Thailand picking up the pieces

At first glance, with its beautiful attractions and large populations of tourists, the Kingdom of Thailand might not seem all that bad or unstable. However, in the last year, political instability and corruption have ransacked the country and slowed economic growth to a halt. With a recent military coup and a new prime minister installed, Thailand looks to stabilize and rebuild its industries. “For the past few years, there have been lots of conflict and fighting. There has been little progress in the country. Right now though, with the military coup happening, the country has cooled down and is more stable. There are now strong indications that the Thai economy will recover,” said Suwich Chitkasemsuk, MD for Digitalcom.

A Glance Back
2013-14 have been two years of economic and political turmoil for Thailand. Stemming from the influence of Thaksin Shinawatra on Thai politics, the majority of the Thai population viewed Thaksin as highly corrupt and damaging to Thailand's democracy and economy. Coupled with the fact that political parties allied to Thaksin have won majorities in every election since 2001, the political hotbox became an issue of fierce debate and turbulence. With the aim of removing Thaksin's influence on politics and the creation of an elected “people's council” to oversee reforms, anti-government protests began in November 2013 calling for the resignation of Yingluck Shinawatra, sister of Thaksin. The protests eventually resulted in the Royal Thai Army declaring martial law throughout the nation, followed by the removal of power from Yingluck, a military coup d'état, and the establishment of a military junta. In recent events, Prayuth Chan-ocha, army chief of Thailand, has now been established as the new interim prime minister.

A BETTER OUTLOOK
Overall, the general consensus regarding the coup seems to be a positive one. Somchai Prajaksoot, MD of Digital Focus explained, “After the coup, the political situation is stable and the economic outlook is better. The security industries have still increased.” There is a definite sense of renewed, if wary, optimism that the new government will reinvigorate economic scenarios as well as the security industry, launching new projects, and creating a better, safer Thailand.

Projects Lead the Way
Key for the Thai security industry lies in government projects. Understandably, they have been few and far between. Feelings across the security market seem to be that one of the most harmful things during the periods of unrest was lack of government projects as well as broken promises. As Johnny Trivitayakhun, MD for Security Communication Center put it, “What was felt, and seriously impacted security companies were government-related projects, where payments were delayed extensively during the periods of unrest.” Pointing once again to the political factors, it's easy to Market Dynamics understand why government projects have been scarce or delayed, as the government's focus has been on quelling unrest and ensuring stability. Further complicating problems, Nuttawaj Chieobangyang, CEO for Coretech, also pointed out that many company projects in the past year have been lost, because the new government evaluates everything to a very fine degree. Every project will be under review, and if the price is too high, an auction will be held, which will shake the whole market. He further added that many companies are not very happy about this.

However, the general belief is that the new government will pursue what the previous governments have left undone. “Since the majority of the spending has to come from the government sector, in order to help drive the economy, I see no reason why there will be any negative impact. On the contrary, I believe that the current government is truly aware of how to best drive the economy, bringing peace and stability to Thailand,” said Trivitakaykhun. The transportation sector, city surveillance, and administration buildings are some government projects to keep an eye out in the future, he added. On the commercial side of things, feelings seem to be somewhat split. Another area of big impact for the security industry is that there seems to be overall more stability. According to Prajaksoot, commercial projects including banks, hotels, retail, and hospitals are still a big factor, as he cited Digital Focus' established dealer and SI network. Tanakrit Rojanasiraprapa, MD for Bacom Internetwork, also added, “Many big projects have been announced. After the coup, the commercial sector invested nearly US$1.5 billion in commercial projects including big groups of condos, department stores, and large buildings.” Trivitakaykhun echoed a similar feeling, “Commercial projects which were put on hold as a result of the coup, will eventually resume towards early next year.”

Arnon Kulawongvanich, MD for Bangkok OA, commented on a different side, explaining that he expects good movement from the private sectors. “The military government is busy trying to reshape everything, not only in the way they run the country, but the fact that they want to clean up everything. And cleaning up takes time,” he said. Because of this, it is of importance that the private, commercial sectors remain strong, being able to offer up larger scale projects. Kulawongvanich also mentioned that Bangkok OA, with 12 years of partnership with Samsung Techwin, continues to promote their solutions in car parking structures, access control, and visitor management. The company is also the exclusive partner of NUUO, working with local Thai software companies to further promote PSIM solutions.

Rollouts of 4G Postponed
The elephant in the room right now in Thailand is a question of how big of an impact the political situation has affected the Thai infrastructure. Because of delays in government projects, adoption of new technology and phase-outs of older ones have not occurred in some aspects yet. A very important factor critical to the Thai economy seems to be the adoption of LTE (4G). Originally promised a while ago, 4G technology and adoption in Thailand are still in its trial periods and are also still delayed. Trivitakakyhun also added, “4G in Thailand has yet to be officially seen, let alone reliable 3G services. Wireless communication obviously plays a drastic and important role when it comes to modern security solutions. Bureaucracy and political instability have cost Thailand dearly.” To add to this, Reuters also reported that in July, Thailand's military government postponed an auction of 4G mobile phone bandwidth for one year, potentially causing billions of dollars of lost investment and sales in a sector that accounts for a tenth of the economy. According to the same article, “Mobile network providers were banking on extra bandwidth to enable faster data communications services, creating an opportunity to increase revenue.”

