THAILAND'S PLANNED purchase of South-East Asia's first military-communications satellite system is coming under threat as the Government calls for a slowdown in defence expenditure.

The cost of the Star of Siam satellite has been strongly criticised. It is among several planned major acquisitions, which face possible delay or cancellation because of Thailand's national deficit.

Prime minister Banharn Silpa-archa is reported to have asked the military to prioritise its requirements and work with the finance ministry to help cut the country's estimated 335.7 billion baht ($14.2 billion) account deficit.

Costing 28 billion baht, the Star of Siam represents the military's most expensive programme. Other planned big-ticket items include a 17 billion baht order for Thailand's first two submarines, and 14.6 billion baht order for eight McDonnell Douglas F-18C/Ds.

Matra-Marconi had been seen as the front runner for the controversial satellite deal, but sources suggest that the programme may now go to open tender to reduce the price of the system. US manufacturers Hughes and Lockheed Martin are viewed as likely bidders.

The satellite purchase, is strongly supported by defence minister Chavalit Yongchaiyudh, but has run into stiff opposition from Thaksin Shinawatra, deputy prime minister and former head of Thailand's Shinawatra Satellite company.

To offset the Star of Siam's high cost, Chavalit has proposed leasing out some of its 24 transponders for commercial applications. Thaksin, however, argues that this would be in competition with Shinawatra's ThaiSat 1 and 2 systems and undermine its concession.

Industry sources are confident that phases one and two of the Royal Thai Air Force's planned F-18C/D procurement will proceed without delay.

Thailand is already in receipt of a letter of offer and acceptance for eight fighters. This is expected to be countersigned and returned, before the end of April. More funding is being sought in 1997 for a follow-on purchase of eight F-18s.

Source: Flight International