The sky’s the literal limit for Malaysia’s aerospace industry, being designated by the government as a strategic sector with high growth potential in the country’s industrialisation and technological development programmes.
Globally, aircraft production is expected to reach 41,030 units and valued at US$6.1 trillion – excluding regional jets – over the next 20 years.
Malaysia is at the forefront of several markets, including composites design and manuracturing; aircraft components design and manuracturing, avionics and sustems design and manufacturing.
Currently, there are eight companies involved in aircraft assembly, 28 companies in the manufacture of aircraft parts and components including ground support equipment, while more than 50 companies are involved in MRIO activities.
Thanks to the country’s conducive business environment, international players have made malaysia their ground for busienss operations.
These include GE Engine Services Malaysia, Airbus, Spirit AeroSystems, Safran, Aerospace Composite Malaysia and Honeywell Aerospace Services.
Meanwhile, local companies have made great strides in aerospace such as SME Aerospace, CTRM Aero Composite, Sepang Aircraft Engineering, Airod and Malaysian Aerospace Engineering.
Rising growth figures a good sign
Malaysia’s aerospace industry is expected to continue its healthy growth momentum this year, driven by the record growth in the past three years and backlog of orders for aircraft in the Asia Pacific region.
Second International Trade and Industry Minister Datuk Seri Ong Ka Chuan was optimistic of this, adding his belief that the industry will grow by 5.0 per cent in terms of export to RM9 billion this year against RM8.49 billion recorded in 2017.
“The Malaysian aerospace industry is seen by the government as a strategic industry, which has a vast potential for the country’s industrialisation and technological development programmes.
“The Asia Pacific region is expected to receive 16,000 new aircraft by 2035 and during this period, the region would account for 4,000 or 36 per cent of global deliveries of passengers and freight planes,” he told reporters after the soft launch of the Kuala Lumpur International Aerospace Business Convention (KLIABC) 2018.
The country had a backlog of orders for the manufacturing of aircraft parts and components, assembly base for light aircraft and corporate planes, and maintenance, repair and overhaul (MRO) activities, he said.
Plenty of aerospace focus
A bevvy of aerospace projects are in the works in Malaysia. Towards the end of the year, the three-day KLIABC, organised by Malaysian External Trade Development Corporation (MATRADE) from October 2-4, 2018, is testament of the government’s effort towards making Malaysia a regional aerospace hub.
The KLIABC 2018 will provide a platform for Malaysian aerospace companies to meet with renowned international aerospace players and obtain in-depth knowledge on the latest technology trends while developing new business linkages.
The highlights of KLIABC 2018, among others, would be a one-day high-level conference which would gather speakers from airlines, original equipment manufacturers and MRO industries, and business-to-business (B2B) meetings. This biennial event is hoped to to attract 500 participants from more than 150 companies in the aerospace industry.
Meanwhile, other worthy mentions include the Asia Aerospace City (AAC) owned by Majlis Amanah Rakyat (Mara). A RM1.7 billion project in the making, this city stands for the global aerospace standard in connecting aerospace players worldwide with the opportunity for growth in Asia.
AAC is fully supported by the Malaysian government and bridges the space between the technical competence and the engineering facilities required by the top industry players.
AAC offers a complete business ecosystem through its high-quality engineering services, industry-relevant human capital, iconic infrastructure, and government support.
To the largest Original Equipment Manufacturers (OEMs) in the world, it aims to be a competitive hub for industrial talent, cost efficiency, connectivity and resources.
Eyes on Subang Aerospace Park
Of current interest is the 24.28-hectare Subang Aerotech Park project which is on track with its first phase to be completed by year-end.
Project owner, Malaysia Airports Holdings Bhd (MAHB), revealed the group has already concluded deals with some delivery partners to build one of the first phase developments for the project.
“We have a catalyst namely Axis Real Estate Investment Trust (Axis REIT) as our delivery partner, who will build a built-to-suit facility and lease back to Senior Aerospace — a Tier 1 aerospace player,” MAHB MD Datuk Mohd Badlisham Ghazali said in an interview with local media.
