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Enabling Malaysia’s drone sector

A group of over 30 local and international industry experts gathered in Kuala Lumpur for the Global Drone Conference & Hackathon 2020 (GDCKL 2020), as Malaysia continues working to become a global testbed for emerging technologies and innovation.

The Chairman of the SME Corporation Malaysia, who officiated the opening, stated that the aim is to turn Malaysia into a drone hub in Southeast Asia.

As the world is in the “midst of a global drone revolution”, the Chairman said that the global drone services market is expected to be worth RM267 billion by 2025, with Asia-Pacific set to grow the fastest.

It comes as no surprise, then, that local entrepreneurs and SMEs are being encouraged to explore opportunities in five industrial verticals: agriculture, construction, energy, infrastructure and public safety.

15 local players involved in the drone industry were highlighted as well as FourFang and Aerofleye – companies that SME Corp hopes to further develop and grow, hopefully emulating the success found by global drone service provider Aerodyne, who recently announced a Series B funding of US$ 30million.

Everything from hardware to service providers

One expert presented a more nuanced view of market growth, by dividing it into several areas: Hobby (potential global market size: US$20 billion), Industry, (US$30 billion) and Military (US$60 billion).

He explained that, originally, the drone market pertained almost exclusively to hardware sales; now, however, drones are transitioning to being part of a more complete solution, as part of overall service, replacing work currently done by humans.

This is the same as the PC industry, in the drone industry, hardware (airframes) will become just commodities and the solution market will be the one that creates added value.

The expert predicted that the transition in Malaysia has yet to happen, noting that the total revenue of the existing Drone Service Provider (DSP) in the country is about US$20 million to US$30 million. The expert identified active sectors like the power industry as well as construction.

However, the one thing that has not really caught on is inspection, in particular for Oil and Gas (O&G). In other countries like Indonesia, Netherlands, Angola, and Australia, the use of drones in the O&G industry is significant. However, there is no big player which suggest that there is big potential.

The Chairman of the SME Corporation Malaysia is encouraging entrepreneurs and SMEs to explore opportunities in five industrial verticals: agriculture, construction, energy, infrastructure and public safety.

Technology ahead of regulation

SME Corp certainly hopes that this potential can be fulfilled by local players. The CEO of SME Corp Malaysia stated that the number of companies will grow from the current 15.

It is hoped that these companies can take advantage of the High Impact Programmes 2 (HIP2) to bring solutions to the market.

Under the 2020 National budget, RM1.2 billion has been allocated for digitalization initiatives with SME Corp hoping to earmark between RM500,000 and RM1 million for drone-related initiatives.

However, a prospective stumbling block is regulation, which is proving to be a tricky problem to grasp. Whenever addressing something, there is always a new requirement, because technology keeps changing. Technology moves forward at the speed of thought, but regulators can’t.

The question is whether the technology and the entrepreneurs can afford to wait if you as a nation wants to lead the way.

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