Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 1 of 7

Aircraft
You are in: Home › Aircraft › News Article SUBSCRIBE

DATE: 25/01/10
SOURCE: Flight International

SINGAPORE 2010: South-East Asian nations in rush to start aerospace

parks
By Leithen Francis

South-East Asian countries are clamouring to establish

aerospace parks as a means of creating jobs and capturing
investment.

Singapore's Seletar Aerospace Park appears to be the

front runner, thanks to the island nation already having
many aerospace businesses, and it has secured additional
investment from high-profile players such as Roll-Royce.

But not to be outdone, Malaysia is pushing Kuala Lumpur's

Subang airport as an aerospace hub and the Philippines has
Clark airport as its aerospace centre

Thailand has notched up some investment wins and is

pressing the claims of Bangkok's Don Mueang airport as a
maintenance and aerospace training hub. Indonesia is
starting to look at establishing an aerospace park and
Brunei is working to diversify its economy beyond petroleum
by targeting aerospace companies.

© Singapore Economic Development Board

With so many countries targeting the same investment dollars, there are bound to be some failures. The consensus
among aerospace firms that Flight International spoke to is that government backing is crucial to the success of an
aerospace park, because political stability is a key consideration. Good government is also needed to ensure that the
aerospace park has the necessary infrastructure - roads, rail and seaports.

Inducements such as tax incentives and access to cheap land, with a minimum leasehold of 30 years, are other crucial
factors, as is co-ordination between government departments and agencies.

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 2 of 7

"Investors need a central body that they can go to," says a senior executive from a maintenance, repair and overhaul firm,
who wishes to remain anonymous. "You can't bounce off investors to different ministries," the executive adds. "That is
where Singapore's Economic Development Board is successful, because it really is a one-stop shop. A lot of
businesses looking to invest in Asia tend to go down the joint-venture or collaborative route."

This is where Singapore's Economic Development Board has been helpful, by getting Singapore government-linked
companies such as ST Aerospace and SIA Engineering to be joint-venture partners.

The government-owned Development Bank of Singapore has also provided financing to aviation start-ups in Singapore.

BRUNEI OFFER

Brunei established the Brunei Economic Development Board in 2001 and is offering national carrier Royal Brunei Airlines
as a potential partner for foreign MRO firms.

"Royal Brunei Airlines engineering has EASA 145 accreditation with type specific capabilities on A320, Boeing 737
Classic, Boeing 757 and Boeing 767s," says the board.

Potential potholes hinder

Clark's expansion plan
Manilla's Clark International
airport has embarked on a 550
million pesos ($12 million)
expansion plan to attract more
carriers and become the second
international gateway into the
Philippines.
To be completed in May, the
expansion will add a second storey,
arrival and departure lounges, and
three aerobridges to the terminal
building. "We want to attract more
airlines, particularly full-service
carriers, but they want amenities
like lounges," says Clark's president Another factor, cited in Singapore's and Malaysia's favour, is the fact that both
and chief executive Victor Jose
Luciano.
Most of the seven passenger
airlines serving Clark are low-cost workforce that can speak "a good standard of English".
carriers. The expansion will boost
Clark's capacity to five million from As well as English proficiency, a country's workforce needs to have skills and
two million.
A second terminal for Clark is also
planned. The airport is evaluating Singapore's Economic Development Board says there are more than 100
proposals from potential joint
venture partners and expects to
make an announcement soon. It
will take two years to construct a
second terminal, says Luciano.
Clark is hoping to become the
country's second international
gateway. Manila's Ninoy Aquino
International airport handled 22
million passengers in 2008, and the
industry believes it will soon reach
its capacity of 32 million.
However, there are potential
potholes on Clark's journey to
become the alternative airport.
"The airline has an impeccable safety standard with one of the best safety
records worldwide," it adds. "A joint-venture establishment with the national
carrier could, for example, specifically focus on maintenance activities such as
engine overhaul, landing gear repairs, cabin interiors and electronic repairs."
Having a strong local partner can be crucial because it provides a Western
aerospace company with some surety that the Asian venture will have a base of
work from which to grow and build.
Good government co-ordination can also mean helping businesses to cut costs
and simplify processes.
Malaysia has a system whereby businesses that have been audited have local
manufacturing warehouse capability, which means the goods produced receive
faster clearance through customs.
are former British colonies. "Setting up a business has certain legal implications,
so a benefit of Singapore and Malaysia is that each has a good legal
framework," says a British-born aerospace executive. Those legal frameworks
are based on British law. The executive also stresses the importance of having a
experience. "Singapore stands out in that respect because of the number of
MRO firms that already exist there," says a MRO business executive.
companies in the island state involved in MRO activities.
Many of Singapore's blue-collar workers are foreigners from other South-East
Asian countries. Its "open door" policy - when it comes to allowing in foreign
talent - is a factor in its favour. The nation has also been careful to establish
engineering training colleges to increase the pool of skilled and qualified labour.
Thailand's Civil Aviation Department director general Wuthichai Singhamanee
concedes that this is one area Thailand needs to work on. The Civil Aviation
Training Centre in central Bangkok has a two-and-a-half year aircraft
maintenance engineering course, says Wuthichai, but Thailand needs to have
more maintenance engineers and would benefit from a one-year training course
to increase the talent pool, he says.
Thailand's efforts to attract aerospace investments is spearheaded by a ministry
of transport committee. Wuthichai sits on that committee and says the

