What are the prospects for South-East Asia’s aerospace industries? We look at how key players in five markets see the future
Competition in South-East Asia is intensifying as aerospace manufacturers and maintenance companies throughout the region are looking to expand.
Plans to redevelop Kuala Lumpur’s Subang airport, Bangkok’s Don Muang airport and Clark airport outside Manila into maintenance, repair and overhaul (MRO) centres could threaten Singapore’s 25% share of the regional market. But Singapore, which is expected to unveil plans this week to redevelop Seletar airport into an MRO centre, also plans to grow its MRO business.
“We recognise that competition in the aerospace industry is strong and are very conscious of the need to ensure that we remain competitive and attractive as a location,” says Singapore Economic Development Board director of logistics and transport Manohar Khiatani.
“We have introduced several measures to reduce business costs in Singapore over the last few years, for example lower corporate tax rates, reduction in price of industrial land, reduction in employer contributions to central provident fund etc. Furthermore we are continuously improving our capabilities, for example manpower and supporting industry, to ensure that Singapore becomes an even more attractive location for aerospace companies.”
Several small military MRO shops have opened recently in the region, including Thai Aviation Industries and Asian Aerospace in the Philippines, and have ambitions to pursue regional military as well as commercial contracts. But the region’s two largest military MRO shops, Singapore Technologies Aerospace (ST Aero) and Malaysia’s Airod are not too concerned about the new competition.
Airod still won a contract late last year from the Thai air force for a Lockheed Martin C-130 heavy maintenance check and warns some of the local providers may not have sufficient local funding to keep afloat.
“It’s an issue of capacity and how extensive the work is,” says Airod chief executive Kamil Aziz. “Almost everyone has basic maintenance capability... We won’t fight against [national aspirations]. But every country has to rationalise what they do. Competition is intensifying, internationally and domestically.”
MRO warning
ST Aero president Tay Kok Khiang warns: “MRO is not so straightforward. It’s not just whether you can do it... They envisage good revenues and good jobs. Whether a country succeeds or not depends on a lot of factors... There are not many successful MRO companies.”
Indonesia, Malaysia and Singapore are also looking to expand their aerospace manufacturing capabilities. Other countries in the region do not have any manufacturing capabilities, but the Philippines and Vietnam are interested in expanding into this sector.
Foreign manufacturers are increasingly outsourcing work to low-cost countries and South-East Asian countries have started to benefit from this trend. But they are well behind their competitors in China, Japan and South Korea and need to become more efficient and introduce more technologically advanced capabilities in order to realise their ambitions.
“We must increase our productivity level compared to Singapore, which I think is a good benchmark,” says Composite Technologies Research Malaysia chief executive Rosdi Mahmud. “If we can bring it up to Singapore’s level, I think we are there.”
BRENDAN SOBIE / SINGAPORE, BANGKOK, LANGKAWI AND MANILA
Source: Flight International
