Malaysia to develop Asia's first aerospace hub

KUALA LUMPUR, Dec 12 — The sky is the new frontier for Malaysia with plans by the Malaysian Investment Development Authority (MIDA) to bring in global expertise to develop the country into Asia's first-ever aerospace hub.

Though the industry is still relatively small - contributing some RM2.8 billion in approved investments over the first nine months of 2013 - the investment authority believes Malaysia is well positioned to pursue the lofty goal.

MIDA chief executive Datuk Noharuddin Nordin said there is currently no country in Asia that can claim to be an aerospace hub despite increased air traffic in the region due to strong growth in international tourist arrivals in recent years.

“Malaysia is very strong in MRO (maintenance, repair and overhaul). We are among the strongest in Asia in the sub-sector,” he said today at a press conference.

“For MRO, we've got a lot of major players who have set up operations at Subang airport's old runway. We have GE, Airbus, everyone is here. What we want to do is complete the ecosystem,” he added.

The Asia and Pacific region registered strong growth for inbound travel for a third straight year in 2012, drawing over 350 million visitors according to industry estimates by the Pacific Asia Travel Association. The figure was an increase of five per cent or around 18 million people compared to 2011.

Last year, Malaysia received over 25 million visitors - roughly 300,000 more than its 2011 tally of 24.7 million tourists. The tourism ministry is aiming to bump up the figure to 36 million visitors by 2020.

The country currently has a combined annual capacity of some 40 million arrivals, with the Kuala Lumpur International Airport (KLIA) capable of receiving up to 25 million people while the Low Cost Carrier Terminal (LCCT) can handle 15 million arrivals.

KLIA's capacity is expected to expand by at least 30 million arrivals with the completion of the KLIA2 terminal - which will serve as the new terminal for budget air travel - though construction has been delayed five times so far with the latest completion date set for sometime in the second quarter of 2014.

Though MIDA has yet to establish how much an aerospace hub could contribute to the country's growth, Noharuddin said Malaysia already has a lot going for it in the industry despite its relatively small size.

To support the growth of the MRO subsector, he said several foreign companies have already set up shop to manufacture certain key components locally such as carbon brakes and engine casts for planes.

Noharuddin said the need for instrumentation and electronics is easily met by transferring existing technology and expertise from the country's long-established electronics sector.

What is left is to bring in long-term investors to grow local manufacturing of key components and industry-specific education and training, on top of expanding on existing capabilities, the Mida chief added.

Noharuddin admitted that investors have been slow in buying into MIDA's aerospace hub plan, but his agency remains hopeful that it will eventually pick up.

“It hasn't really taken off since we started our push for the hub late last year, but just look at Lima,” he said, referring to the biennial Langkawi Internatioinal Maritime and Aerospace exhibition.

“When Lima started, it was first for the military but now it has grown to also include commercial interests, so we are hopeful,” Noharuddin said.

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