The government plans to strengthen cooperation with members of the Association of Southeast Asian Nations (ASEAN) to promote the aircraft industry to meet an expected increase in demand in Asia.
Japan hopes to expand business opportunities for its small and midsize companies that have high technology for aircraft parts manufacturing.
The Economy, Trade and Industry Ministry and the Malaysian International Trade and Industry Ministry will sign an agreement to promote cooperation in related industries on the sidelines of an air show to be held in Singapore in mid-February. The Japanese government has already reached similar agreements with the British and French governments as well as Boeing, but the upcoming deal with Malaysia will be the first such agreement in Asia.
Extremely high precision is required to manufacture aircraft parts, and the technological capabilities of Japanese companies are recognized worldwide. However, when it comes to growing further by expanding overseas, they are "hesitant because they don't know how to go about it," according to a senior ministry official.
Through the agreement, Japan and Malaysia aim to revitalize their industries by enhancing the supply chains so that Japanese companies can leverage their strength in precision processing and surface treatment by making components that will be transported to Malaysia to be assembled at low cost.
The two countries also plan not only to provide opportunities for companies from both countries to enhance mutual cooperation, but also to develop human resources by, for example, training Malaysian engineers at Japanese plants. They are also considering seeking financial support through the Japan Bank for International Cooperation.
According to the Japan Aircraft Development Corporation, the number of jetliners operating worldwide will total about 40,000 in 2038, nearly double the number in 2018.
The Asia-Pacific region, in particular, is expected to have a large share of the number as economic growth in the region will help expand the middle class and grow low-cost carriers.
Many airlines in Southeast Asia are government-affiliated, and those governments have tried to broaden their domestic industries by asking European and U.S. aircraft makers to produce some parts in their countries when signing deals to purchase their airplanes.
The governments of Malaysia, Thailand and Singapore have been working with the private sector to develop domestic industries by, for example, offering tax incentives to attract foreign companies, developing industrial complexes and improving airport facilities.
Expectations for tie-ups with Japan are growing in Southeast Asia, because safety standards for aircraft parts are strict. "An excellent supply chain can be established when Japanese advanced technology is paired with Asia's cost-competitiveness," said an official at the Board of Investment of Thailand.
The Japanese government has set a target of expanding sales in the domestic aircraft industry to around 3 trillion yen in 2030 from 1.8 trillion yen in 2018. With international competition expected to intensify further in the future, the government hopes Japan can take advantage of growing demand by helping small and midsize Japanese companies become part of the supply chain in Southeast Asia.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