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 3 of 7

government wants to turn the old Bangkok international airport, Don Mueang,
The airport is a 2h drive along into an international hub for MRO and aviation training.
congested streets from Manila's
business district. While the Four international investors have already applied to set up businesses at Don
government has plans to build a Mueang, says Wuthichai. These include French MRO firm Europe Aviation,
high-speed railway to link the two which wants to maintain Airbus A320s and Boeing 737s.
airports, this will take 10 years.
EADS also plans to establish a landing gear overhaul centre, says Wuthichai,
"The railway needs to be there to adding that there is an undisclosed aircraft engine manufacturer that wants to
make Clark into a premier airport. have a engine maintenance centre at Don Mueang.
There should be a serious effort
from the government to ensure Thailand's push to attract MRO firms has been spurred on by the fact local
that another international airport is
airlines, with the exception of Thai Airways International, have been sending
constructed within three to five
aircraft overseas for heavy checks, mostly to China and Singapore.
years," says Philippine Airlines'
president Jaime Bautista.
The same has been happening in Indonesia, which is why that country is looking
Others have pointed out that to establish an aerospace park. Indonesian Aircraft Maintenance Shop
launching a wide-ranging expansion Association (IAMSA) chairman Richard Budihadianto estimates that half of
might not be the way to go, and Indonesia's commercial aircraft are being sent overseas for heavy checks,
they have questioned how quickly mostly to Malaysia and Singapore.
Clark will be able to expand its
capabilities. Budihadianto is also president of Garuda Indonesia's MRO arm GMF AeroAsia.
He says GMF and IAMSA favour having an aerospace park and having foreign
Cebu Pacific chief executive Lance MROs come in. "If you look at what the airlines in Indonesia are planning, we are
Gokongwei says: "I will be cautious going to see double-digit growth over the next five years," he says. He adds that
against expanding Clark to passenger traffic will rise by 15% a year.
something that will not generate
adequate returns." The country has to increase its MRO activity because there is no way the
existing players can absorb all the work, he says.
Ninoy Aquino International airport's
assistant general manager Tirso SELETAR STRENGTHEN'S ISLANDS AEROSPACE
Serrano says: "For it to be a viable
gateway, you need two major Singapore is developing the Seletar Aerospace Park to reinforce its position as
successes: better connectivity to a major centre for aerospace.
Clark, and industry acceptance."
The country has a quarter of the maintenance, repair and overhaul market in Asia, making the tiny city-state the region's
biggest MRO player, says Singapore Economic Development Board director transport engineering Sia Kheng Yok.

"The number of MRO companies in Singapore is well over 100 and you would be hard pressed to find an original
equipment manufacturer not represented." Singapore has achieved this despite higher labour costs.

"We all know places where wage rates are extremely low, yet customers still come to Singapore," says Sia.

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 4 of 7

© Singapore Economic Development Board

There is a combination of factors why aerospace firms choose Singapore. Productivity, having "people with the right skills,
infrastructure, efficiency of logistics of movement, geographical location, proximity to customers and potential business
partners," Sia adds.

He points out that "we have built an industry cluster", which means there are so many third-party MROs and OEMs in
Singapore that all the work can be done on the island. This is key in the MRO segment, "which is very sensitive to
timeliness", says Sia.

