October 26, 2023
BANGKOK – After a Chinese shipbuilder failed to secure a Germany-made diesel engine to be fitted on a submarine built in China, as stipulated in the contract signed by the two sides, Defence Minister Sutin Klungsang said late last week that Thailand would seek an anti-sub frigate in place of the submarine.
The Thai Navy used to have four small subs but they were decommissioned after World War II.
In 1995, the Navy requested a budget of about 40 billion baht for the procurement of two Kockums submarines under a commitment of seven budget years but it was not approved by the government.
The Navy waited for 15 years before renewing its attempt to buy submarines.
In 2015, the Navy proposed procuring two new or three used submarines with a budget of 48 billion but it failed to win approval again.
A year later after the Yingluck Shinawatra government took office in 2011, the Navy proposed buying six used U-206A submarines from Germany with a budget of 7.7 billion baht.
But the proposal failed to be put on the Cabinet’s agenda for approval. Finally, the Navy decided to buy a sophisticated frigate from South Korea with a budget of 14.6 billion baht instead.
The Navy’s hopes of acquiring the submarines was revived during the interim government of General Prayut Chan-o-cha following the 2014 coup.
During a Cabinet meeting on July 25 2016, the Cabinet approved in principle the Navy’s proposal to buy two Yuan-class S26T subs from China with an option to get another for free. The procurement budget was set at 36 billion baht. The project aimed to buy one sub at a time under the commitment of several budget years.
Then defence minister General Prawit Wongsuwan told reporters that the post-coup National Legislative Assembly had approved the planned procurement.
Prawit said Thailand needed more than one submarine because neighbouring countries also had subs.
He said the subs were needed to defend Thailand’s maritime territory and to survey marine resources.
He added that the kingdom had been without submarines for over 60 years after World War II and it became “a defence strategic big hole”.
Prawit said the interim government had approved the project because the government attached importance to national defence strategies.
On April 18, 2017, the Cabinet reaffirmed its decision to allow the Navy to buy two Yuan-class S26T submarines from China with one free submarine, with a budget of 36 billion baht without announcing the deal to the public.
The procurement was part of a government-to-government deal. On May 5, 2017, the Royal Thai Navy signed a deal with China Shipbuilding & Offshore International Co Ltd (CSOC), a state enterprise, to buy the first sub for 13.5 billion baht.
The CSOC agreed to receive payment in 17 instalments over a span of seven years. The first sum of 700 million was paid in 2017 and from 2018 to 2023, the Navy would have to pay 2.1 billion more a year.
The Navy secured an agreement from the CSOC that the payment terms would be lenient depending on the current financial situation of Thailand.
However, the CSOC’s failure to get approval from the German government to buy a diesel engine for its subs has become the trigger for the current Thai government to ditch the sub deal.
Sutin said Chinese President Xi Jinping and Chinese Premier Li Qiang agreed with Prime Minister Srettha Thavisin during their talks when the Thai premier visited Beijing earlier this month to replace the sub with a frigate.
Following is the timeline on how the submarine deal with China sank:
April 28, 2015: Cabinet approves in principle the procurement of three subs (two plus one free)
April 18, 2017: Cabinet gives final approval for the procurement of three subs for 36 billion baht. The Navy signs a deal with the Chinese shipbuilder to deliver the first sub to Thailand in 2023.
October 7, 2019: Cabinet approves the 2020 budget bill that includes provision for buying the second and third subs.
2020: The Cabinet asks government agencies to return budget that was not urgent, and the Navy returns its budget for buying subs.
July 17, 2021: The Navy requests a budget of 22 billion baht for buying two subs.
July 19, 2021: The Defence Ministry withdraws its subs procurement project from the 2022 budget bill.
February 28, 2022: The Navy admits its first submarine has an issue with engine as Germany will not approve the sale of a German-made engine for Chinese subs.
August 9, 2022: The Navy defers a decision on whether to accept a Chinese-made diesel engine in place of the German-made one.
October 21, 2023: Sutin says the submarine deal will be replaced by a frigate deal.