“The facility is expected to be operational by the end of 2018,” Mohd Badlisham said.
“As for the remaining land area, we will be undertaking an open process to seek and partner a delivery partner to develop and manage the entire park. This is expected to conclude in the second half this year,” he added.
The 60-acre Subang Aerotech Park is expected to attract over RM1 billion in investment, both locally and internationally, supporting over 5,000 jobs within the next five years, Badlisham added.
“With some 70 aerospace companies already based within the Subang aerospace ecosystem, the Subang Aerotech Park will further provide a platform to build the aerospace small and medium enterprise supply chain, creating a complete aerospace ecosystem,” he said in a statement earlier this week.
“This is in line with the government’s intention as outlined in the Malaysia Aerospace Industry Blueprint 2030 that aims to make Malaysia the top aerospace nation in Southeast Asia.
“We also expect that these developments will have a positive effect for the aerospace and aviation cluster in our Kuala Lumpur International Airport (KLIA) Aeropolis development (in Sepang).”
The airport manager had previously signed memoranda of understanding with South Korea-based Gyeongnam Techno Park and Danish aircraft maintenance company Skyways Technics AS to collaborate on the project.
The project will become a built-to-suit facility and a longterm lease property for manufacturing (aero structure, components, tools and jigs), MRO (component and engine), aerospace logistics, high tech and precision engineering, as well as amenities.
It is located adjacent to the Asia Aerospace City.
Meanwhile, the AAC is expected to be an aerospace ecosystem centre and the cluster will include MROs like Asia AeroTechnic Sdn Bhd (Mara’s subsidiary), engineering services, business consulting and investment centre, research and development centre, education institution and living quarters.
The city is expected to offer up to 32,000 job opportunities.
As of November last year, Subang Aerospace and Aviation Ecosystem has provided up to 3,200 jobs with the investment of RM400 million.
The establishment of Subang Aerotech Park by MAHB is part of the second National Aerospace Industry Blueprint 2030, led by the Ministry of International and Industry.
Players join the fray
Earlier this week, Senior Aerospace UPECA announced plans for its manufacturing plant and office at the Subang Aerospace Park by Axis REIT Manager Bhd to begin in early April and is expected to be completed by year-end.
Axis REIT chief executive officer/executive director, Leong Kit May, said the 1.66-hectare (ha) facility would be used as Senior Aerospace UPECA’s centre for manufacturing, storage and distribution of aerospace
“The RM151 million facility has an initial fixed lease period of 20 years, with an option to renew for two terms of six years each,” she said at the facility’s groundbreaking ceremony earlier this week.
Leong said the company was excited to be part of the regeneration of the Subang Airport initiatives by having a presence here at the Subang Aerotech Park.
“Our collaboration with Malaysia Airports for this 2.84 ha greenfield land started in the first half of 2017, with the agreements signed in November 2017,” said Leong.
The new facility would be in addition to Senior Aerospace UPECA’s existing facility in Shah Alam, and would feature state-of-the-art automation manufacturing and comprehensive special process capabilities from the UK-based Senior plc.
Once completed, the facility would employ 360 highly skilled engineering and technical personnel.
Senior’s group chief executive officer, David Squires, said the group planned to increase its investment in Malaysia significantly over the next 10 years following plans to grow its business in the country.
“It will be an organic growth. We are very much in favour in putting our investments where our existing facilities are, rather than going to different countries,” he said.
Malaysians stand out during Singapore Airshow 2018
Malaysia continued to strengthen its position at the global aerospace arena withits participation at the Singapore Airshow 2018 from February 6-11, 2018.
Deputy Secretary General (Industry) of the Ministry of International Trade and Industry (MITI), Datin K. Talagavathi, said as an emerging aerospace outsourcing destination in Southeast Asia, Malaysia aimed to attract quality aerospace investments as well as developing strategic partnerships with global aerospace players.
