Indonesia to establish special economic zone for aircraft work

Industry Minister Saleh Husin said the ministry was mulling Bintan island in the Riau archipelago to establish the SEZ, considering the existing MRO facilities already established there.
“There are requests from the companies to focus on one place to develop the MRO services, so it can be integrated,” he said on the sidelines of the Singapore Airshow recently.
Saleh added that Bintan had a strategic position, as many airlines went to nearby Singapore for MRO.
“We know that Singapore has limited space and it can be expensive to have MRO services there. Why don’t we develop it in a nearby location like Bintan, so people can switch to having the services there?” he said.
The government is said to be in discussions with GMF AeroAsia, national flag carrier Garuda Indonesia’s MRO service subsidiary, on its facilities in Bintan, as well as other companies. Currently, GMF is developing a hangar in Bintan, which is being built in a joint venture with Bintan Aviation Investments, a subsidiary of Singapore-based Gallant Venture, dating back to 2014.
Gallant Venture has the concession to build an airport in the area, which is slated to operate by 2017, with the company providing land for the hangar development for GMF. The hangar is slated to have the capacity to contain wide-body aircraft such as the Boeing 747 and Airbus 330.
Meanwhile, the country’s biggest low-cost carrier, Lion Air Group, has also established an MRO service at nearby Hang Nadim Airport in Batam, which is close to Bintan.
Saleh said companies establishing MRO facilities in Bintan would get incentives that were applicable to SEZs, as stipulated in the economic package. The incentives would include a tax holiday or tax allowance, adding to the scrapping of taxes on aircraft components for the industry.
The aircraft MRO business is estimated to be worth US$1 billion (Bt35.7 billion) per year, with Indonesian businesses currently taking up only 30 per cent. There are an estimated 60-70 aviation MRO companies in Indonesia, with GMF AeroAsia the only one certified by the European Aviation Safety Agency and the US Federal Aviation Administration.
GMF AeroAsia president director Richard Budihadianto said in an official statement that the expected total spending for MRO over the next five years would reach $32 million, with engine maintenance hitting $28 million worldwide, giving the opportunity for local MRO services to access international markets.
Commenting on the plan, State-Owned Enterprises Minister Rini Soemarno said she had also pushed Garuda Indonesia to negotiate with aircraft manufacturers such as Boeing and Airbus to hand over the servicing of their aircraft to Garuda, as it had purchased plenty of their products.
GMF signed a deal with Dutch airline KLM worth $3.5 million on aircraft components and engine maintenance on Wednesday. It was estimated to have signed deals worth more than $100 million during the Singapore Airshow.