Prasanth Aby Thomas
Thailand security market: steady as she goes
As the Association of Southeast Asian Nations (ASEAN) reaches its 50th anniversary this year, there is much the region can boast about. Its 10 members include the likes of Vietnam and Philippines that are growing at over 6 percent and it has tremendous investment potential as the region is expected to be the fifth largest economy in the world soon, according to the World Economic Forum.

Indeed, economic and social progress, becoming a manufacturing powerhouse and achieving considerable political stability, all have helped the region come this far. But the ride to the top has not been smooth for everyone, and some have not been able to do as well as others. Thailand is an example.

According to the Bank of Thailand, the country is expected to grow 3.5 percent in 2017, which would be its fastest expansion rate in the past five years, but this is still behind neighboring emerging nations. It does have a substantial current-account surplus and Thai bonds have seen significant demand, making the local currency, baht, the best-performing currency of the year in Asia. But the World Bank last year warned that to remain competitive, Thailand has to embark on an extensive reform of the economy to lay down a future for the country, in areas such as infrastructure and advanced manufacturing.

Nevertheless, the Thai economy is on track to recovery. Reports suggest that as the military rule — that has so far sought to propel the economy — could pave way for elections to take place once again in the country, there are hopes that development efforts will be reinforced to boost growth. Expectations are sky-high on several projects, especially the ones like the initiative to build smart cities that could drive a technological revolution in the country.

That brings us to the Thai security market, which has also remained steady in the recent years. According to data obtained by a&s, the local security market is expected to reach 3.5 billion baht (about US$110 million) this year and grow 10 to 12 percent in 2018. Extended vertical application of security technologies in areas like smart cities and urban development, smart retail and smart homes are expected to be the major factors supporting growth.


The ground reality of Thailand security market

According to several security systems integrators (SI), the market is indeed steady, although the general sentiment is not quite optimistic. Henny Beeber, CEO of AES Group, said that the security market in Thailand is still growing but it does not seem quite as fast as before. It is expected that the demand will pick up again along with the local economy. Sakchai Somsuk, MD of TSolutions, agreed that the market is growing, mainly because the customers are becoming more and more educated about the need to improve the quality of video by using HD video in both analog and IP solutions.

Somsuk added that analog HD has become the most popular video upgrade from coaxial-based installations, as the customers still look for cost-effective and cheap solutions. However, there are also customers for whom the company provides high-quality video network camera solutions coupled with two-way audio, paging system, intercom and panic button.

“We have a government regulation to improve the quality of the security systems. Since they have put government tender spec for full HD network camera system, this would leverage the interoperability of all security equipment on a single platform for better situation awareness,” Somsuk said.

There are others who aren’t quite so optimistic about the outlook. Wissawat Chotbenjakul, CEO of Fit IT and Solution, said that in his opinion, the Thailand security market is quite down with regard to government projects and foreign investment is quite low. The government tries to distribute the money for local projects but that is followed by stricter regulations. In the private sector, investments are low, although Chotbenjakul acknowledged that most of his foreign customers are Japanese and there is still Chinese cash inflow into the country.

Interestingly, Chotbenjakul added that he expects there will be elections soon, which could pave way for more economic reforms. But during the time leading up to the elections, the market will be down.

Some attribute the weakness in the market to the lack of awareness among customers on the need for security technology. Nick Wall, Business Development Manager for Greater Bangkok at Securitas, pointed out that a lot of customers still consider manned guards a better and more economically viable option compared to technological solutions.

“There are several reasons to this,” Wall said. “Firstly, the cost of manpower is still cheap. Labor-wise, wages in Thailand have increased, especially since the government raised the minimum wages, but the mindset of the customers, whether its hospitality or industrial segments, etc., a lot of them have a security guard for the sake of visibility.” These include the likes of doormen and parking lot guards with whistles.

Wall added that Securitas is working toward shifting this mindset by helping customers understand the advantages that security solutions bring. This includes initiatives such as moving clients away from log books to become paperless by recording all access control electronically. Furthermore, utilizing GPS tracking of guard tour patrols, real-time incident reporting and total 24-hour site overview of all activities for the client to access via web-portal.

Some actions by the government have encouraged efforts toward this. For instance, toward the end of last year, the government introduced a law that made it mandatory for security companies to be certified. This created quite a chaos in the market as a lot of local companies were not certified and there was a sudden shortage of certified security guards. This could have prompted an interest in technology. Graham Murrell, MD of Risk Protection Security Solutions, agreed that from a business perspective, the market is still manpower-oriented. He sees the market remaining steady, without much expansion or contraction. The biggest market for security systems still remains with video surveillance solutions as there are several customers who are still shifting from analog to IP cameras. Other solutions like smart, remote monitoring systems, for instance, are not seeing much demand because the customers are not aware or convinced of the benefits they bring.

Murrell added that the lack of awareness is also due to the fact that Thailand has relatively less crime compared to places like the U.K. or some countries in Europe. However, we were not able to independently verify this claim.


