Indonesia Creates Sustainable Aviation Industry Ecosystem in Batam Island - Photo by Coordinating Minister for Economic Affairs Office

JAKARTA (TheInsiderStories) – Indonesia is committed to creating an aviation industry ecosystem to become the top 10 global aviation markets by 2020 and the world’ top five by 2034, said a senior official today (08/14). Its begun the planned by developed aircraft maintenance, repair, and overhaul (MRO) services center with total investment US$466 million in Batam Island.

In an official statement, Coordinating Minister for Economic Affairs Darmin Nasution revealed, Batam was chosen as MRO’ center because it had several advantages. Beside the location is adjacent to Singapore, Batam also has an Original Equipment Manufacturer (OEM).

Other reason, Batam has status as a Free Trade Zone areas with various business facilities and fiscal incentives on 30 hectares of land. Also, Batam near to Southeast and South Asia countries has a great potential to become a target market for aircraft MRO services.

“Cooperation to develop MRO is needed for the aviation industry efficiency. We hope that the industry can be more competitive and grow,” Nasution said at the ceremonial event at Hang Nadim Airport, Batam.

The government’ commitment to make Batam an MRO center is marked by the construction of the facilities between Batam Aero Technic (BAT), French’ tyre maker Michelin Group and PT Garuda Maintenance Facility AeroAsia Tbk (IDX: GMFI). Also, the groundbreaking of the second stage of the hangar construction by BAT and unit of PT Garuda Indonesia Tbk (IDX: GIAA).

It also signed an aviation education and training center between BAT, GMFI, and Aircraft Maintenance Training Organization (AMTO). At the same area, Nasution also inaugurated the Kirana Angkasa Polytechnic and aircraft repair facilities.

He expect, the construction of an aircraft tire retreading plant were designed to improve operational cost-efficiency and to support the domestic aviation industry and as an import substitution. So far it must be brought from Thailand.

“This is all to support investments worth US$466 million which will certainly be able to boost the economy in Batam while supporting the development of the aviation industry,” said the minister.

Number of national air passengers will reach 270 million passengers in 2034, up more than 300 percent compared to 2014, according to the International Air Transport Association latest report. And Asia Pacific’ aircraft number in 2025 is predicted to reach 11,680 units and will become the largest MRO industrial market in the world with a value of $100 billion.

Currently, the MRO business in Indonesia is only able to serve 30 percent to 35 percent of the national market, the rest is absorbed by foreign MROs. Going forward, the potential for national MRO business in 2020 is estimated at $1.85 billion.

Nasution also hopes the cooperation between Garuda Indonesia and Lion Air Group is underway for other flight operations so the caountry’ airlines more affordable for the public.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com