KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) is bullish about developing Malaysia as the air cargo and logistic hub in Asean and Oceania, capitalising on the booming e-commerce and the government’s Digital Free Trade Zone (DFTZ) initiative.

MAHB managing director Datuk Badlisham Ghazali told NST Business that the domestic air cargo volume is expected to double from 760,000 tonnes currently through the National Task Force on logistics as wel as facilitation from the Ministry of Transport.

“Alibaba Group is one of the players that we work with to attract other global and local players in logistics and air cargo. One of the largest e-commerce players in the region has agreed to set up the e-fulfilment and e-clearance hubs in Malaysia,” he said in a recent interview.

Badlisham hinted that the potential products include perishable, pharmaceuticals, halal goods and electronics.

“We have always been looking at the e-commerce market space. Prior to Alibaba, we have been looking to develop the infrastructure of e-commerce players,” he added.

Badlisham said although e-commerce is still nascent in Asia, it is growing rapidly due to the middle income group.

“Most of the population is going online to buy. However, the logistics portion of it has not kept up. Most of them are still being shipped out of their original country and moved to individual country itself.

As larger players become global like Alibaba, they require hub facility,” he said.

Badlisham said Alibaba wanted to make Malaysia as one of its hubs for Southeast Asia and Oceania.

“By having a hub, Alibaba can pull in not only Chinese products but also other products that are on e-market place including our own Malaysian small and medium enterprises,” he said.

Badlisham noted that there will be a lot of requirements for domestic inbound logistics players to deliver end-products to customers with the enhancement made by the logistics players.

“The government will have about 5,000 SMEs onboard e-commerce platform with Alibaba. Malaysian products need to be moved from source to distribution hub, and then the logistic players will play a part in it through air freighter and commercial airlines,” he said.

He said the 5,000 local SMEs would benefit within three years.

“By having Alibaba here, the programme would help startup to establish e-commerce and transaction and payment.

“When you have access to global market, the growth rate of e-commerce would be in a single-digit but once the ecosystem is implemented, it will quickly jump into high double-digit,” he said.

Badlisham said Malaysia has multiple connectivities to the world, especially in Asia with about 1,700 air frequencies a week to Asian countries.

“Commercial airlines have the opportunity to carry e-commerce cargo, which in turn would boost airlines profitability and good for the airport. Thus, airlines would also look at other opportunities to either same or introduce new destinations,” he said.

Badlisham said a transhipment hub is required not only for domestic but also international products, which then can be shipped out from the local hub.

“For us developing thousands of acres is important as the airport would benefit from the infrastructure, creating better ecosystem that attract aviation and logistics players to Malaysia.

“Thus, existing airlines will launch more frequencies and routes. New airlines will also be interested in Malaysia as it will not only for passengers volume but profitability of the cargo,”

he said, adding that the air freighters for cargo will also be attracted to come to Malaysia.

MAHB wants to attract higher value of maintenance, repair and overhaul (MRO) facilities, which require closer proximity to the airport.

“The aviation industry is about inbound foreign direct investments. For example Boeing and Airbus will save 40 per cent of their new aircraft deliveries over the next 10 years in Asia. Aircraft manufacturers need to move a lot of those activities in Asia to serve their customers. They need to open up more MRO centres,” Badlisham said.

There are about 300 companies involved in the aviation aerospace work and it is vital for MAHB to find players who have high value skills and better scale of MRO facility.

“That is the ecosystem we want to develop and it is not about quantity of the company but the ecosystem quality,” he added.