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MALAYSIA AIRPORTS ‘CREATING TOMORROW, HERE’ WITH KLIA AEROPOLIS An airport city development that is synergistic with airport business and aligned with Malaysia’s development agenda

24 May 2016

KUALA LUMPUR – Malaysia Airports launched its latest and most exciting endeavour, the KLIA Aeropolis today, which will serve as the driver in achieving its vision of becoming a global leader in creating airport cities. The KLIA Aeropolis was officiated by the Minister of Transport Malaysia, YB Dato’ Sri Liow Tiong Lai in Grand Hyatt Hotel, Kuala Lumpur earlier this morning in front of approximately 200 guests including YB Datuk Ab Aziz Kaprawi, Deputy Minister of Transport Malaysia, institutional investors, government stakeholders, business partners, financial analysts and members of the media.

Identified as one of the strategic pillars in the Malaysia Airports’ five-year business plan, Runway to Success 2020 (RtS2020), the KLIA Aeropolis is an ecosystem development that is synergistic with the airport business and aligned with Malaysia’s development agenda. It aims to elevate the country to developed-nation status by 2020, and to transform KLIA Aeropolis into a world-class airport city with high standards and a tourist destination in its own right. Its success will allow Malaysia Airports to transform from an infrastructure provider to a key economic enabler by contributing significantly to national GDP and job creation. 

Synergy with airport business direction and future growth

KL International Airport (KLIA) is the core of KLIA Aeropolis, the development of which is in tandem with another strategic pillar in RtS2020 - establishing KLIA as the preferred ASEAN hub. KLIA’s location within the heart of ASEAN, as well as its excellent connectivity within the region is a strategic advantage to the development of KLIA Aeropolis. Today, KLIA is already catering to more than 50 million passengers a year with over 60 airlines serving y than 130 direct destinations. 

Another strategic advantage is the Malaysian government’s foresight in providing for future growth by allocating KLIA with a land bank totalling 100 square km. This allows for it to have unrestricted growth potential, expanding from a core airport to that of a complete, synergistic airport and aviation ecosystem that provides best in class connectivity, speed and agility. More than 60% or 13,000 acres of the land bank is designated for airport and aeronautical use. Of this 13,000 acres, the current KLIA airport system takes up 6,000 acres, leaving a balance of 7,000 acres reserved for the core airport growth needs over the long term.

Alignment to national development agenda

KLIA Aeropolis enjoys strong support from the Malaysian government and its development is closely aligned to national development agenda such as the Logistics and Trade Facilitation Masterplan (2015-2020), the 2nd National Aerospace Industry Blueprint (2015-2030), the Kuala Lumpur Tourism Master Plan (2015-2025), as well as other Tourism NKEAs. For example, Mitsui Outlet Park KLIA Sepang (MOP), which is an early realisation of KLIA Aeropolis, is an Entry Point Project (EPP) under its own NKEA for Tourism.

Dato’ Seri Liow applauded Malaysia Airports’ latest initiative, “On behalf of the Government of Malaysia, I would like to commend Malaysia Airports for initiating a project that not only will spur Malaysia’s economic development but also will enhance Malaysia’s reputation in eyes of the world as a vibrant hub for aviation business and connectivity, as well as for trade.”

The development is expected to drive more business investments and tourist traffic to Malaysia. As a centre for urban growth and development, it will spur an increase in employment opportunities, thus stimulating the local economy.  Based on an economic impact analysis conducted by PricewaterhouseCoopers on the KLIA Aeropolis development plans – excluding airport terminal operations and expansion, the total estimated impact over a 15-year period would be a GDP contribution of about RM30 billion with 56,000 jobs created. This is in line with the government’s agenda of becoming a high-income nation by 2020. 

Demand-driven initiative

KLIA Aeropolis is a demand-driven initiative based on the vast growth potential that exists specifically within Asia and the ASEAN region. The Asia Pacific (APAC) region is expected to remain as one of the fastest growing regions for air traffic, experiencing between 6% and 8% percent growth. 30% of scheduled aircraft deliveries by Boeing and Airbus will be to this region. APAC is also a strong magnet in attracting aviation-linked businesses due to its cost competitiveness, ready talent pool and available infrastructure. The region already accounts for 21% of the aircraft maintenance, repair and overhaul (MRO) market. 

The KLIA Aeropolis development is centred on three key clusters, namely Air Cargo & Logistics, Aerospace & Aviation, and MICE & Leisure. 

During the event, Datuk Badlisham Ghazali, Managing Director of Malaysia Airports had said, “We are very clear in our KLIA Aeropolis development strategy. The clusters identified are synergistic to the larger airport system and will serve to not only benefit the airport operator but also the aviation supply chain as a whole. These clusters were also identified in view of its strong alignment with national agenda as well as the strong demand available today and over the longer term.”

