Thai offset plans could be derailed by a move to reinstate countertrade

Thailand's plan to introduce a formalised defence offset policy within the next few years could be derailed by a government move to reinstate countertrade, IHS Jane's understands.

The proposal to reintroduce countertrade is being backed by several government ministries, which see opportunities to boost exports of Thai goods through barter deals attached to acquisitions of military equipment from abroad.

It is also notable that the last Thai government to use military countertrade to any great extent was Thaksin Shinawatra's administration in the early- to mid-2000s. The present government, which took office following a 2011 general election, is politically aligned with Thaksin and is led by his sister, Prime Minister Yingluck Shinawatra.

Should political backing remain strong for the move, the government is likely to gradually reintroduce countertrade from 2013 alongside a continuing ad hoc effort to boost defence industry capability through collaboration. This, in turn, could halt plans currently being progressed by the Ministry of Defence's Defence Technology Institute (DTi) to introduce a defence offset policy that is intended to develop – in a structured manner – industrial capabilities and enhance self-reliance.