The recently released budget has specified that Malaysia’s aerospace sector is one of the targeted high growth industries to accelerate Malaysia’s transformation into a high-income nation by 2025. Germain Thomas, Asian Insiders partner in Malaysia takes a closer look.
Malaysia’s aerospace sector plays a critical role in driving Malaysia’s advancement in technological innovation and development. It is a key focus area outlined in the 12th Malaysian Plan and the Malaysian Aerospace Industry Blueprint 2030 (MIAB2030). Malaysia offers a well-established industry and solid capabilities in aircraft assembly and maintenance with one of the largest aerospace sectors in Southeast Asia.
The story of transformation in Malaysia’s aerospace sector is from a small, domestically focused group of start-ups to a globally recognised power cluster of some 240 companies generating a revenue of USD 3.5 billion per annum. This growth is attributed to Malaysia’s strategic location at the crossroads of important international air and trade routes and a supportive government implementing a series of proactive and long-term policies that has led to a growth in supporting infrastructure and a skilled workforce with strong capabilities in aircraft design, assembly and maintenance.
Further the government has recently launched Malaysia Aerospace Centre of Excellence (MyAERO Centre) that works to identify and nurture home-grown SME’s that offer potential to become a part of the global supply chain, strengthening and role and position of Malaysia’s aerospace sector. Due to this burgeoning ecosystem, the country has attracted a large number of major international partners that have established bases in Malaysia, including Airbus, Boeing, GE Aerospace, Spirit AeroSystems, Honeywell, Safran Malaysia, Bombardier, Rolls Royce, SpaceX and many other international firms.
For example, the Boeing company has predicted that the demand for airframes will continue to grow over the next decade with the region needing over 17,500 new planes. Some 40% of these will be required within Southeast and Northern Asia alone.
Under the MIAB 2030 plan, Malaysia aims to become Southeast Asia’s top Aerospace nation, through becoming an integral part of the global supply chain. The blueprint targets a total annual revenue of USD 12 billion and the creation of 32,000 high value jobs. The MIAB plan further sets to lay out Malaysia’s aerospace sector focus on five main areas with industry-led research and technology integral to each – maintenance and repair operations (MRO) where Malaysia’s target is 5% of global market share, aero-manufacturing, systems integration where Malaysia plans to become self-reliant with at least 70% local content, engineering and design services with goals of 3.5% global share and education and training with plans to be the number one supplier of industry talent within Southeast Asia.
The aerospace industry globally is witnessing a positive, post-pandemic surge as economies fully reopen. Further, climate change and the awareness of environmental degradation is propelling global industry towards sustainable alternatives and this applies also to aircraft construction and operation. There is growing demand for environmentally friendly aircraft, engines and fuel technology and this is an encouraging trend where Malaysia’s aerospace sector can collaborate in developing sustainable solutions in design, materials and emission-reducing technologies. Further, the rapid development of new environmentally friendly aircraft will lead to extended retrofitting requirements and whole new categories of MRO services.
Selangor, a Malaysian state just outside the capital, Kuala Lumpur, is where most of Malaysia’s Aerospace cluster is located. In their Selangor Aerospace Action Plan 2020-2030, coordinated with regional and national economic development plans to ensure that local activities are aligned with national plans as well as business community objectives. These include a series of aerospace industry parks, some specialising in various subsectors as well as dedicated finance facilities such as investment grants, export finance facilities and support for loan guarantees, low-rate long term leasing support, R&D tax credit systems as well as government supported talent search and development units, student internship programmes and other specialised support facilities.
There are a range of additional support sectors that feed directly into and supports Malaysia’s aerospace sector including enhanced AI digitisation and improved data systems available on SaaS platforms, a rapidly developing drone sector as well as the improved telco infrastructure, all supporting Malaysia’s domestic and international players.
Malaysia has set its sights upon a strong global position in this industry and is set to become an Asian and global leader in the aerospace sector. With an open economy, a supportive national government, supported by proactive regional policies and infrastructure, the invitation is out to foreign players in the aerospace industry to investigate Malaysia as a base or to provide elements in their supply chain.
Asian Insiders offers expertise and experience in working with Malaysia’s aerospace sector. To discuss investment, engagement and direct connection to opportunities in Malaysia’s aerospace sector, please contact Jari Hietala, Managing Partner: jari.hietala(at)asianinsider.com or Germain Thomas, Malaysia Partner: germain.thomas(at)asianinsiders.com
