Malaysia plans new aviation hub at KLIA

Men watch Malaysia Airlines aircraft at Kuala Lumpur International Airport in Sepang, Malaysia, in this picture taken on March 2.
Men watch Malaysia Airlines aircraft at Kuala Lumpur International Airport in Sepang, Malaysia, in this picture taken on March 2. PHOTO: REUTERS

Malaysia yesterday launched a plan to turn hectares of empty land around the Kuala Lumpur International Airport (KLIA) into an aviation hub filled with firms offering air cargo, logistics, aerospace and aviation services.

Called KLIA Aeropolis, it is intended to serve South-east Asia's aviation needs, said its project promoter, Malaysia Airports Holdings Berhad (MAHB).

Although KLIA is located close to Singapore's Changi Airport, one of Asia's busiest, Malaysian officials said the investments KLIA Aeropolis aims to draw can complement the services offered by its neighbour.

"We are not competing with Changi," said Transport Minister Liow Tiong Lai after the project's launch.

Citing increasing air traffic in Asia, officials hope to draw the business spillover from the Republic.

"There is enough demand being generated," said Mr Badlisham Ghazali, managing director of MAHB, referring to growth in air travel and the need for more planes, spare parts and maintenance.

MAHB general manager Randhill Singh said: "Singapore has a capacity, land constraint. It has the ecosystem but because it can't expand, businesses are looking to us." He added that Malaysia is also looking at European firms seeking offshore opportunities. "The idea is to bring them here," he told The Straits Times.

MAHB, which is Malaysia's airport operator, also plans to build meetings and conventions facilities at Sepang airport, located about an hour away by car from downtown Kuala Lumpur.

The entire hub, which includes the present airport terminals - KLIA, and KLIA2 for low-cost carriers - spans an area of 100 sq km. MAHB did not announce how much it will cost to roll out the initial infrastructure to attract investors. It projects that the hub will contribute RM30 billion (S$10.2 billion) to Malaysia's economy over the next 15 years, with 56,000 jobs created.

The area around the Sepang airport is not empty. In May last year, the Mitsui Outlet Park KLIA - billed as the largest factory-outlet shopping mall in South-east Asia - was opened just 6km away from the airport. The Sepang International Circuit, which hosts F1 races and other motorsport events, is also nearby.

Malaysia hopes to boost its cargo and logistics traffic through the Aeropolis project in the next five years, from 726,000 tonnes a year now to match Singapore's 1.8 million tonnes, by banking on the growth of e-commerce.

MAHB has signed agreements with German logistics company DHL, Malaysian manufacturing and distribution firm DRB Hicom and low-cost carrier AirAsia to develop cargo facilities.

A version of this article appeared in the print edition of The Straits Times on May 24, 2016, with the headline 'Malaysia plans new aviation hub at KLIA'. Print Edition | Subscribe