New Thai Flavor with a Hint of Indo

As one of the largest markets in Southeast Asia, Thailand is a land of opportunity for many security companies. Be it government or private sector, the demand for security technology and equipment has never been greater. Indonesia, on the other hand, is an entirely different story.

With a well-developed infrastructure, a free-enterprise economy and pro-investment policies, Thailand is among Southeast Asia's best economic performers. "Boosted by increased consumption, strong export growth and increased expenditure in infrastructure modernization projects," said Manop Homsuwan, General Manager of Bosch Security Systems Thailand, "the overall domestic security market in Thailand is estimated to be growing at 7.5 percent per annum." There are others who have pegged growth at 20 to 30 percent per year.

In response to both global and domestic requirements for greater public security, the Thai government is increasing its investment in safety and security equipment, particularly at or around airports and seaports.

In addition to international requirements for stricter security measures specifically at ports, the ongoing unrest in the three southern provinces of Thailand has prompted the government to increase its investment in stricter safety and security measures and more advanced technological abilities to ensure greater public safety.

Meanwhile, the social unrest calls for operators of high-threat areas like shopping centers to increase security measures and technology to provide safety for their premises, employees and customers. In addition, the demand for personal and private property security has also risen as a result of the high-end residential property boom and the increasing purchasing power of consumers in this specific segment.

Thailand is a market of growing demand for security devices and technology. According to David Viccars, Managing Director of Chubb Thailand (a company of UTC Fire & Security), the 2007 electronic security market for Thailand is projected to be US$150 million, while guarding services are valued at $40 million.

Henny Beeber, Chief Technical Officer of AES Group, gave a similar but lower market size estimate of $120 million. Founded in 1992, AES provides security and communication products, system engineering and maintenance services to both military and commercial sectors.

Market Drivers & New Projects

For Bosch, the Security division enjoyed a high growth rate in 2006, especially from the CCTV product segment which achieved the highest growth thus far in terms of value. Some prestigious projects executed last year, according to Homsuwan, included major public transportation, city surveillance and key commercial and government buildings.

Transportation

Both the Thai government and private sector are expected to increase their safety and security spending to ensure greater capability to cope with growing security uncertainties resulting from both domestic and global issues.

To comply with international safety requirements and its own domestic needs for greater public safety, the Thai government is expected to invest in additional security devices and better technology at airports and seaports.

According to Johnny Trivitayakhun, Managing Director of Semple Cochrane (Asia ) , the new Suv a rnabhumi International Airport has more than 1,500 network cameras installed in the passenger terminal. For the surrounding infrastructure, subcontractor Smith Detection has supplied more than 1,600 network cameras, said Beeber. And the new airport rail link, due for completion in 2008, has adopted fully integrated security systems that include IP-based cameras, access control and video analytics.

"Also, there are 22 royal palaces throughout the country, and each of them is adjacent to an airport. These airports have a very high demand for security as well," said Trivitayakhun. The U.S. Commercial Service also suggests that improvement work scheduled for four other international airports, 25 provincial airports and quite a number of military airports presents sizable opportunities for security equipment vendors.

In addition, the Laem Chabang Port in Thailand needs to comply with the U.S. CSI (container security initiative) program by implementing tightened security measures for cargo handling. The port authority has already invested $34 million in security measures and services. Other smaller ports such as Map Ta Phut Port, Songkhla Deep Seaport, Nongkhai River Port and Nakhonsawan River Port are also potential customers.

Pichai Sihsobhon, Managing Director of Security Communication Center, added that more budgets will be injected into the construction of new metro lines and rail links after the general election takes place later this year.

City Surveillance

The endless stream of terrorist activities in southern Thailand has prompted the government to beef up city surveillance. Industry sources revealed that approximately 9,000 network cameras are being installed in this region and will be connected directly to Bangkok's police headquarters, and more counterterrorist efforts will be made in other major cities and tourist attractions.

Retail & Real Estate

The retail sector is another major market for security electronics. According to the U.S. Commercial Service, there are currently 117 discount stores, 230 department stores, 247 supermarkets, 3,650 convenience stores and 650 specialty stores in Thailand.

Despite the fact that most of them have basic security equipment for their internal operationssuch as inventory protection and safety of their premises (including easy access control systems, theft and intruder detection systems, smoke detectors and fire alarm systems), the increasing threat to public security is urging retail operators to ensure greater safety and security at their premises.

The U.K. chain Tesco is by far the largest and most aggressive foreign retailer, said Viccars. "They have expanded hugely in the last few years with some 100 'mega malls' and some 250 smaller convenience stores nationwide." Carrefour (France) is also in Thailand, but on a more gradual growth curve focusing mainly on Bangkok with 22 stores.

"Macro (from the Netherlands) was the first foreign retail chain in Thailand but only has about 20 stores," Viccars continued. The Thai-owned Central Group, including Tops, has a range of malls and is the largest retailer in Thailand; the group also owns hotels and has a large property portfolio and other interests. The Thai-owned Mall Group operates a mix of high-end mega malls like the Emporium and Paragon and the more traditional Thai malls.

"Jusco from Japan is also here, with about 15 stores; 7-Eleven is here with over 3,000 stores," recounted Viccars. All these mega malls plus super condominiums and mixed developments warrant limitless possibilities for vendors of video surveillance, access control and electronic article tracking systems, said Somphop Poshakrishna, Deputy Managing Director of Chubb Thailand.

Commercial property and residential high rises are major users of safety and security equipment as well. Industry sources estimate that the sector represents approximately 50 percent of the demand for security equipment and services.

