Aerospace Sector to be Boosted Under 12MP

Oct 2021

The Twelfth Malaysia Plan (12MP), the country’s long-term development plan has identified the aerospace sector as one of its high-tech and priority industries to be bolstered between 2021 and 2025. The Malaysian aerospace sector is anticipated to generate MYR 30 billion (USD 7.18 billion) in revenue and 30,000 jobs over the next five years under 12MP.

Development of a sustainable environment, clustering, and zoning of aerospace operations, building an aerospace digital system, and foraying into sustainable energy will be among 12MP’s strategies to bolster the country’s aerospace sector. The key initiatives are summarized below.

  • The National Aerospace Industry Coordinating Office (NAICO) will be upgraded as an agency to strengthen its role in supporting the execution of initiatives and action plans under the Malaysia Aerospace Industry Blueprint (MAIB) 2030 to build a sustainable aerospace ecosystem. NAICO’s upgrade would also increase its role in coordinating the execution of the Aerospace Industry Framework, which outlined the industry’s goals, as well as strategies and intended outcomes for each cluster.
  • An Aerospace Center of Excellence will be established to provide training and exchange best practices and facilities, particularly for micro, small and medium companies to enhance industry competitiveness and position Malaysia as Southeast Asia’s regional aerospace hub.
  • The government will provide incentives and financial support for the local aerospace sector to stay competitive in the global value chain and to foster long-term growth. Incentives for research and development, innovation, and high-value-added investments will also be provided, while loans and loan guarantees for companies will be reviewed to improve the industry’s access to liquidity and compensate for lower cash flow owing to the pandemic’s impact.
  • The aerospace industry’s expansion would be redirected to generate specialized capabilities through clustering and zoning aerospace activities in certain economic zones. The industry development will focus on four clusters: maintenance repair and overhaul (MRO), aerospace manufacturing, systems integration, and engineering and design services. The zoning and clustering of aerospace operations will be based on each economic area’s natural capabilities.
  • An aerospace digital system will be developed through a public-private partnership to serve as a central data repository for aircraft operations, MRO, and aerospace production in Malaysia. The government will manage the system, which will be utilized to regulate and monitor the sector’s progress. This will enable stakeholders and industry participants to get real-time demand and supply information thus boosting the competitiveness of the nation’s aerospace sector.
    Malaysia also aspired to establish itself as a leading producer of bio-jet fuel in the region, with the first bio-jet fuel test on a piloted aircraft scheduled for early 2022.

In addition, the government has emphasized that Malaysia’s aerospace production and MRO services are the most prominent subsector, accounting for more than 90% of the industry’s revenue. It has brought around MYR 16.2 billion (USD 3.88 billion) in total revenue while generating MYR 2.07 billion (USD 495 million) investments in 2019. The aerospace parts and components are manufactured for global players and are intended solely for export. The country is also home to over 240 aerospace-related local and foreign companies. Many global aerospace companies have opened regional centers in Malaysia to service the booming Asia Pacific market such as Airbus’s regional engineering support center and Malaysia-based Aerodyne, the world’s second-largest drone technology company. To date, more than 25,000 skilled jobs have been created with 95% of those employed being locals.

(Sources: New Straits Times; Daily Express; The Edge Markets)

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