UPDATE 3-Thailand to buy six Swedish Gripen fighters

(Adds Swedish PM comment, updates Saab share price)

BANGKOK, Oct 17 (Reuters) - Thailand's Air Force will buy six JAS-39 Gripen fighter jets from Sweden's Saab SAABb.ST for 19.5 billion baht ($574 million) to replace ageing F-5E fighters, Air Force chief Chalit Pukphasuk said on Wednesday.

A member of the selection panel had said on Tuesday the Air Force would buy 12 Gripens in two batches, but Chalit told a news conference approval of the second batch would have to wait until a new government took office after a December general election.

The first six would be bought between 2008 and 2012 and the second batch “as soon as possible”, Chalit said.

“We still prefer to have Gripen for the rest of the fleet, but it is up to the next government and the economic conditions then,” he said.

The Air Force said in a statement 15.4 billion baht was set aside for the second phase of the purchase between 2013 and 2017.

SAAB shares were up 3.15 percent by 1220 GMT.

The choice of a replacement fighter had been under discussion since Prime Minister Thaksin Shinawatra, ousted in a bloodless coup last year, came to power in 2001.

Thaksin once pushed for Sweden or Russia to buy frozen chicken from Thailand, then hit by bird flu, in return for fighters, but the idea fell through.

The selection panel member said the Air Force wanted the F-16 CD, but the United States was not allowed to sell weapons to countries whose governments have been ousted in coups.

But Chalit said on Wednesday Gripens were chosen over other candidates because they had the most modern technology and Saab promised to transfer technology to Thailand, while the F-16 would have to be upgraded soon. As part of the package, two Swedish radar surveillance planes were given to Thailand for free, Chalit said.

Sweden’s prime minister, Fredrik Reinfeldt, welcomed Thailand’s choice, noting that after the announcement of elections, it was on the way to becoming a democracy again.

“We welcome the fact that there is interest for Swedish industry,” Reinfeldt said. “It is a country on the way to democracy. We have to note that with gladness.”

Sweden’s Inspectorate of Strategic Products, which controls the export of military equipment, approved the offer of Gripens to Thailand in 2005, but still has to grant an export licence for the deal to go ahead.

“There is no embargo against Thailand, but we are following developments closely,” said Diana Malm, spokeswoman for the inspectorate.

Other reported candidates were Russia’s Sukhoi Su-30 and MiG-29 and France’s Rafael, but Chalit told Reuters in July that Thailand would not buy MiG-29s because they were already in service in neighbouring Myanmar and Malaysia.

Since the coup, Thailand’s army-appointed government has approved a 66 percent increase in military spending, sparking criticism of the generals who launched the country’s 18th putsch in 75 years of on-off democracy.

Last month, the post-coup interim cabinet approved the 6.7 billion baht ($211 million) purchase of Israeli guns, Ukrainian armoured vehicles and Chinese missiles.

($1 = 34 baht)

((Editing by Michael Battye and Sanjeev Miglani; Reuters Messaging:; +662 648 9732)) Keywords: THAILAND FIGHTERS/

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