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Smart Partnerships Integral to Subang Aerotech Park

The initiative to regenerate Subang Airport, which was conceptualised in March last year, is Malaysia Airports Holdings Bhd’s (MAHB) commitment to transform Subang Airport (Sultan Abdul Aziz Shah airport) into a vibrant and modern city airport, a hub for business aviation and an aerospace ecosystem integral to the global value chain.

The drive to enhance the aerospace ecosystem at Subang Airport will now be accelerated through the Subang Aerotech Park development.

One of the first major smart partnerships that MAHB formed was with Axis Real Estate Investment Trust (Axis-REIT) and Senior Aerospace UPECA. Axis-REIT developed a 7.02-acre vacant land that it subleased from MAHB. The development incorporates a “built-to-suit industrial” single-storey manufacturing plant and office for Senior Aerospace UPECA, a global player in manufacturing and technology for aerospace. Axis-REIT has leased the completed facility to Senior Aerospace UPECA for a fixed term of 20 years.

With construction completed within a year, Senior Aerospace UPECA, the launch tenant of the Subang Aerotech Park, commenced operations in the new 178,000 sq ft facility last June. The new facility is equipped with state-of-the-art automation and projected to house up to 300 skilled engineering and technical employees. As a global aerospace player for manufacturing and supplying aircraft parts for Airbus and Boeing, Senior Aerospace UPECA’s commitment to invest in this region is geared to support the growth momentum of the aerospace and aviation ecosystem at Subang Airport.


Clear development strategy

Subang Airport is the focal point of the national aerospace supply chain, with the presence of global players such as Spirit Aerosystems, one of Airbus and Boeing’s major suppliers, as well as Airbus Helicopters and Leonardo (formerly known as AgustaWestland) having established regional operations. Development has taken place in phases, beginning with the Helicopter Centre (2011-2014) and, subsequently, the MRO Centre, which saw the repurposing of an unused facility to host players such as TP Aerospace, GTA, RUAG and Skyways Technic. The operators undertaking pure component maintenance, repair and overhaul (MRO) work for helicopters and smaller aircraft and operations with a smaller footprint have been placed here.

The current phase of the Subang Aerotech Park, a greenfield site, is targeted at attracting tenant operators undertaking larger-scale operations that require bigger purpose-built facilities. The predevelopment and common infrastructure began in mid-2015 at a cost of about RM40 million, which was borne by MAHB. A key push was to seek a catalyst tenant-operator for the park.

According to MAHB group CEO Raja Azmi Raja Nazuddin, there have been various engagements with industry players - with the close support of government agencies such as the Malaysian Investment Development Authority, the National Aerospace Industry Coordinating Office at the Ministry of International Trade and Industry, Matrade and the Selangor government through their various agencies - at trade missions, industry exhibitions and one-to-one dialogues.

He says, “Over time, we learnt which was the right model for us to adopt in order to significantly improve the chances of success for this park in providing a ‘plug-and-play’ infrastructure solution for aerospace players as well as access to human capital. Hence, we sought to engage a strategic delivery partner, essentially an industrial developer, to undertake a ‘built-to-suit and lease model’ to attract and fulfil the expectations of the aerospace tenant-operators. This is a unique model in Malaysia.”


Needle mover: New partnership and delivery model

MAHB is committed to be a value creator and position Malaysia as Asia-Pacific’s hub for MRO. The partnership agreement between MAHB and Boustead Projects, a leading industrial real estate solutions provider, will focus on the development and management of an aerospace and high-tech park within the Subang Aerotech Park. Boustead Projects Ltd was selected after a year-long request for proposal exercise last year.

This smart partnership creates a new business model, providing built-to-suit, high-grade industrial facilities to be leased to tenants in the aerospace industry. Raja Azmi says, “This allows the operators to run an asset-light model and focus on their business operations. Operators need not be concerned with resolving real estate matters such as allocating internal funds and securing bank loans to construct their own facility, taking on construction risk and undertaking maintenance of the facility.”

Aerospace is a strategic industry, which has been identified by the government as one with the potential to push forward the country’s industrialisation and technological advancement.

To create a leading industrial park, the single-minded focus of MAHB as an ecosystem developer, coupled with the capabilities of Boustead Projects, will be to deliver a compelling proposition for aerospace players to select Malaysia, specifically Subang Aerotech Park, as a regional hub.