In talking about the Air Cargo & Logistics cluster, Badlisham had said that since 2010, KLIA has been seeing a trend of high growth in specific cargo segments, i.e. 33% for express cargo volume and 102% for mail cargo volume. This is aligned with the global trend of e-commerce where the market in South East Asia is expected to grow by five times to USD35 billion by 2018. The fastest growing air-freight trade lane will be Intra-Asia, and is projected to grow 6.5% annually up to 2033. KLIA Aeropolis will serve as the core of Malaysia Airports’ air cargo and logistics ecosystem that extends to Penang and East Malaysia.

He added further that KLIA Aeropolis is also poised to capture the growing demands from the aerospace industry trends.  There has been a significant boom in the national aerospace ecosystem and presence of its players - from only a few players before the year 2000 to over 300 today, including renowned first-tier players. Malaysia Airports currently hosts over 20% of these players within its aerospace ecosystem in Subang and KLIA. 

This boom has led to the country formulating a clearly-defined national aerospace blueprint that aims to position Malaysia as a leading player in the global aerospace value chain. Within the aerospace ecosystem, Malaysia Airports aims to capture a significant pie of the aerospace offshoring activities by aircraft original equipment manufacturers (OEM) and first-tier aerostructures manufacturers who are looking to South East Asia in order to leverage on its cost competitiveness, ready talent pool, and available infrastructure.

Executing smart partnership

In realising the ultimate airport city, Malaysia Airports will create value through smart partnership and synergistic collaboration with its business partners in order to achieve mutual benefits.

Future developments for the MICE & Leisure cluster will follow in the successful joint venture model between Malaysia Airports and Mitsui Fudosan in its development of MOP, whereby Malaysia Airports will partner with established players in the market who are interested in investing in the development of this segment. 

The marketing and sourcing approach for KLIA Aeropolis will be to leverage on various governmental bodies such as the National Industry Coordinating Office (NAICO), National Logistics and Trade Facilitation Taskforce, Malaysian Investment Development Authority (MIDA), Malaysia External Trade Development Corporation (MATRADE), as well as Invest KL, Invest Selangor and the Selangor state government. A key value proposition to business partners will be the offering of business facilitation services that will expedite engagements between potential investors and the government so as to cushion entry risks. 

During the event, Malaysia Airports had also announced five strategic partnership agreements and intents. They were with: 

For the Air Cargo & Logistics cluster:

1. DRB Hicom Berhad, through its wholly-owned subsidiary, KL Airport Services, an aviation ground services provider who are currently servicing all five international airports under the management of Malaysia Airports.  The agreement is for the development of additional space of approximately 450,000 square feet to conduct their cargo operations at the Cargo Terminal (former site of the Low-Cost Carrier Terminal or LCCT) 

2. Raya Airways Sdn. Bhd. (Raya Airways) - Malaysia’s second designated national cargo carrier – for the tenancy of 200,000 square feet of space at the Cargo Terminal to conduct their cargo operations. Raya Airways will be teaming up international industry player, Dnata and collaborating with long-standing business partner, DHL Express to optimise the project’s viability and potential.

3. AirAsia Berhad, the world’s best low-cost carrier airline who currently has their main hub in klia2 and intends to develop its regional distribution centre at the Cargo Terminal for Redbox – their low-cost express courier and parcel delivery services. 

4. Vanderlande Industries B.V., a Netherlands-based material-handling and logistics automation company who is a global market leader in baggage handling systems for airports, and sorting systems for parcel and postal services. The partnership intent is to explore the setting up of a regional distribution centre for the management and distribution of spare parts for baggage handling systems in Malaysia. 

For the Aerospace & Aviation ecosystem:

1. RUAG Aviation Malaysia Sdn. Bhd., a Swiss-based company who is the leading supplier, support provider and integrator of systems and components for civil and military aviation. The partnership intent is to convert the former Customs building at Sultan Abdul Aziz Shah Airport into an MRO facility. 

With KLIA at its nexus providing excellent connectivity, KLIA Aeropolis provides an important link to a thriving regional market. It will also lay the perfect foundation for a cargo and aerospace ecosystem which will extend beyond the boundaries of KLIA Aeropolis. 

Sharing his aspiration on the future of KLIA Aeropolis, Tan Sri Dato’ Dr Wan Abdul Aziz Wan Abdullah, the Chairman of Malaysia Airports had said, “I envision KLIA Aeropolis to be a truly remarkable airport city development with top class tourism and business attractions. It marks a promise of sustainability and growth for companies who will call it their home.”

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