“Malaysia’s presence in international aerospace events has been promising and gaining momentum in recent years.
“The increase in demand for Malaysia to cater to the growing global market has prompted us to accelerate our capabilities development in order to remain competitive at the global level,” she said in a statement.
MITI said Malaysia’s presence at Asia’s largest aerospace and defence event was important to highlight and promote the country’s capabilities, world-class infrastructure and aerospace ecosystem to the world.
The Malaysian Pavilion, hosted by the National Aerospace Industry Coordinating Office (NAICO), a unit under MITI, would showcase Malaysia’s capability and strength as part of the global aerospace supply chain, it said.
“The pavilion highlights an inter-agency collaborations among NAICO, SME Corp Malaysia, Malaysia External Trade Development Corp (MATRADE), Malaysian Investment Development Authority (MIDA) and Invest Selangor.
“It also features Malaysian aerospace industry players – Malaysia Aerospace Industry Association, Malaysia Airports Holdings Bhd (MAHB), Aerospace Malaysia Innovation Centre, Asia AeroTechnic and Dviation Group.
The Malaysian delegation also included 18 small and medium enterprises (SMEs) currently being groomed by SME Corp under the Economic Transformation Programme known as Entry Point Project No 8: Developing SMEs in the Global Aerospace Manufacturing Industry Programme, it said.
MITI said the SMEs would be exposed to the dynamic and evolving nature of the aerospace sector globally, and would have the opportunity to position themselves to address future needs of the global aerospace industry.
Talagavathi said NAICO has been aggressively promoting the development of the Malaysian aerospace industry based on the Malaysian Aerospace Industry Blueprint 2030.
Since the implementation of the blueprint, Malaysia has secured several new projects through its local champions namely UMW Aerospace and CTRM Aero Composites, she said.
She said the products to be delivered from Malaysia by these companies included engine fan casing for Rolls-Royce and A350 Fan Cowl.
Meanwhile, a number of memorandums of understanding (MoUs) and memorandum of agreement exchanges would be held at the Malaysia Pavilion between Malaysian aerospace players and their global partners.
Among the exchanges included MAHB and Axis–REIT focusing on building an industrial manufacturing facility for Senior Aerospace UPECA at the Subang Aerotech Park and MAHB with Skyways Technics, a company based in Denmark with over 30 years of maintenance experience in ATR aircraft for collaboration efforts to facilitate Skyways Technics expansion plan within the Malaysia Airports aerospace ecosystem spanning the Subang Aerotech Park. MAHB would also sign an MoU with Asian Business Aviation Association to support positioning of Subang as Regional Business Aviation Hub under Subang Regeneration Exercise.
NAICO and MITI agencies, namely Mida, Matrade and SME Corp, would continue to facilitate the implementation of all projects that would contribute to attracting more aerospace investments, accelerate export of aerospace products and services, enhancement of the local supply chain and talent development.
SMEs see new record in potential sales
The 18 Malaysian small and medium enterprises (SMEs) which participated in the Singapore Airshow 2018 recorded potential sales of RM14 million.
In a February 12 statement, the Ministry of International Trade and Industry (MITI) said, the SMEs were part of SME Corp Malaysia’s EPP8: Developing SMEs in the Global Aerospace Manufacturing Industry programme.
“These companies were identified for further development as part of the government’s initiative to expand the local aerospace supply chain. Throughout the event, the SMEs participated in business networking meetings with major industry players,” it said.
MITI said Malaysia had an eventful participation at the airshow, which brought together global aerospace players to network, exhibit and converge new product ideas, transfer of knowledge and training capabilities, among others.
Malaysia Airport Holdings Bhd signed two memorandum of agreements (MoAs) and two memorandum of understandings (MoUs) with several business partners, it said.
“The MoA with Axis REIT Real Investment Trust is to develop a built-to-suit industrial manufacturing facility for Senior Aerospace UPECA, while the agreement with Skyways Technics is on expansion plan to develop a new facility in the MRO Centre at the Subang Aerotech Park.
