The Asia-Pacific aviation industry is experiencing rapid growth, leading to an increased demand for local aerospace services.
Projections indicate that by 2034, this region will handle 42% of global air passenger traffic, accommodating an additional 1.8 billion passengers.
Consequently, many major global aerospace companies are seeking to expand their presence in the Asia-Pacific, particularly in Southeast Asia. Southeast Asia is a booming market with some of Asia’s most developed economies.
For example, Indian airlines often choose Singapore for aircraft maintenance and repair (MRO) over India. Airbus predicts the Asia-Pacific market for commercial aircraft services will more than double from $52 billion to $129 billion by 2043.
This substantial growth presents a significant opportunity for Southeast Asian nations to capitalize on.
This market expansion is driven by a demand for roughly 19,500 new aircraft and a strong annual passenger traffic growth rate of 4.81%, according to Airbus.
The following sections will provide brief examples of the current aerospace industry activities in the APAC region according to Business Information Industry Association.Singapore, being the most advanced economy in Southeast Asia, has naturally become the region’s leader in the high-tech aerospace industry.
It hosts over 130 aerospace companies involved in various sectors, including manufacturing crucial components like engine parts and avionics. Furthermore, Singapore is Asia’s top provider of comprehensive MRO solutions, contributing 10% of the global MRO output.
MRO includes all maintenance work essential for aircraft safety and airworthiness. With the global MRO market projected to grow by over 33% between 2023 and 2033, Singapore is well-positioned to capture a significant portion of this growth. Its strong infrastructure, engineering expertise, and availability of skilled workers are attracting major investments from leading global aerospace companies.
Companies like Pratt & Whitney, Rolls-Royce, Thales, Airbus, and GE Aerospace have committed to invest over $750 million in more than 10 projects in the next three to five years.
This investment is expected to create over 2,500 new jobs in the industry during the same period to support its expansion.
Malaysia, currently boasting the second-largest aerospace industry in Southeast Asia, has ambitious plans to become the region’s leading aerospace nation and a key player in the global market.
The Malaysian government’s plan aims for RM 55.2 billion in revenue and over 32,000 high-paying jobs. The country is already home to over 200 aerospace firms, both international and local. A strong and competitive supply chain, featuring precision engineering, advanced manufacturing, and modern technology, supports this industry. For instance, Airbus recognizes Malaysian companies like CTRM and SME Aerospace as top-tier suppliers. To attract foreign investment, the government offers various incentives, including tax reductions, financial aid, and simplified regulations for investors.
Thailand also aims to grow its aerospace industry by capitalizing on its strong automotive manufacturing base. The government’s Board of Investment is specifically focused on making Thailand a key supplier of aircraft parts.
Thailand’s growing air passenger traffic, and potential for even more growth, makes it attractive for aircraft maintenance and manufacturing businesses, according to Tractus.
Airports Council International predicts Thailand will become the ninth largest country globally for air passenger traffic by 2040, indicating significant opportunities for local MRO providers.
Demand for MRO services in Thailand is expected to reach $2.95 billion by 2037 (around 5.4% annual growth), with the number of aircraft in Thailand growing from 314 to 811, according to Tractus.
Thailand can utilize its automotive sector expertise, which has fostered advanced logistics and a wide network of experienced industrial suppliers for products, parts, equipment, and services.
Thai universities are also good at producing engineering and other skilled graduates. Aerospace industry development is a key part of Thailand’s Eastern Economic Corridor project.
U-Tapao Airport, Thailand’s main eastern airport, is planned to expand and become an MRO center for aviation industries, with a target of $7 billion in investment.
Indonesia once aimed to be a major aerospace player under President Suharto. Now, with its “Golden Indonesia 2045” vision launched in 2022, it’s trying to revive these ambitions. Goals include building turboprop aircraft with under 100 seats using advanced technology, manufacturing large two-ton cargo drones, and becoming a leading flight simulator producer. Indonesia also wants its aerospace MRO sector to generate about $2 billion in revenue by 2045. Indonesia’s large domestic market and growing defense spending are advantages for attracting aerospace FDI. However, compared to Malaysia, Singapore, and Thailand, it faces challenges like less developed infrastructure and logistics.
Despite these challenges, Boeing showed interest in June in partnering with the Indonesian government and industry players to support the sector’s growth.
Boeing is reportedly collaborating with the National Development Planning Agency, various ministries, government officials, regulators, and companies.
Vietnam possesses considerable promise in aerospace, being Southeast Asia’s fastest-growing aviation market and the fifth globally for passenger and cargo traffic growth.
With global aircraft manufacturers facing order delays, the rising demand for aircraft parts presents a chance for Vietnamese companies to increase their participation in the supply chain, as highlighted by the Vietnam Investment Review.
There’s optimism that major aerospace players like Boeing, Airbus, Dassault Aviation, and Lockheed Martin might relocate some production to Vietnam.
A key hurdle for Vietnamese businesses is meeting stringent global aviation standards and specific requirements from companies like Boeing, according to a consultant cited by the Vietnam Investment Review.
However, given Vietnam’s track record of successful manufacturing expansion in other sectors, Worldbox Business Intelligence believes Vietnam can overcome this obstacle.
Article by: Asst. Prof. Suwan Juntiwasarakij, Ph.D., Senior Editor & MEGA Tech