5 mins read

The regulatory hurdles holding back Malaysia’s drone industry

May 19, 2023
Tech In Asia
5 mins read

Let's talk about drones. The major industry index that always sparks discussions is the Drone Readiness Index.

Malaysia seems to do well here. This year, we've moved up eight spots to no. 21 in the rankings. This puts us among the best-or if not the best-in Southeast Asia.

Malaysia also has two local drone service providers - Aerodyne and Meraque -globally ranking first and 18th, respectively.

The index is developed by consultancy Drone Industry Insights (DII) and compares various countries' drone regulations. DII uses six parameters to assess both countries and drone operators: applicability, human resources, airspace integration, operational limitations, administrative infrastructure, and social acceptance.

Aerodyne, in particular, has been making news for its rapid growth, fueled primarily by mergers and acquisitions. It's also looking to list soon, though it has not mentioned where.

I'm going to list some other positives for drone companies in Malaysia as well before I tackle some of the key problems.

The country is geographically diverse with different terrain. We have large "old economy" sectors such as plantations and telco services that need drone services.

But whether the take-up is encouraging remains anecdotal. Depending on who you talk to, some of the big players may say that drones help while others scoff at the tech.

We are also home to four drone sandboxes and there are some funding options for drone service providers. A large company like Aerodyne has also been a beneficiary of government funding.

Among the government agencies that's really selling the drone agenda is the Malaysian Research Accelerator for Technology & Innovation (Mranti), which hosts one of the four sandboxes.

Its CEO, Dzuleira Abu Bakar, as well as its other officials have been on a media blitz, appearing on radio stations and news portals. All well and good.

Same ol' tune

But we've been droning about this for years. In fact, we are still short of real discussions if we are going to move the needle. There are two problems.

Firstly, the hurdles. Service providers need to get through four regulatory hoops for permits: the Civil Aviation Authority of Malaysia (CAAM) to fly drones; the Malaysia Communications and Multimedia Commission for checks to control signals; SIRIM for device readiness and checks; and the Department of Survey and Mapping Malaysia for permissions to chart locations.

While these are the major government agencies overlooking the drone industry, they're not the only ones that service providers have to deal with. They also need to get approval from the Chief Government Security Office to fly in designated no-fly zones as well as from local councils to operate their drones in certain areas.

You want to be ambitious by moving upstream? That's what India's Garuda Aerospace wants to do with its drone factory, and it wants to build that in Malaysia.

To execute this, Garuda will need further approvals from a different set of agencies at both the federal and state level, such as the Malaysian Investment Development Authority.

While there have been some improvements to bring all these agencies and authorities together - the country launched a drone roadmap last year- service operators will still need to go through the necessary hoops.

There isn't a unified body to deal with drone approvals or investments. There is also bureaucracy to consider, which means a long approval period. Worth mentioning are the sandboxes: While they are safe spaces to test drones, they are nowhere close to providing real-world simulations.

Secondly, the slow pace of legal reforms. Most of the countries that rank high on the Drone Readiness Index, such as Taiwan and South Korea, are known for being able to quickly develop airworthiness requirements for high-risk drone operations.

Rules, rules, and more rules

In Malaysia, drone operators currently need special permission to fly higher than 120 meters, across no-fly zones, and above crowds or private premises. They also need approval to carry heavy payloads.

There are real concerns especially with privacy and safety. But due to slow approvals, many drone service providers are stuck if they want to, for example, test unmanned deliveries or do maintenance work for telco towers.

Ah, before I forget, if we're talking about amending laws or drafting new ones, then we need to involve Parliament and the Attorney-General's Chambers, too. So much fun.

To be sure, Aerodyne and other drone companies have been testing out features since 2014. So this isn't a new phenomenon. And it's funny that we're still talking about the slow pace of referms.

Would there be improvements? CAAM is promising to shorten the approval time for operators to run each drone. Currently it takes two weeks and -1 kid you not operators need to submit a written application by downloading the form online.

The agency will also launch an improved application system this year where it's all done on an app, with approvals done in a day.

Economic Affairs Minister Rafizi Ramli said the government would fast-track expatriate visa applications from the current three months to just five days, which would enable overseas drone companies and their employees to set up shop here quicker.

But, like all new aspirations, only time will tell how easy it will be for foreign operators to enter Malaysia.

Our neighbors are also catching up. Thailand, for example, is using drones for smart farm projects. Indonesia leveraged drone technology to deliver Covid-19 vaccines in 2021.

With so much happening around us, it's inevitable that if Malaysian drone operators were to make any impact, the domestic market will be small and progress slow. So their best bet is to compete globally.