Government Backs Off Sub Deal – China Agrees to One Year Delay

Chinese-made Submarines for Thai Navy

The government has decided to temporarily back off from the controversial purchase of two submarines worth 22.5 billion baht from China after the Chinese government allowed the purchase to be delayed for a year, a source said.

The source at the House committee scrutinising the budget bill for the 2021 fiscal year said that after the Chinese agreed to the request for the delay, the government sent a signal to the committee’s members from coalition parties to slash the budget of about 3 billion baht for the first payment.

The purchase of the first of the three submarines from China has already been finalised, using money from the 2017 budget. Delivery is expected in 2023.

The other two submarines, costing 22.5 billion baht, require payments spread over seven years.

The budget to buy the second and third submarines from China was scrutinised by the sub-committee on durable product items, state enterprises, ICT equipment and revolving funds headed by Suphon Fongngam, an MP from the ruling Palang Pracharath Party.

The sub-committee was split equally, prompting Mr Fongngam as chairman to cast his deciding vote in favour of passing the budget for the submarines.

The budget was then put to the main House committee examining next fiscal year’s budget headed by Deputy Finance Minister Santi Promphat.

The main committee will hold a vote today on whether to approve the procurement.

The source also said the subcommittee today will inform the main committee of China’s decision.

A source from the Royal Thai Navy (RTN) said the matter to put on hold the purchase of the two submarines was decided by Prime Minister Prayut Chan-o-cha who held talks with China. The source said the RTN respected the decision of the premier.

Yuttapong Charasathien, the Pheu Thai MP and deputy chairman of the subcommittee said yesterday he would seek a Constitutional Court ruling on the validity of the procurement of the two submarines if the purchase is approved by the House committee.

He cited Section 178 of the constitution which stipulates that any agreement that may have a wide impact on security, the economy, society and trade and investment must be approved by parliament.

The section says parliament must approve the agreement within 60 days of the document reaching parliament.

Mr Charasathien said that if the purchase of the two submarines is a government-to-government agreement, it must follow the procedure under the section.

However, he said that a check has found that no such government-to-government agreement had been submitted to the now-dissolved National Legislative Assembly or to the current elected parliament for approval.

This means the purchase contract is likely to violate the section, Mr Charasathien said.

Still, Mr Charasathien said he suspects the purchase may not be a government-to-government agreement.

”I suspect it is not a government-to-government contract. I have never seen the Chinese government send a written quotation for the submarines to the government.

“When I checked the contract for the purchase of the first submarine, the payment was made to a private company, not to the Chinese Finance or Defence Ministries. The company did not have a letter of authorisation from the Chinese government,” Mr Charasathien said.

He said the Royal Thai Navy had failed to explain details regarding the signing of the government-to-government procurement contract.

If there is any attempt to push the purchase of the two submarines through the House committee, he will recommend the Pheu Thai Party petition the Constitutional Court to rule on the legality of the procurement, Mr Charasathien said.

He previously said the contract is not a genuine government-to-government deal as claimed because navy chief Adm Luechai Ruddit who signed on behalf of Thailand had no authority to represent the government and the Chinese company which signed the contract was also not representing the Chinese government either.

Only the prime minister or the foreign minister can legally represent the government in such deals and only the defence minister is able to be assigned that authority if necessary, said Mr Charasathien.

However, the navy defended the procurement, insisting the subs were vital for protecting the country’s maritime security and the procurement of three submarines was a done deal.