Selangor plans to optimise existing aerospace industry parks

Most of the surrounding areas at the existing aerospace hubs are still underutilised, say MB

By AFIQ AZIZ / Pic By TMR File

THE Selangor state government has outlined a plan to maximise the potential of the fast-growing aerospace industry that is currently spread out in several areas in Sepang, Serendah and Subang.

Mentri Besar (MB) Amirudin Shari said the state has no plan to expand the aerospace business in other districts as most of the surrounding areas at the existing aerospace hubs are still underutilised.

“We need to fully utilise or expand the existing 3S — Sepang, Serendah and Subang — land capacity. I believe we have not yet maximised them.

“So, we are not ready to create the fourth industrial park, although we do have land for the purpose,” he told the press after attending Selangor Aerospace Action Plan’s (SAAP) town hall in conjunction with the signing of a memorandum of understanding (MoU) between Invest Selangor and UMW Development Sdn Bhd.

The MoU is aimed at attracting more foreign direct investment into the Serendah area at the site already owned by UMW Development Sdn Bhd, which will also spur further interest in the high-tech manufacturing park.

Amirudin said only 30% of the 348ha UMW High Value Manufacturing (HVM) Park in Serendah is currently being utilised.

In the case of the KLIA Aeropolis in Sepang, half of the allocated land is still available for further development.

“However, in Subang, most of the land area has almost reached its maximum capacity in terms of development, and we are looking to find some space to further optimise the current operations,” Amirudin said.

He added that the state is also in talks with international aerospace players that are interested to relocate some of their operations to Selangor.

Currently, the UMW HVM Park has already been established as UMW Aerospace Sdn Bhd’s fan case manufacturing facility for Rolls-Royce Holdings plc is based there.

The project also serves as the pioneer and a catalyst to draw in other investors and aerospace firms to complete the entire ecosystem.

Selangor has been the main hub for Malaysia’s aerospace and aviation industry because it is the base of more than 62% of the Malaysian aerospace players.

The industry is strongly supported by a great demand from players in the Asia-Pacific region that also makes up some 30% of the global aerospace and aviation activities and products.

Amirudin said the SAAP, which is jointly prepared by international consultant Frost and Sullivan, is expected to address seven various challenges in the industry, including the shortage of human capital and low growth rate of the maintenance, repair and overhaul (MRO) segment.

The plan includes almost 30 actions, which will echo the Malaysia Aerospace Industry Blue Print 2030, while ensuring Selangor’s position as one of the aerospace and aviation industry’s gateways for Asian countries.

Amirudin said over the years, the Selangor aerospace industry has grown organically without a strong strategic policy implementation that includes mergers and acquisitions, and investment plan.

“A combination of these organic and inorganic growths could and would contribute to a much higher revenue impact for the industry and in return to the state of Selangor,” he said, adding that the plan would include the finalisation of all the three aerospace hubs in the state.

Amirudin added that globally, the production of aircraft is only at approximately 600 units per year, while there are more than 10,000 aircraft orders which are now pending.

He said the demand for MRO services is also high, apart from aircraft scrapping and storage businesses.

Frost and Sullivan associate director (aerospace, defence and security) Amartya De said one of the short-term challenges is to increase the rate of the MRO industry, which currently generates a total income of RM6.2 billion.

“We do not have a global player which is able to do multiple MRO services such as Lufthansa Technik AG in the Philippines, AAR Corp in the US, Haeco Group in Hong Kong and ST Aerospace Engineering Pte Ltd in Singapore.

“These large players usually could provide component maintenance, avionic, airframe and engines services,” De said.

The non-existence of such services had prompted most of the global aviation firms to fly to neighbouring countries for such services.

He added that while the manufacturing segment’s compound annual growth rate has increased to 32% over the last seven years, the MRO sector only generates about 4% to 5% of the total rate over the same time.

“The MRO services have been growing, and are expected to grow positively this year but at a slower rate,” he said, adding that it is crucial to attract large MRO players into the country to increase the rate.