Overview
Thailand’s National Security Strategy focuses on safeguarding the nation, strengthening the armed forces, maintaining combat readiness, neutralizing the regional arms race among ASEAN countries, and modernizing the country’s armed forces. Thailand, the second-largest economy in Southeast Asia, had an annual defense budget of approximately USD 6-7 billion before the pandemic.
Post-pandemic defense spending is expected to be around USD 5-6 billion. The lion’s share of the budget is reserved for maintaining combat readiness. As a result, the primary expenditures are in upgrading and modernizing existing military equipment.
The major drivers of the defense and security industry are political unrest, violence from the insurgency in the southern provinces of Pattani, Yala, and Narathiwat, human trafficking, and occasional border conflicts.
The Thai government 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 is one of Thailand’s largest sources of defense equipment.
In 2023, the Thai government allocated 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 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 Defense Technology Institute (DTI).
Table: Thailand’s Defense Budget (Millions USD)
| 2021 | 2022 | 2023 | 2024 (Estimated) | |
|---|---|---|---|---|
| Defense Budget | 6,920.34 | 6,058.70 | 5,893.90 | 6,011.78 |
| Gross Domestic Product (GDP) | 531,251.61 | 489,975.76 | 564,848.48 | 576,145.45 |
| Defense Budget in % to GDP | 1.30% | 1.24% | 1.04% | 1.04% |
| Annual Increase /Decrease(%) | -7.4 | -12.5 | -2.72 | -2.72 |
| Exchange Rates | 31 | 33 | 33 | 33 |
Source: The Budget Bureau, Thailand’s Ministry of Finance
Leading Sub-Sectors
- Security and safety equipment
- Defense electronics
- Defense equipment
Opportunities
The Thai defense sector is focused on technology transfer, defense modernization, and local defense industry promotion. Local defense industry developments are 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 12 ‘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. In the DFIZ, defense equipment infrastructure is developed through public private partnerships between the Thai government, local, and foreign companies.
The Thai military is also investing in equipment such as helicopters, fighter jets, frigates, armored vehicles, utility vehicles, high-technology electronic devices, cybersecurity equipment, telecommunication systems, anti-terrorism equipment, and natural disaster management systems.
Government and military expenditures drive the Thai defense and equipment market. Starting in 2014, increasing budgets expanded the market until the beginning of the pandemic. Post-pandemic there is a potential for growth in the Thai military budget since spending levels have historically been less than two percent of the national GDP.
One growth area is unmanned vehicles for military applications. There are opportunities for sales and joint development of unmanned platforms for air, land, and sea applications.
The Thai Ministry of Defense introduced the 5-year Ministry of Defense Reorganization Plan 2023-2028. The Reorganization Plan aims to accomplish the following national security strategic goals:
- Increase the Ministry’s efficiency by reducing military personnel.
- Equip the Thai military with advanced defense equipment sufficient to protect Thailand’s sovereignty.
- Enhance the ability to cope with multiple threats with multi-mission capability.
- Increase capacity to handle a changing national security environment.
- Reduce or close military units with redundant roles and responsibilities.
In addition, Thailand’s Ministry of Defense follows a Five-Year International Military Security Cooperation Plan (2023-2028) focused on promoting international relations with military forces of friendly countries. The plan promotes international military operations, including joint military exercises, high-level commander visits, military education exchange programs, bilateral and multilateral meetings, and Memorandums of Understanding. The goal is also to increase trust among military forces of friendly countries.