Malaysia’s aerospace industry driven by MRO segment

The govt plans to position Malaysia as the leading aerospace nation in SE Asia

by RAHIMI YUNUS / by HUSSEIN SHAHARUDDIN

The country’s aerospace industry has vast potential in Malaysia and is expected to record a revenue of RM16 billion this year, driven by the vibrant manufacturing and maintenance, repair and overhaul (MRO) segment.

The industry recorded RM14.4 billion in revenue last year, of which 48% was contributed by manufacturing, while 46% by the MRO segment.

Speaking at the opening ceremony of the Langkawi International Maritime and Aerospace Exhibition (LIMA) 2019 yesterday, Prime Minister (PM) Tun Dr Mahathir Mohamad said the government has plans to position Malaysia as the leading aerospace nation in South-East Asia and as an integral part of the global market.

The aspiration is in line with the Malaysian Aerospace Industry Blueprint 2030, he added.

“In the global arena, Malaysia is known for its quality aerospace products produced for global aerospace leaders such as Airbus SE, Boeing Co, Rolls-Royce plc, Safran SA, Honeywell International Inc and Thales SA,” the PM said.

Malaysia’s export of aircraft-associated equipment and parts has jumped 20.7% year-on-year to RM8.48 billion in 2018, with the US, Singapore, the UK, China and France as export destinations.

Among the locally manufactured aerospace products for export are fan cowl, fan casing, thrust reverser, forward leading edge, aircraft door, avionics equipment and carbon brakes.

Some 11 new aerospace investment projects worth RM816.3 million were approved in 2018 and are expected to generate more than 1,500 employment opportunities. The industry now supports 24,500 highly skilled workers mainly in manufacturing and MRO. Meanwhile, Malaysian Investment Development Authority CEO Datuk Azman Mahmud said the government has targeted to attract RM1 billion investment in the aerospace industry this year and RM500 million has been approved year-to-date for 10 projects.

International Trade and Industry Minister Datuk Darrell Leiking said Malaysia is targeting RM16 billion revenue use the aerospace industry.

“We want more than the RM14.4 billion. RM15 billion to RM16 billion for this year, why not,” Darrel said on the sidelines of LIMA 2019.

Darrell said the government is strengthening the coordination between all related agencies to promote the country’s aerospace ecosystem to investors in order to achieve the RM16 billion revenue target.

SIRIM Bhd, an agency under MITI, is working to become the region’s first AS9100 certification body as part of Malaysian companies to compete in the global aerospace market. Regionally, Malaysia is in a position to capitalise on the growing aerospace industry as original equipment manufacturers have forecast that more than 4,200 new aircraft valued at US$650 billion (RM2.64 trillion) will be delivered to this region by 2037.

Expenditures on both the defence and commercial sectors are expected to increase in tandem with the rising demand for security, defence and commercial assets.

In 2018, defence expenditures for South-East Asia were estimated to be more than US$35 billion.

In the commercial sector, the growth in the region was mostly boosted by the expansion of low-cost-carrier businesses, which had accelerated the activities for aerospace manufacturing, MRO, training, as well as the travel and tourism industries.

Darrell also said Malaysia’s shipbuilding and ship repair (SBSR) exports have grown by 20% to RM1.29 billion last year, compared to RM1.08 billion in 2017.

He said the exports mainly consist of light vessels, dredger, floating dock and cargo ships to Australia, Indonesia, Thailand and the US.

Total revenue of the SBSR industry in 2018 was RM7 billion, with shipyard recording the highest revenue of RM4.93 billion from 77 companies.

“Expanding the SBSR business, Malaysia shall look at other opportunities in the SBSR industry, particularly in ship design, parts and components manufacturing, system integration and other marine equipment production,” Darrell said.

The SBSR industry supports 13,000 jobs in Malaysia — a subset of the marine industry that can be divided into five contributing groups, namely shipyard, classification, manufacturer, design and MRO.

In 2018, two expansion projects were approved in the SBSR industry with a total investment of RM33 million.

Held biennially since its debut in 1991, the 15th edition of LIMA opened yesterday until March 30, with a theme of “Defence and Commercial Connecting Intelligence”.

LIMA 2019 witnessed the return of Dr Mahathir to the Asia Pacific’s leading maritime and aerospace exhibition — his brainchild in 1991 when he launched the first blueprint for the development of the aerospace industry in Malaysia.

LIMA 2019 hosts business delegations from 31 countries and a total of 390 defence and commercial companies, comprising 60% defence and 40% commercial contents.

Some 195 international businesses are displaying their products and services throughout the five-day event, which is expected to attract some 42,000 trade visitors.