32
Figure 4: Thailand Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 34
Figure 5: Thailand Defense Capital Expenditure (THB Billion), 2013-2022 36
Figure 6: Thailand Defense Capital Expenditure (US$ Billion), 2013-2022 36
Figure 7: Thailand Defense Budget Split Between Army, Navy, Air Force and Others, 2013-2022 38
Figure 8: Thailand Defense Budget in THB Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 40
Figure 9: Thailand Defense Budget in US$ Billion - Breakdown by Services (Army, Navy, Air Force and Others) 2013-2022 42
Figure 10: Thailand Per Capita Defense Expenditure (US$), 2013-2022 44
Figure 11: Thailand Homeland Security Expenditure (THB Billion), 2013-2022 46
Figure 12: Thailand Homeland Security Expenditure (US$ Billion), 2013-2022 46
Figure 13: Terrorism Heat Map, 2017 48
Figure 14: Terrorism Index, 2017 51
Figure 15: Benchmarking with Key Markets - 2013-2027 vs. 2018-2022 53
Figure 16: Defense Expenditure of the Worlds Largest Military Spenders (US$ Billion), 2017 and 2022 54
Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 55
Figure 18: Thailand Military IT- Networking Market Size (US$ Million), 2017-2027 56
Figure 19: Thailand Main Battle Tank Market Size (US$ Million), 2017-2027 57
Figure 20: Thailand Diesel Electric Submarine Market Size (US$ Million), 2017-2020 58
Figure 21: Thailands Defense Import Trend, 2012-2016 (TIV values) 59
Figure 22: Thailands Defense Import by Country, 2012-2016 (TIV values) 60
Figure 23: Thailand Defense Imports by Category (%), 2013-2022 61
Figure 24: Industry Dynamics - Porters Five Forces Analysis 63
Figure 25: Thailands GDP Per Capita at Constant Prices (US$), 2015-2025 87
Figure 26: Thailand - GDP at Current Prices (US$ Billion), 2015-2025 88
Figure 27: Thailands Exports of Goods and Services (THB Billion), 2005-2014 89
Figure 28: Thailands Imports of Goods and Services (THB billion), 2005-2014 90
Figure 29: Thailands Gross National Disposable Income (US$ billion), 2005-2013 91
Figure 30: Thailand LCU per US$, 2015-2025 92
Figure 31: Thailands Market Capitalization of Listed Companies (US$ billion), 2005-2012 93
Figure 32: Thailands Market Capitalization of Listed Companies (% of GDP), 2005-2012 94
Figure 33: Thailands Government Cash Surplus/Deficit as % of GDP (LCU), 2005-2012 95
Figure 34: Thailand - Goods Exports as a % of GDP (%), 2005-2014 96
Figure 35: Thailand - Goods Imports as a % of GDP (%), 2005-2014 97
Figure 36: Thailands Services Imports as a % of GDP (%), 2005-2014 98
Figure 37: Thailand Service Exports as a % of GDP (%), 2005-2014 99
Figure 38: Thailand - Foreign Direct Investment, net (BoP, current US$ bn), 2005-2014 100
Figure 39: Thailand- Net Foreign Direct Investment as a % of GDP, 2005-2014 101
Figure 40: Thailands Mining, Manufacturing, Utilities Output (THB Billion), 2005-2014 102

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