Introduction

The AEROPN Tech-Up Financing Program was initiated to address key challenges facing Malaysia’s aerospace industry, including constraints in production capacity, skilled talent shortages, and limited product development capabilities. Despite the sector’s robust revenue of RM18 billion in 2023 and a workforce reach 30,000, structural gaps in supply chain efficiency and technological adoption remain. Recognizing the urgent need to boost industry competitiveness, particularly among SMEs, the program provide financing through a blended model of equity and soft loans to eligible company, while encouraging productivity improvements, technology upgrades, and capacity expansion.

Objectives

·      Improve access to funding for aerospace companies, particularly SMEs;

·      Identify and recommend suitable government incentives and institutional partnerships; and

·      Support industry players adopting productivity-enhancing technologies and expansion strategies.

Problem Statement

The program was developed in response to critical challenges faced by Malaysia's aerospace industry, particularly in production capacity, technical talent, and product development. Companies in the sector are struggling with limited manpower, technological constraints, and supply chain inefficiencies, all of which hinder their ability to meet the growing market demand. These issues are especially pronounced among small and medium enterprises (SMEs), which often lack access to the necessary resources and expertise to scale effectively. As a result, the industry is experiencing a mismatch between high global demand and the limited domestic supply capacity, highlighting the urgent need for targeted support and strategic investment.

Methodology

The program adopts a blended financing methodology combining equity investments and interest-subsidized loans to support the growth of aerospace companies, particularly SMEs. Under this approach, the government allocates RM45 million as interest rate subsidies to Development Financial Institutions (DFIs) and Financial Institutions (FIs), alongside RM30 million in equity injections through Venture Capital Institutions. Initially piloted with two companies and set to expand to ten, the program targets capital and operational expenditures related to technical training, R&D, certification, and procurement of essential machinery and software. With a total financing pool of RM1 billion offered at interest rates below 5%, the program will promote capacity expansion, enhance technological capabilities, and ultimately strengthen Malaysia's aerospace industry competitiveness.

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