Verticals that are on the rise

Being a developing market, several verticals in Thailand are still seeing demand for security solutions. In Beeber’s opinion, rail and related infrastructure are growing. Many new metro lines are being built in Bangkok along with airport expansions. Both of these types of verticals have a very high-security requirement including hundreds to thousands of access controlled doors as well as thousands of video surveillance cameras. Indeed, city development is a major vertical that could see strong demand in the coming days. Chotbenjakul said that smart cities are an interesting vertical at the moment, although the solutions have to become simpler and easier for customers to use.

Somsuk agreed. “Public safety is a promising market, our government is focusing on using security equipment to safeguard Thai people, [considering it] top priority,” he said. “City surveillance, transportation, safe zone. All of this requires high-quality products rather than cheap price. In many circumstances such as low-light environments, to capture fast moving objects, car license plates, face recognition and centralized video surveillance, the main focus is to leverage the use of camera from both private sector and public sector together to improve security awareness of Thai people.”

According to Wall, the manufacturing segment could be considered one of the verticals that are seeing most demand at the moment. Multinational companies with multiple sites are seeking to centralize their real-time monitoring of access control data, surveillance video analytics and alarm systems. Graham’s Risk Protection Security Solutions is one of the companies in the country that mainly focuses on the jewelry manufacturing sector.

Thailand’s jewelry segment has traditionally been a major export revenue earner. Although the country has seen a decline in exports over the past two years, it still remains a regional manufacturing base in Southeast Asia, known for its extensive network of diamond and gem artisans. Given the high value of the products manufactured in this industry, the need for stringent security measures is obvious. However, unlike what most people would assume, the major threat is not that of someone breaking into a factory and stealing the products. “In terms of security in this vertical, the biggest threat is staff-orientated,” said Graham. “Unfortunately, in our business, the everyday employee is the main risk. Internal theft is a big problem.” But he added that the manufacturing sector, in general, is neither growing nor contracting. “It’s just steady,” he said.

Unfortunately, there are concerns about the future of this industry as well. Pimonwan Mahujchariyawong, Senior Economist at Kasikorn Research Center, was quoted by Reuters as saying that Thai exports of gems and jewelry, excluding gold, would be down 3 percent this year. Some jewelry companies have shifted their manufacturing plants away from Thailand to key rivals including Vietnam and Myanmar where production costs are cheaper.


Coexistence of international and local brands

As with several countries in the region, the Thailand security market currently sees a tug of war between Western and Asian brands. Needless to say, the Western brands were the preferred choice until recently, but with the arrival of heavy-weight Chinese brands, things are no longer the same.

According to Beeber, in Thailand, Cambodia and Laos, there is a mix of requirements for both Western and Asian brands, but Asian brands are now growing their market share. Chotbenjakul elaborated on this when he said that Western brands are rather weak in the market, only being used in huge projects. Major Chinese brands provide good products at a competitive price. However, Japanese customers prefer to use Japanese brands.

Nevertheless, Somsuk insisted that now the Thai government provides ICT spec to filter out cheap OEMs or products that are not ISO-certified regardless of their country of origin. “Rather than look specifically at the country of origin, we would better encourage high-end brands for the quality of their products that fit the customer’s needs,” Somsuk said. “This would also help customers understand why they have to pay a higher price for a brand.”

It’s not just global security solutions providers that are competing in the Thailand market, but SIs too. The market is so diverse that global brands like Chubb and Securitas have a strong presence there along with their local counterparts. But naturally, the projects that international SIs prefer to take up differ from those of many of the local SIs.

Significantly, Wall pointed out that a lot of local SIs may be forced to shut down because it is difficult for them to adhere to government regulations. “Local companies are going to start closing down because they can’t afford to pay for the criminal background checks and the medical checks [of their employees], and all these compulsory requirements that have come with the introduction of the legislation for security certification,” he said.

Speaking specifically about security guards, Wall added that many local SIs do not follow international standards of labor management. But many of the large companies, especially international ones, have internal policies with regard to labor management and that extends to the companies that they partner with. In other words, it would be difficult for an international customer to work with a local SI that is not up to their standards in the treatment of its employees. This is where international SIs like Securitas have an advantage.

Moreover, many international companies in Thailand would have their management-related decisions taken at a regional headquarter like Singapore. So they would prefer an SI who has a presence in Singapore as well so that they can deal directly with them instead of having to go through their Thailand counterparts.

Smarter solutions and cautious growth ahead

Even though the Thailand security market is not expanding as fast as its neighboring countries, growth is still persistent. Beeber said that his company sees continuous growth of video surveillance solutions along with access control, especially to control people-flow through pedestrian barriers into destination lifts.

However, he added that high costs are limiting the adoption of more advanced solutions. “Due to the high costs there still does not seem to be a high demand for facial recognition and video analytics except for retail application where business analytics is commonly used in shopping centers for people counting, people flow, dwell time and heat maps,” Beeber said. As the market moves forward and Thailand’s economic conditions develop, there is sure to be a change in the customer buying behavior. A lot does depend on the upcoming elections in the country and how that would affect the overall growth of the country. However, regardless of the outcome, the market will continue to remain on track for growth.

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