Defence footprint grows in corridor

Defence footprint grows in corridor

Support for the 11th targeted industry is picking up steam as non-military applications of related innovations offer opportunities for national development.

A drone is tested by the Royal Thai Navy. Pawat Laopaisarntaksin
A drone is tested by the Royal Thai Navy. Pawat Laopaisarntaksin

The government's flagship Eastern Economic Corridor (EEC) scheme has long been promoted as a vehicle to upgrade the country's industrial sector using technology. Along with the 10 industries targeted for development in the corridor, defence was added last November, with the aim of improving the country's military technology and innovation.

The 10 targeted industries are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical services.

The corridor spans 110,168 rai, covering 30 existing and new industrial zones, while the government expects investment value of 1.7 trillion baht in three eastern provinces: Chachoengsao, Chon Buri and Rayong.

The prime proponent of updating the country's defence technology was Deputy Prime Minister Prawit Wongsuwon, who wants Thailand to create its own military technology, reduce dependence on imports of new and used weapons, and cut costs.

Privileges granted

Achara Soontawnkru, director of investment strategy and policy at the Board of Investment, said the BoI announced the defence industry ecosystem in February.

The government approved it as the 11th targeted industry last November, in line with efforts to enhance the army, air force and navy.

The BoI's privileges for this sector are categorised as Group A.

Such investors will receive corporate tax exemption for activities deemed to be of high importance or knowledge-based investments, as well as high-tech activities, complicated production processes and capital-intensive investments.

Group A has A1 and A2 subcategories, which are eligible to receive a corporate income tax exemption for eight years, while more privileges can be requested if related parties continue to invest in science, technology and human resource development.

Group A investors can get a tax exemption on machinery and materials for export, plus other non-tax privileges.

For the defence industry ecosystem, the BoI has classified these products as Group A: tank, armour and battle vehicles; army drones; unmanned aerial vehicles (UAVs); military robotics; unmanned aerial watercraft; communication systems; and weapons repair.

Supporting bylaws

Gp Capt Chamnan Kumsap, director for knowledge management and the publication department at the Defence Technology Institute (DTI), is interested in R&D for army drones and UAVs in a bid to upgrade the ground-based controller and communication system and satellites for national security.

Founded in 2009, the DTI is a public organisation under the Defence Ministry. After the defence industry ecosystem becomes the 11th targeted industry, the DTI will look to co-invest and co-develop with private sector players.

"We plan to draft the Defence Technology Agency bill because it will unlock our ability to conduct joint defence projects," Gp Capt Chamnan said.

The DTI has completed a second public hearing process, he said.

"Once this new bill has been passed, the DTI aims to invest in research and development to mobilise the country's defence sector," he said.

The act has to be passed by the National Legislative Assembly.

Gen Nawin Damrikarn, deputy secretary-general of the Prime Minister's Office, said many related acts need amendment because the Defence Ministry and other military agencies are restricted in business terms.

The NLA is at the final stage of amending the act, which is scheduled to become effective early next year at the latest.

In the first stage of the act, the focus will be on maintenance and integration service providers in the military sector, as these projects require a small budget when compared with the R&D unit. The government thinks the service providers can also be improved more quickly.

"We aim to replace imports, then expand exports in international markets," Gen Nawin said. "[There will soon be] a site visit to Israel, one of the major exporters of army equipment. Participants are expecting to learn new ways to design the military master plan and business model for Thailand."

He said three ministries -- Defence, Industry, and Science and Technology -- as well as other business operators are teaming up to craft the defence master plan for the sector.

The plan is to encourage army-related agencies to procure Thai-made military hardware and equipment.

"Procurement from state agencies will bring Thai-made military products to compete with international ordnance trading firms, and new local startups can seize on opportunities in this sector," Gen Nawin said. "This special procurement for local firms can build up the defence industry faster than if business operators are left to go it alone."

He said military vehicles and weapons are normally used for two purposes -- wars and industry -- with the former purpose falling under the auspices of the Defence Ministry.

But military technologies can be used in UAVs, drones, sensor systems, robotics and artificial intelligence for non-defence purposes.

"They are not just used for war or combating terrorism," Gen Nawin said. "Other applications of these technologies include UAV surveillance for examining damage to gas or water pipelines, petroleum production and forest encroachment."

New hope from private sector

Siwaruk Siwamogsatham, deputy executive director of the National Electronics and Computer Technology Center (Nectec), said a lot of equipment can be proposed for national security, such as identification technology, facial recognition systems and multipurpose sensor systems that can track environmental damage (including oil and chemical spills) or hunt down cyberterrorists.

"Once policymakers open the defence industry to the local market, other equipment and machinery can be developed," he said.

Nectec has helped its researchers develop a prototype electronic nose that can discern different odours. This system can be applied for both national security and industrial purposes, such as detecting narcotics on someone's breath or alerting of flammable materials.

The machine nose can also be employed for smelling wine, food processing, medical purposes and air-quality surveillance with smart dust technology.

Once the nose is tested and ready for commercial production, it will receive a tentative procurement deal from SET-listed CP All Plc, the operator of 7-Eleven convenience stores, to control consumer goods quality.

Burin Sungketkit, deputy managing director of Top Engineering Corporation, a local startup UAV producer and integrated service provider, said he feels hopeful that policymakers will open the sector up to non-national-security uses, as it will help create new startups.

He said the industry can be viable, citing the readiness of basic infrastructure and human resources.

"New promotional measures will then go into effect to drive S-curve industries," Mr Burin said.

Policymakers are ready to promote the robotics and automation sector, which dovetails with the defence industry's needs, creating greater chances for business operators that employ the same technology.

Incentives should be granted to startups so they can better access funding, Mr Burin said.

His company was set up three years ago with support from the National Innovation Agency. Mr Burin's firm received a contract order in April from the national oil and gas group, PTT Plc, to examine a 1,770km onshore gas pipeline with its UAV products.

Mr Burin said the company is developing an unmanned ground vehicle to examine places and things that people cannot access.

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