Australia Defence Industries (ADI) and Loxley will cooperate in the production of a new generation of the "Bushmaster" armoured personnel carrier, which is currently deployed in Afghanistan and Iraq.

The Bushmaster is designed to rapidly deploy troops to a combat zone.

Loxley won the contract when it came top of a list of competitors after ADI started looking for ways to make the Bushmaster more price-competitive, said Bob Simpson, ADI's engineering director.

"Thailand was an automatic choice because of its proven ability in producing automobile components," he said.

Although Loxley has some contracts with North Korea, ADI does not fear a technology leak to the rogue state.

"We trust Loxley," Simpson said.

He said ADI's intent was for Loxley to assemble and complete the Bushmaster, with the Australians supplying 30 per cent of the components and Loxley 70 per cent, including the engine and transmission.

However, initially Loxley will send those 2,000 components to ADI in Australia where the vehicle will be assembled. There, ADI will train Loxley staff in the technology to enable them to carry out the same work in Thailand.

Simpson said the Thai-Australia free-trade agreement, which was concluded in 2004, had simplified the process.

Under the FTA, Thai automobiles and Australian big-engine vehicles can be exported tariff-free.

The deal has strong support from the Australian government, said its ambassador to Thailand William Paterson, adding the deal was also built on strong military ties between the two countries.

Australia is Thailand's second most important defence partner after the United States and the two sides hold regular military training exercises together, Paterson said.

"It's better value for money," said Simpson, adding that by partnering with Loxley, the Bushmaker will become much cheaper compared to those from the USA and Europe.

The last time the Thai military tried to unveil different kinds of armoured military vehicles was in 1997, a few months before the financial crisis hit the Kingdom.

Loxley's senior project manager Chaiyan Pongcharoen said the technology transferred from Australia would boost Thai confidence in their ability to build military vehicles.

"We have the technology and capability but have never done it. This is a great opportunity to fulfil our potential," he said.

Sopaporn Kurz

The Nation