Aerospace manufacturing and MRO accounts for only 1-2% of GDP, but it is a priority of the government because of "the
value and technology it brings and the complementary role that MRO plays with our role as an air hub", Sia says.

Its importance has led Singapore to develop Seletar Aerospace Park. New roads and buildings are being built there and
the airport is getting an instrument landing system so it can operate round the clock. The runway is also being extended
200m (656ft), to 1,800m, so narrowbodies will be able to land with no payload restrictions.

Rolls-Royce plans to make wide-chord fan blades at Seletar and have a plant for assembling and testing Trent 1000
engines for Boeing 787s. This is the company's first engine assembly plant outside Europe.

Eurocopter is to establish a helicopter MRO centre at Seletar and Pratt & Whitney has a major investment in the
pipeline.

Companies can purchase 30-year leasehold land at Seletar, but "we also know many companies want to stay asset light
and conserve cash, so there are developers that are willing to take on the leasehold", says Sia. Those developers plan
"purpose-built buildings", he adds.

Singapore has goods and service tax exemptions for export businesses, while the corporate tax rate is 17%.

The Economic Development Board offers tax holidays, but "our starting point is that businesses looking to set up in
Singapore must have a business case", says Sia, adding that "we don't want to prop up things artificially" .

Kuala lumpur tempts with low costs and land

Malaysia is dangling the easy availability of land, low labour costs and tax
breaks in front of multinational companies in a bid to become a major regional
aerospace hub.

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 5 of 7

The Malaysia International Aerospace Centre (MIAC), a subsidiary of Malaysia

Airports, is spearheading the development of the hub, which is at the old
international airport at Subang. It won a 60-year concession to redevelop the
area, with an option for another 30 years. Its strategic direction comes from
the Malaysia Aerospace Council, which is chaired by prime minister Najib
Razak.

© Subang Skypark

Subang's old international airport is being revamped

"Our advantages include a [Boeing] 747-capable runway, existing infrastructure

like hangars and terminals, and tax breaks and government incentives to
aerospace companies. The original 400 acres [160Ha] allocated for aerospace
infrastructure has been almost fully taken up, and we want to expand further,"
says chief executive Mahat Samah.

Spirit AeroSystems was one of the earliest to sign up, and began operations in
2009 on a 30Ha facility that produces composite subassemblies for Airbus A320
family aircraft. "There is access to a well-educated and skilled workforce and a
very positive attitude toward developing the aerospace industry," says the
company.

Subang SkyPark, a Malaysian company, won the concession to revamp and

operate the only remaining passenger terminal at the airport. More
significantly, it has set up a business aviation centre, constructed a fixed-base
operation and persuaded VistaJet to base jets and locate its regional
headquarters there.

"We are also looking to set up a business jet MRO centre at Subang, and there
are several other plans in the pipeline. We want to be South-East Asia's
premier business aviation hub," says executive director Ravindran Menon.

Eurocopter plans to add a training academy to its helicopter hangar and

maintenance facilities. Malaysia Airlines performs in-house and third-party MRO
work at its hangars, while local MRO firm Airod - which focuses on the military
market - is also in the hub. The Malaysian Institute of Aviation Training, part of
the University of Kuala Lumpur, will have its campus there and offer
professional qualifications.

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 6 of 7

MIAC has asked the government for another two parcels of land totalling 130Ha
for the next phase of its growth. This could house additional MRO,
manufacturing and even passenger-to-freight conversion facilities, says Mahat.

"We want to move up the value chain. The space is there, the incentives are
there, the support is there. We are confident that more companies will sign up
soon," he adds.

Spread the word: related bookmark it! diggit! reddit! newsvine!

Rate this article

1 2 3 4 5
Poor Outstanding Average rating: 4 out of 5

SUBMIT

Click here to check out the highest rated articles

For exclusive news and expert analysis every week subscribe to Flight International print edition. Included with your
subscription are 4 FREE issues and FREE delivery to your home or office.

Sign up to
Flight Digital Magazine Flight Print Magazine Airline Business Magazine E-newsletters RSS

Disclaimer Terms & Conditions P

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011
Boeing 747 and Airbus A380 Aircraft News from Flightglobal Page 7 of 7

Subscriptions Flight Newsletter About Us Flightglobal Branding Media Centre Contact us © Reed Business In
Site Map RBI media jobs UK

Search the site SEA

http://www.flightglobal.com/articles/2010/01/25/337457/singapore-2010-south-east-asian-n... 1/9/2011