Regardless of the project delay, 4G development still remains an important indicator to the country's development of network devices. “We do know that the respective bodies in the communication industry have done reviews to analyze the mobile management spectrum in 4G. Recently, there have been trials of LTE that is aimed at bringing the latest telecommunications knowledge and technological experience to the public and private sectors. We believe that this technology will be implemented in Thailand in due time,” said Nafis Jasmani, Regional Business Development Manager for South Asia Pacifc at Axis Communications.

MIGRATION OUT OF ANALOG
Tied into the issue of bandwidth, the adoption of IP-based solutions has also been impacted by the political situation. Nevertheless, with the political climate finally settling down, and the military government coming to terms with the economic scenarios, things are looking up. As William Ku, VP for the International Business Division at VIVOTEK mentioned, “At the current stage, most of the Thai users still use analog systems. The adoption of IP-based security solutions has not been totally prevalent yet. However, with increasing demand for clear and detailed footage in order to enhance security and intelligent video solutions for strengthening organization operation, the move from analog systems to IP-based security solutions is happening in the Thai security industry.” Another trend noted by Rio Mao, Sales Director of APAC at Dahua Technology is the fact that easy-to-use and affordable cost solutions will be ideal, and new functions to facilitate sales lie in value-added products in video surveillance systems. One thing worth keeping an eye out for, however, is the fact that city surveillance projects being touted by various city governments in Thailand are now aiming for IP-based solutions that are easy to integrate with existing solutions. According to Prajaksoot, “For city surveillance government projects, they now require certain specs of IP cameras. They are just now switching from analog to IP. Cameras are now very cheap,” which drives higher adoption of IP cameras.

HD-over-Coaxial a Factor
Another important factor to point out is the transition to HD-overcoaxial solutions and to IP from older analog systems. Recently, a number of Asian manufacturers, especially from Taiwan, China, and Korea, have been strongly promoting their latest HD-over-coaxial products, with very high price-effectiveness and long transmission distances. Some of the existing IP video surveillance providers have started to feel the decrease in their growth rates, because of the latest HD-over-coaxial products on the market. In the future, not just Thailand, but the entire Asian continent might start facing competition between IP and HD-over-coaxial, especially in the SMB sectors. This may result in the SMB sectors slowing down the migration to IP-based solutions.

China Grows its Market Shares
Tied directly into the surveillance markets, and hot on the heels of the video surveillance industry in Thailand, and indeed the rest of the world, is the giant that is China. In the analog video surveillance world, China is arguably number one in the world. With many large, established companies in China, they leave large footprints in the Thai industry. As Prajaksoot explained, Chinese companies are very competitive, very strong. They have also impacted the industry in more ways than one, forcing many distributors and providers across Thailand to slash prices and play catch up.

Because of the price factor as well as the notion of China's ever-improving quality, China will continue to play a very important and big role. “Cost consciousness is obviously the prime focus, from the client's point-of-view. China has a lot to serve and provide. Today, we are experiencing a level comfort when it comes to quality improvement and technological know-how, which makes Chinese manufactured products more attractive, especially when compared to other neighboring countries,” said Trivitakkayhun. Kittichai Samittwuttikul, Director for SMC Group, also brought up another factor in China, where he mentioned that price competitions with companies from Shenzhen are very high. A point elaborating on is the fact that some Shenzhen companies can even offer 720TVL cameras at the price of a 360TVL without sacrificing quality. By taking an aggressive approach to gaining the market, these companies are now putting FOB prices online and offering longer-term payment plans. In order to stay competitive, SMC Group has started to promote its own brand, establishing franchised outlet shops, as well as project design and installation shops for different projects.

HIGH HOPES FOR THE FUTURE
All-in-all, things are looking up in Thailand. Forecasters are predicting mild growth this year with stronger aspects the year after. “I believe that the Thai economy has shown signs of improvements, and growth momentum should pick up late this year. The changes that are happening will ensure both tourists and locals alike will start spending and investing,” said Trivitakakyhun. Ku also brought up the point that Thailand has been one of the founding countries of the Association of Southeast Asian Nations (ASEAN) and also one of the key ASEAN members. “ASEAN is a transnational organization for accelerating economic growth and regional prosperity.” One final factor lies also on the political side. Hopefully, as Prayuth Chan-ocha's government continues to settle in, stability and economic reforms will continue. The launching of better IP infrastructure and 4G will also play a big role. “Foreign investment in Thailand as a result of country reforms will also be a factor,” said Prajaksoot. Hopefully, this rings true and Thailand will again be prosperous and stable.