Putrajaya seeks US tariff exemption for aerospace industry

By Danial Dzulkifly

SHAH ALAM, May 8 — Malaysia is ramping up efforts to shield its aerospace sector from the impact of ongoing United States (US)-China trade tensions, with Federal officials confirming negotiations to exempt critical industries like maintenance, repair, and overhaul (MRO) from retaliatory tariffs.

Investment, Trade, and Industry Ministry (Miti) deputy secretary-general (Industry) Datuk Hanafi Sakri said the government is committed to strengthening Malaysia’s role in the global aerospace supply chain.

“In this context, I believe there is mutual dependency. The US depends on us, and we rely on the US.

“We are negotiating to ensure the aerospace sector is excluded from tariffs. Ideally, we would want everything exempted, but the priority is ensuring this critical sector remains competitive,” he said during the launch of KarbonMRO Services Sdn Bhd’s new aircraft and engine maintenance facility today.

Malaysia’s aerospace industry, currently valued at an estimated RM25 billion, is targeting RM55 billion in output by 2030 under the Malaysian Aerospace Industry Blueprint (MAIB).

Hanafi said strategic partnerships, like the collaboration between local firm Dviation Group and Japan’s Marubeni Corporation via KarbonMRO, are essential to accelerating growth and positioning Malaysia as a key regional player.

Dviation Group managing director Kevin Teoh said Malaysia is well-positioned to become a regional leader in MRO services, pointing to the country’s competitiveness, a strong regulatory framework, and a skilled local workforce.

“Our ambition is clear: to make Malaysia a regional leader in MRO services, and one that is rooted in expertise, recognised globally, and powered by passion,” he said in his speech.

Teoh added that Malaysia’s expanding aerospace ecosystem offers a competitive edge, particularly in component repair and overhaul (CRO).

“Malaysia has strong potential due to the availability of skilled manpower, local talent, and a robust aerospace ecosystem. We have both foreign and local players integrated into the aviation supply chain, which makes it much easier for us to expand,” he said.

KarbonMRO currently operates at around 10 per cent capacity, but it plans to scale up over the next five to ten years, eventually handling up to 30 aircraft maintenance checks annually.

Meanwhile, Teoh stressed the importance of sustainability and reliability in modern aviation.

“Delaying maintenance is like not servicing your car on time; it becomes inefficient and costly. The same applies to aircraft,” he said.

As part of efforts aligned with the Paris Agreement, KarbonMRO is exploring key areas including sustainable aviation fuel (SAF), new engine technologies, and operational enhancements to lower carbon emissions and increase efficiency.

Its newly launched facilities at the Skypark RAC in Subang Airport include a Civil Aviation Authority of Malaysia-certified hangar capable of servicing two single-aisle aircraft — Boeing 737s or Airbus A320s — simultaneously.

The company also introduced Karbon Engine Services (KES), an engine-focused unit certified to maintain CFM56 engines capable of accommodating up to six engines simultaneously.

The facility provides a full range of airframe and engine services, from scheduled maintenance and structural repairs to aircraft teardown and preservation, catering to airlines, lessors, and operators across the Asia-Pacific region.