Overall, the Thai security market is growing and moving forward at an attractive rate. For 2007 and beyond, Bosch Thailand plans to grow at least double the rate of average market growth. "We are confident of achieving this target," said Homsuwan. "We will focus on educating customers on our new technologies which are suitable for all businesses such as governmental organizations, financial institutes, transportation facilities, and small-to-medium enterprises."

Major Players

There is no known local production of security electronics. Major distributors, as suggested by Trivitayakhun of Semple Cochrane and Chubb's Viccars, include Pacific Technology Distribution, Security Communication Center, Seaworld Supply & Trading, Digitalcom, AES Group, AK Engineer and SGD International.

In security, AES carries ACTi, aimetis, Axis, Bosch, Cardax, Sanyo, SmartSight, Verint and VIVOTEK solutions, whereas Security Communication Center represents Pelco, Infinova, Verint, Magic Radar and HID Global.

Major Thai security system integrators include Tyco, Chubb, Semple Cochrane and Secom; service providers for guarding are still very much in demand and include Chubb, Gunnebo, Leeco and Kingdom.

Indonesia Overview

In Indonesia, several bomb attacks and threats to foreign embassies and tourist sites in various cities have underscored the need for heightened security. To prevent future attacks, the government of Indonesia has had plans to form a special counterterrorist agency, as an expansion of the current counterterrorist unit managed by the Office of the Coordinating Minister for Security and Political Affairs. This agency will have branches in cities throughout the country, requiring all kinds of security equipment.

According to the U.S. Commercial Service, the demand for security and safety equipment in Indonesia will continue to increase as more trade centers, malls and apartments are built in the next few years.

At least 16 new trade centers and 44 apartment complexes were completed in 2006. Such facilities need security equipment and systems for access control systems, card systems, intrusion alarms, door entry systems, video surveillance systems, smoke detectors, fire alarms, anti-shoplifting devices and parking lot management systems.

Siemens Buildings Technologies (SBT) first started doing business in Indonesia in 1998, with fire and building management, and SBT Indonesia entered into security in 2004, said Jeffry Tondang, Product Manager. "As project-based integration is quite limited, with only a handful of existing customers," Tondang continued, "the CEO of SBT Global has shifted the company's focus from solutions to products in order to meet growth targets." As a result, Tondang was asked by the headquarters to conduct a field survey to find out the exact size of the Indonesian security market.

He visited 120 distributors and used the questions and formulae (for example: turnover, number of employees, product stocks, etc.) from the headquarters to get the following market data: video surveillance $16 million, access control $7 million and intrusion $3 million (products only, at distributor price; with 60-percent confidence level).

According to Tondang, annual market growth is about 8 to 15 percent, and the local security market is highly polarizedpeople either choose high-end brands or price-competitive products.

Market Drivers & New Projects

In January 2005, the government of Indonesia offered 91 infrastructure projects worth $22.5 billion in five priority sectors, including transportation, gas pipelines, electric power, telecommunications, and water supply and resources. For airport projects, the government proposed development of the New Medan Airport ($250 million), the Soekarno- Hatta Extension Terminal ($178 million), a Cargo Processing Facility at Soekarno- Hatta Airport ($48 million), the Makassar Airport Extension ($94 million) and a new Lombok Airport ($139 million).

The government also plans to build a new railway from the city of Jakarta (Manggarai) to the Soekarno-Hatta Airport. The project, called Airport Railink, will require a $156 million in investment.

For marine transport, the government plans to develop the Bojanegara Port ($212 million), the East Ancol Jakarta Port ($714 million) and the Balikpapan Port ($72 million).

Growing verticals, said Vincentius Liong, Head of Product Development Division at Gunnebo Indonesia, are oil and gas (Pertamina, BP, ExxonMobil, Shell, Caltex, Chevron, Premier, Total, Vico, Unocal, Hess Conoco Philips and Kondur Petroleum), banking (for example: Bank of Central Asia with over 500 branches), mining (Aneka Tambang, Freeport and Newmont), telecommunications (three locals) and pharmaceutical companies (easy access to raw material in rainforests).

Ari Viryananda, System Support for Galva Technovision (sole distributor of Sony in Indonesia), seconded these while adding that government projects such as power plants and city surveillance are also picking up. Sui Sen, National Sales Manager of Jessilindo Pratama, identified high-rise buildings, supermarkets, city surveillance and transportation as important areas to watch, and commercial buildings and factories were brought up by Felix Kristianto, Team Leader of Systems Development Department at TOA Sound & Communications.

Major Players

Major players in video surveillance, said Eddy Tandyen, Product Manager for SBT Indonesia, are Bosch, Honeywell (made in Thailand) and Panasonic. Many of the interviewees suggested that most installations are still analog because there is virtually no IP infrastructure in Indonesia, except for the government's wireless programs.

"Honeywell and HID are strong in access control," Tandyen continued. "For intrusion, Tyco (ADT and DSC) and Siemens (AlarmCom) dominate the market." Major distributors identified by him are Gunungsari Widitama (sole distributor of Panasonic), Axindo Humapordana (Honeywell cameras and access products) and Intisar Primula (access control).

Lester Chua, President Director of CISCO MAS, thinks that major CCTV brands include Panasonic, Samsung Techwin, Ganz, NCS, Advert and SAE, while Kristianto threw in other Japanese and Taiwanese names such as SANYO, SHARP, Sony, AVTech, AVerMedia and Hi-Sharp into the mix.

"Gunnebo is the largest distributor and system integrator in Indonesia, with 25 branch offices on various islands," boasted Liong of Gunnebo, who identified Siemens, SECOM and G4 Securicor as the company's direct competitors. He thinks major CCTV brands are Pelco, CNB, ACTi and CBC; major access control system providers are Verex, TAC/Andover Controls and Gunnebo/Ritzenthaler; major reader brands are HID, Bioscrypt, Suprema and KEICO Hightech.
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