KUALA LUMPUR: Malaysia should regulate foreign investment in the aviation sector to ensure it supports domestic development and aligns with national interests. 

Transport consultant Wan Agyl Wan Hassan stressed the importance of implementing stricter labour regulations and providing incentives to help local companies stay competitive.

"The focus should be on nurturing local talent and making sure Malaysia keeps control over important tasks, including maintenance, repair, and overhaul (MRO) operations. 

"When done right, foreign investment control can be a useful instrument for policy development," he said. 

He was commenting on the recent entry of Singapore Airlines' subsidiary, SIA Engineering Company (SIAEC), into Malaysia's regional aviation market, which has sparked mixed reactions from aviation analysts. 

While some see it as a game-changer, others are concerned about its impact on Khazanah Nasional Berhad-controlled Malaysia Airlines.

Aviation analyst and Endau Analytics founder Shukor Yusof warned that Malaysia Airlines could struggle unless the government intervenes with the right policies. 

"Not with money but with the right policies. Issues of "poaching" are not going away as we live in a globalised and meritocratic world. 

"Malaysia Airlines has a good record of producing highly skilled pilots and engineers, many of whom have gone abroad. It is not a unique problem at Malaysia Airlines. Other sectors in Malaysia suffer a similar fate. The government must find ways to retain talent, or the brain drain will continue," he told Business Times.

He also called for a balanced evaluation of SIAEC's role in Malaysia, arguing that foreign investment can benefit the local industry in the long run. 

"This is not just about the immediate loss of staff but about the long-term benefits that come from raising standards and creating job opportunities for Malaysians. We need to leave emotions aside and view this development in totality," Shukor told the Business Times. 

Tourism and transport consultant YS Chan, addressing concerns about job losses and increased competition, pointed out that Malaysia operates in a free market where foreign investors are allowed to compete both globally and locally.

"We also have the Competition Commission Act 2010 to promote and ensure fair competition," Chan said.

He also said that the arrival of SIAEC was predictable, especially after the company announced the formation of a wholly owned subsidiary in Malaysia in October 2023, with Subang Airport identified as an ideal location.

"If Malaysia Airlines were caught off guard, it is the management problem, as the exodus of key technical staff will happen sooner or later for businesses that are less competitive," he said.

*Concern over Subang Airport Rejuvenation Plan*

SIAEC exposes key weaknesses in both Malaysia Airlines' operations and the broader Subang Airport Rejuvenation Plan (SARP), despite offering foreign investment and expertise, according to Wan Agyl.

He said that this highlights the urgent need for Malaysia Airlines and the government to rethink their strategies to safeguard national interests while engaging with international partners.

"Originally meant to build Subang as a major regional hub, SARP presents major questions over who would benefit from SIAEC's supremacy. 

"Although foreign knowledge is essential, if companies like SIAEC acquire too much market share, Malaysia runs the danger of losing control of important assets," he said.

Wan Agyl also cautioned that prioritising Subang could have a negative impact on Kuala Lumpur International Airport (KLIA), which stands to lose millions of passengers annually if Subang takes precedence. 

"The government has to ensure that SARP balances donations from foreign companies with promotion of Malaysian aviation interests," he said. 

Shukor also criticised SARP, calling it a poorly planned initiative.

"It will hurt KLIA and, by extension, Malaysia Airlines, as Subang has limited capabilities," he added. 

"The focus should be on nurturing local talent and making sure Malaysia keeps control over important tasks, including maintenance, repair, and overhaul (MRO) operations. 

"When done right, foreign investment control can be a useful instrument for policy development," he said. 

He was commenting on the recent entry of Singapore Airlines' subsidiary, SIA Engineering Company (SIAEC), into Malaysia's regional aviation market, which has sparked mixed reactions from aviation analysts. 

While some see it as a game-changer, others are concerned about its impact on Khazanah Nasional Berhad-controlled Malaysia Airlines.

Aviation analyst and Endau Analytics founder Shukor Yusof warned that Malaysia Airlines could struggle unless the government intervenes with the right policies. 

"Not with money but with the right policies. Issues of "poaching" are not going away as we live in a globalised and meritocratic world. 

"Malaysia Airlines has a good record of producing highly skilled pilots and engineers, many of whom have gone abroad. It is not a unique problem at Malaysia Airlines. Other sectors in Malaysia suffer a similar fate. The government must find ways to retain talent, or the brain drain will continue," he told Business Times.

He also called for a balanced evaluation of SIAEC's role in Malaysia, arguing that foreign investment can benefit the local industry in the long run. 

"This is not just about the immediate loss of staff but about the long-term benefits that come from raising standards and creating job opportunities for Malaysians. We need to leave emotions aside and view this development in totality," Shukor told the Business Times. 

Tourism and transport consultant YS Chan, addressing concerns about job losses and increased competition, pointed out that Malaysia operates in a free market where foreign investors are allowed to compete both globally and locally.

"We also have the Competition Commission Act 2010 to promote and ensure fair competition," Chan said.

He also said that the arrival of SIAEC was predictable, especially after the company announced the formation of a wholly owned subsidiary in Malaysia in October 2023, with Subang Airport identified as an ideal location.

"If Malaysia Airlines were caught off guard, it is the management problem, as the exodus of key technical staff will happen sooner or later for businesses that are less competitive," he said.

*Concern over Subang Airport Rejuvenation Plan*

SIAEC exposes key weaknesses in both Malaysia Airlines' operations and the broader Subang Airport Rejuvenation Plan (SARP), despite offering foreign investment and expertise, according to Wan Agyl.

He said that this highlights the urgent need for Malaysia Airlines and the government to rethink their strategies to safeguard national interests while engaging with international partners.

"Originally meant to build Subang as a major regional hub, SARP presents major questions over who would benefit from SIAEC's supremacy. 

"Although foreign knowledge is essential, if companies like SIAEC acquire too much market share, Malaysia runs the danger of losing control of important assets," he said.

Wan Agyl also cautioned that prioritising Subang could have a negative impact on Kuala Lumpur International Airport (KLIA), which stands to lose millions of passengers annually if Subang takes precedence. 

"The government has to ensure that SARP balances donations from foreign companies with promotion of Malaysian aviation interests," he said. 

Shukor also criticised SARP, calling it a poorly planned initiative.

"It will hurt KLIA and, by extension, Malaysia Airlines, as Subang has limited capabilities," he added. 

https://www.nst.com.my/business/economy/2024/09/1103127/regulate-foreign-investment-aviation-sector-prioritise-domestic