“A MoU was inked with Asian Business Aviation Association to provide crucial industry knowledge to strengthen and make Sultan Abdul Aziz Shah Airport into an attractive destination for the aviation business.
“The MoU with MARA Corp will focus on a partnership to facilitate human capital development for KLIA Aeropolis,” it said.
Moving forward, MITI said, through the National Aerospace Industry Coordinating Office and its agencies, namely, Malaysian Investment Development Authority, Malaysia External Trade Development Corp and SME Corp, it would continue to promote the aerospace eco-system in partnership with industry players.
“This concerted effort will enable Malaysia to reach the targets set under the Malaysian Aerospace Industry Blueprint that aims to position Malaysia as the leading aerospace nation in the region and an integral part of the global market by 2030,” it said.
MAHB poised to tap into growing aerospace
As Malaysia’s only airport manager, all eyes are on Malaysia Airports Holdings Bhd (MAHB) as it is poised to tap the growing aviation-related industry.
This comes after MAHB streamlines its businesses through the setting up of two subsidiaries.
MAHB currently manages and operates 39 airports in Malaysia and one international airport in Istanbul. It also provides airport management and technical services for the development, operation, maintenance and management of overseas international airports.
Managing Director Datuk Badlisham Ghazali said for its overseas foray, the airport operator would set up Malaysia Airports International by end of this quarter.
“We’re putting all international assets under this subsidiary and will be looking for more opportunities overseas, either by taking a stake in other companies or providing services ourselves,” he told Bernama in an
Badlisham said its maintenance, repair and overhaul (MRO) and land development portfolios, meanwhile, would be placed under another subsidiary, KLIA Aeropolis Sdn Bhd.
“It will house all our land development assets as well as aviation support and logistic businesses. This will be realised latest by the first or second quarter of this year,” he said.
Badlisham said following this, MAHB would have three lines of business: airports operations in Malaysia, the aeropolis (airport city) business and the international business.
“All that would be structured this year. There’ll be great times for MAHB ahead,” he added.
According to Badlisham, Malaysia is in a strong position to seize the new opportunities in the aviation business, either in manufacturing, MRO or services.
MAHB is also involved in the masterplan created by the Ministry of International Trade and Industry to drive the aerospace industry’s growth – the Malaysia Aerospace Industry Blueprint 2030.
“We want to build Malaysia as the aerospace hub for Asia-Pacific. The key part is how to redevelop Subang as well as we have developed KLIA.
“We are not only an airport operator in Malaysia, but have also been tasked to develop the land around the airport,” he noted, adding that an area about 25 hectares in Subang remained for the last phase of redevelopment.
“It is best suited to support the aviation industry; therefore, getting the right type of investment is crucial, not only to serve current customers but also tap the growing opportunities across the region, with aircraft delivery here expected to double in the next 20 years.
“A lot of aerospace players already like Malaysia because of the availability of land and industry development programmes. What they want to see is the execution,” he said.
Meanwhile, MAHB is waiting for a report from the International Air Transport Association (IATA), which it commissioned to do a study on its infrastructure and operation.
“It is an eight-month work. Recommendations arising from that study will be presented this month,” Badlisham said.
MAHB tried to balance between the IATA growth forecast and the growth of MAHB’s infrastructure, he explained.
The company has allocated half a billion ringgit for airport automation and expansion over the next 12 months.
“We are also going to complete our expansion of the Langkawi International Airport, costing about RM80 million in August. Another RM500 million will be spent to expand the Penang International Airport to boost its annual passenger capacity from 6.5 million to 12 million and the two-year project will start at the end of the year.
“We’re also expanding the airport in Kota Bharu, which will cost about RM470 million, over the next three years. So many other projects are being done. Malaysia doesn’t lack plans in upgrading its infrastructure,” he added.
Badlisham said the upgrading and expansion activities involved not only the physical infrastructure but also other facilities involving other agencies to increase resources, such as the Department of Civil Aviation, the Customs Department and the police.