Kuala lumpur: The International Air Transport Association (IATA) is advocating for Malaysia’s Budget 2026 to incorporate measures that bolster the aviation industry, highlighting its significance to the national economy and tourism.
According to BERNAMA News Agency, Sheldon Hee, IATA Regional Vice-President for Asia-Pacific, emphasized the importance of aviation as a substantial contributor to Malaysia’s economy. He stated that any policies considered should carefully evaluate and mitigate potential impacts on airlines and passengers, particularly concerning taxes, levies, or fees associated with security and border control measures. The industry reportedly contributes US$14.4 billion annually to Malaysia’s economy and supports over 650,000 jobs, with 100,000 directly within the aviation sector.
Hee pointed out that Malaysia’s reputation as an international travel hub is dependent on policies that promote efficiency and competitiveness. He warned that increased operating costs could impact airlines, passengers, and ultimately Malaysia’s global connectivity. On sustainability, Hee welcomed the delivery of the first locally blended sustainable aviation fuel (SAF) by Petroliam Nasional Bhd (Petronas) and mentioned IATA’s engagement with the government to introduce a comprehensive SAF policy by 2027, aligning with global decarbonization efforts. IATA has submitted six policy suggestions for Budget 2026, including the need for stable, predictable policies that support renewable energy and fuel production, and are adaptable enough to manage unintended outcomes.
The recommendations also highlighted the importance of SAF pricing transparency, ensuring airlines can claim environmental benefits from SAF, and avoiding standalone SAF mandates without incentives to close the price gap with conventional fuel. Additionally, IATA advocated for a global SAF accounting and reporting methodology to facilitate broader market access and international SAF trading.
Hee stated that with the Asia-Pacific region expected to experience rapid aviation growth over the next two decades, addressing capacity challenges is crucial. He suggested that Malaysia could leverage this growth with appropriate policies. Incentives to enhance efficiency and productivity, such as the digitalization of airport processes through IATA’s ONE ID and ONE Record, were cited as offering significant advantages. ONE ID aims to streamline the passenger journey using a document-free process based on identity management and biometric recognition, while ONE Record provides a data-sharing standard for end-to-end digital logistics.
Hee also mentioned the need for training incentives to ensure Malaysia develops the skilled workforce required to meet future industry demands. He underlined that aviation not only generates direct employment but also supports broader economic activities like tourism, trade, and investment. Each flight connecting Malaysia to the world opens up economic opportunities, and ensuring the aviation sector’s sustainability and competitiveness will yield broader economic and social benefits for the nation.
Hee concluded by affirming IATA’s readiness to engage with the government to ensure Budget 2026 policies fully harness the potential of international aviation. Budget 2026 is set to be presented by Prime Minister Datuk Seri Anwar Ibrahim in Parliament on October 10.