With Asean being a vital agent for MRO activities in Asia, Malaysia is bound to benefit from the growth in the aerospace industry, analysts say. — Bernama photo
KUCHING: With Asean being a vital agent for Maintenance Repair and Overhaul (MRO) activities in Asia, Malaysia is bound to benefit from the growth in the aerospace industry, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) stated in an aviation sector update.
According to MIDF Research, Malaysia’s exports of aircraft parts and components have almost quadrupled from RM2.23 billion in 2012 to a record high of RM8.49 billion in 2018, maintaining a contribution of more than one per cent to Malaysia’s total trade value for the past eight years.
“The growth was mainly driven by expansion of aerospace manufacturing activities which also translated to the increase of revenue of Malaysia’s aerospace industry,” the research arm recapped.
“Locally manufactured aerospace products for export mainly include fan cowl, fan casing, thrust reverser, forward leading edge, aircraft door, avionics equipment and carbon brakes.”
MIDF Research highlighted that in terms of investments, 11 aerospace projects with total investments of RM816.3 million were approved in 2018 of which 41 per cent were foreign investments which are expected to generate a total of 2,442 employment opportunities.
It further highlighted that the continued growth of this sector is aligned with the milestones charted by the Second Malaysia Aerospace Industry Blueprint (2015-2030) which aims to generate annual revenue of RM55.2 billion and create more than 32,000 high income jobs.
Overall, MIDF Research remained optimistic on the aviation sector amidst the potential growth in the aerospace industry.
“Given the growing demand for commercial aircraft in the Asia Pacific region, we are confident that the aerospace industry in Malaysia will remain vibrant and thriving for many years to come.
“Moreover, local airlines such as AirAsia Group Bhd will contribute to the nation’s aerospace industry with its long term fleet plan focused on maintaining its lead in Asean.
“Therefore it is crucial for Malaysia to secure more ‘design and build’ work packages and become a ‘risk sharing partner’ with original equipment manufacturers from the early stages of the aircraft’s life cycle.”
MIDF Research also expected Malaysia Airports Holdings Bhd (MAHB) to be a major beneficiary of a growing aerospace industry given the group’s ample landbanks surrounding Kuala Lumpur International Airport (KLIA) (over 9,000 hectares) and Subang Airport (430 hectares).
“In the short term, we believe that MAHB will continue to gain from the expected growth in passenger traffic which is expected to surpass the 100 million mark for Malaysian operations in financial year 2019 (FY19).”