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Malaysia to develop 30 new aerospace SMEs by 2020

According to a recent report, the Malaysian government targets to develop 30 new manufacturing small and medium enterprise (SME) players in the aerospace sector by 2020, in addition to the current 20 companies.

The Head of the National Aerospace Industry Coordinating Office (NAICO) stated that the local aerospace industry’s manufacturing segment had shown tremendous growth since the 1990s and recently surpassed the maintenance, repairs and overhaul (MRO) segment as the top revenue contributor in the aerospace sector.

He added that, of course, the MRO sector has been providing quite a sum of revenue to Malaysia but at this point in time, manufacturing (segment) is number one.

The hope is that it (manufacturing) can increase between 7.0 and 15.0 per cent every year, but this will rather heavily depend on how the country and the various organisations within it can bring in more investments.

The Head of NAICO also stated that about 48 per cent or RM6.6 billion of the aerospace industry’s revenue in 2017 came from the aerospace manufacturing segment, followed by 46 per cent from the MRO segment and the remaining from the engineering and design services segment.

The US-based General Electric’s decision to invest RM200 million to set up a new high-tech LEAP service centre in Malaysia would result in up to 40 new airlines servicing their engines in Subang airport.

The expectation is that with the new investment, more engines will be serviced in Subang, the Head told media reporters after the launch of the third Kuala Lumpur International Aerospace Business Convention (KLIABC) recently.

The launch was officiated by International Trade and Industry Minister. The Head added that NAICO, a unit under the Ministry of International Trade and Industry (MITI), will work with SMEs to ensure their long-term engagement in the aerospace industry.

MITI through its agencies like the Malaysia External Trade Development Corporation (MATRADE), Malaysia Investment Development Authority and SME Corporation (SME Corp), will provide grants to assist the SMEs in the aerospace industry.

It is important to note, however, that these grants, only cover about 50 per cent of any investments needed as we want to see the (same) commitment from industry players and to determine if they really want to invest in this segment, he added.

Meanwhile, the MITI minister said that the Malaysia Aerospace Blueprint 2030 targeted an annual revenue of US$14.3 billion or RM55.2 billion by 2030 and the creation of more than 32,000 high-income jobs.

“Malaysia is at the forefront of various activities in the aerospace value chain. Our companies cover engineering and design services, system integration, and the manufacture of aircraft parts and components including ground support equipment and MRO activities.

SMEs involvement in the industry is also encouraging. The 20 SMEs under the SME Corp’s Global Aerospace Manufacturing Industry Programme have shown positive growth and are expected to generate more than RMB30 million this year.

In 2017, Malaysia’s aerospace export surged 54 per cent to RM8.51 billion from 2016, with main exports being parts and components, particularly for wings, empennage and aircraft fuselage.

The three-day KLIABC is organised by MATRADE in collaboration with Malaysia Aerospace Industry Association (MAIA) and ABE France and will see the participation of 150 aerospace industry organisations from 21 countries.

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