THAILAND has postponed for a year its purchase of two submarines from China worth 22.5 billion baht following public backlash and mounting political pressure over the controversial deal.
Thai Prime Minister Gen Prayut Chan-o-cha said about three billion baht in instalment payments for the subs have been shelved and the navy will hold further talks with China over other payments included in the deal.
A Thai parliament sub-committee had recently approved the purchase of the two Yuan-class S26T submarines with payments spread over seven years.
The proposal was passed last month with the narrowest of margins as a sub-committee was initially tied at 4 to 4, but a ballot from the chairman, allowed the deal to be approved.
However, the decision proved to be unpopular with critics saying the money could be better spent on helping the ailing economy due to the Covid-19 pandemic.
It even led to a hashtag #PeopleSayNoToSubs trending in Thailand on Twitter.
According to the Bangkok Post, Prayut said as the submarines were a key part of the armed forces' development, the purchase can only be delayed and not cancelled.
He said the Thai navy needed the right weapons and equipment for maritime defence and protection of the country's vast marine resources inside and outside its 200-nautical mile territorial waters.
He added that without any submarines, the navy would need to deploy a large contingent of soldiers to carry out defence duties at a high cost.
Thailand had already ordered a submarine from China after the budget for it was approved in 2017. It is expected to be delivered in 2024.
Government spokesman Anucha Burapachaisrisaid the government would also reveal details of the navy's talks with China about the decision to delay the contract.
Yutthapong Jarassathian, deputy chairman of the subcommittee from the opposition Pheu Thai Party, had said though the navy showed the Memorandum of Understanding for the purchase of the first submarine, it did not say that Thailand was obliged to buy the other two submarines.
He said the MoU was signed by Prayut and the Chinese defence minister.
"The prime minister must choose between the submarines and the economic survival of the people," he said.
According to the Nikkei Asian Review, the purchase has drove a wedge into the Thai ruling coalition, which elected the former army chief as prime minister.
The arguments for the purchase made by the navy and the prime minister have apparently failed to convince the Democrat Party, which is the third biggest of the allies.
Deputy Democrat spokesman Akkaradet Wongpitakrote had said that at least seven out of 13 of its MPs would vote against the deal, citing economic measures as a greater priority.
Thailand's gross domestic product shrank 12.2 per cent in the second quarter of this year, its biggest contraction since 1998, when the nation was struggling during the Asian financial crisis.
The government also predicts a contraction of 7.3 to 7.8 per cent for the year, which could become the worst slump in Thailand's history.
Tourism, which accounts for around 20 per cent of the economy, was the heaviest hit industry of all as the nation has closed its borders to tourists and there seems to be no clear indications when the industry will recover.
The government is now trying to spur domestic tourism with a stimulus package called We Travel Together.
It has set aside a 22.4 billion baht budget for the package, almost the same size as for the two Chinese submarines.