KUALA LUMPUR: Airport city development is the next wave in urban development and Malaysia Airports Holdings Bhd (MAHB) is riding on that wave to attract over RM1bil in future investments from third-party investors as it continues to develop KLIA Aeropolis and embarks on the Subang Airport regeneration project.
Both these developments would be able to generate over 3,300 new jobs in five years.
MAHB will spend RM150mil from 2018 to 2020 to develop supporting infrastructure needed for both the sites.
Speaking to reporters at a briefing yesterday, MAHB acting CEO Raja Azmi Raja Nazuddin said the “company had enough development expenditure to fund the capital expenditure needed for the infrastructure”.
“Now, the Subang Airport regeneration can move more quickly,” he added.
Its general manager for land development, Randhill Singh, added that MAHB wants to partner industrial park developers for the developments.
That in itself will lighten the burden of having to fork out huge sums for the developments for the airport operator, which manages 39 airports in the country.
“A lot of infrastructure funds are looking at airport development and free trade zones these days, as it is seen as a blue-chip development. It is a ‘long-term play’ that offers steady yields of about 7% per year,” he said, adding that MAHB could either partner equity funds, infrastructure funds or developers to pursue the development.
The company is developing KLIA Aeropolis with several partners.
The Aeropolis near KLIA covers an area of 22,000 acres and is being developed in stages into three clusters – air cargo and logistics; aerospace and aviation; and meetings, incentives, conferences and exhibitions, including leisure.
For the Digital Free Trade Zone (DFTZ), MAHB is partnering China’s Alibaba to create a regional logistics hub to serve the region. The creation of the 60-acre Asean Regional E-Commerce Hub, which is a 30:70 joint venture between MAHB and Cainiao of China, is also seen as a “game changer for air cargo”, as it would increase air freight activities for Malaysia, Randhill added.
About RM60mil from the RM150mil has been used for the DFTZ and the rest would be used for the development of the Subang Aerotech Park as part of the Subang Airport regeneration project, Randhill said.
As for Subang Airport, MAHB is undertaking a regeneration on a 1,063-acre site which involves the expansion and upgrading of the existing terminal and air site facilities to create a city airport; remodelling Subang as a business aviation hub; and having a complete aerospace ecosystem to support the maintenance, repair and overhaul and aero-manufacturing activities for the region.
Randhill said MAHB recently issued a request for proposal to appoint a master planner for the Subang Airport regeneration project, confirming a StarBiz report that appeared on Monday.
Randhill expects the award to be made early next year.
A terminal will be built, including hangars and more parking bays.
The airport will be able to handle five million passengers from 1.5 million now.
Randhill said the Subang Airport regeneration could cost up to RM2.5bil and create hundreds of new jobs.
“A lot of funding for the Subang Airport regeneration will come from investors as we will work with them,” Randhill said.
However, for Subang to attract more private jets and compete with the likes of Singapore and Hong Kong, a total review of the regulations is vital.
“We also will be announcing a strategic delivery partner very soon that will develop built-to-suit facilities for aerospace players in Subang,” Randhill said.
Asked on the status of the concession agreement between MAHB and the government, Raja Azmi said talks were still ongoing but he hopes to “close by first quarter of next year”. MAHB footed the bill initially to build KLIA2 and was compensated with a 35-year extension to its concession period from 2034 to 2069. The finer details, however, still need to be hammered out.
Asked on the proposed airport real estate investment trust announced under Budget 2019 as a way for the government to securitise and monetise its infrastructure assets, Raja Azmi said “it was yet to be clarified”.
Raja Azmi said the airport would eventually be moving to adopt the regulated asset base framework and operating agreement that would help resolve issues, which are among others, future airport development funding.