Malaysia’s tech startup ecosystem may not be as vibrant as neighbors like Singapore and Indonesia, but when it comes to drone technology, Malaysia is home to one of the world’s leaders in the sector, Aerodyne Group.
Kuala Lumpur-based Aerodyne Group was founded in 2014 by entrepreneur Kamarul Muhamed, who always had a passion for aviation and technology, and forecasted that drone technology would have an impact on society when drones were still new to the masses.
“The first project we were involved in was during bad floods in Malaysia in December 2014, which affected a lot of remote areas and caused damages worth billions of ringgits,” Muhamed told KrASIA.
“We helped the emergency response finding people stranded in jungles, and we provided visual intelligence of what was happening in the disaster location. That’s how Aerodyne started, and we realized that we can do a lot more with this technology,” he added.
Fast forward to 2021, Aerodyne has transformed into what they call “an international DT3 (Drone tech, data tech, and digital transformation) solutions provider,” with offices in 12 nations around the world.
Aerodyne’s drone tech is used for applications such as infrastructure surveillance, disaster management, security, field mapping, and crop spraying, among others. It operates in 35 countries, directly, through partnerships, or after merger and acquisition (M&As) with local companies. Aerodyne manages over 300,000 clients’ infrastructure assets, and has inspected more than 100,000 km of power lines.
According to Drone Industry Insights, Aerodyne is the world’s second-largest drone service company, as of 2020, behind Japanese firm Terra Drone. The ranking is based on various indicators such as the company’s size, market shares, and sales figures, among others.
KrASIA recently talked to Muhamed about Aerodyne’s growth, drone development in Southeast Asia, and future plans.
KrASIA (Kr): Your company has a presence on almost all continents today. How did you start the global expansion? What is your strategy?
Kamarul Muhamed (KM): We started to explore outside of Malaysia in 2017, starting from Australia, and we were pleasantly surprised that there was a good market fit there. Encouraged by that positive response, we expanded to Indonesia, Singapore, the Middle East, and so forth. The first phase of the company was the initial growth in Malaysia, and now we are in the next stage where we’re ramping up global operations.
We sometimes enter the market directly, but we also do M&As, or we form joint ventures with local companies. M&As of local companies don’t only give us access to the market, but also to a world-class workforce. More than 40 senior managers with global experience have joined Aerodyne as they believe in our case and are helping to push our agenda. Our overall strategy has always been focused on technology, focusing on people, and global expansion through M&As and partnerships.
Kr: Drones and related services are tightly regulated in most Southeast Asian countries, how is this impacting drone tech development in the region?
KM: Every country has very restrictive regulations when it comes to drones. I think the basic reason is that people are afraid of what they don’t understand. However, we started to see regulators becoming more supportive in Malaysia, thanks to engagement among industry players and government agencies. The Civil Aviation Authority of Malaysia is now very receptive to drone tech, they are already opening up the airspace, and creating a system of procedures for running drone operations.
The government gives drone companies a regulatory sandbox, which helps us to test our technology without the need to go through complicated permit procedures. Moreover, the government is investing to develop talents for the drone sector. We are also training more than 100 talents for drone operations and other related disciplines, such as data science and artificial intelligence (AI).
Kr: Safety and privacy are some of the biggest concerns surrounding drones, how is Aerodyne addressing this matter?
KM: People need to better understand how drones work, and we’ve been communicating with regulators and other stakeholders about this. As a leading player, we are setting the standards in Malaysia to ensure that we run operations in compliance with existing regulations. We developed a very solid standard operating procedure (SOP) that respects security and privacy.
We track all our incidents, and we’ve seen zero lost time injury [a term to identify work-related incidents that lead to a worker being unable to complete duties for a minimum of one shift] and very few incidents. We publish the reports publicly, because we want the industry to grow and this innovation to be accepted by society. We have been working with the Malaysian police to operate drones for surveillance and enforcement during the pandemic, so people can see drones flying everywhere in the designated areas. We hope that people realize that as long as drones are being operated by professional organizations, the technology is completely safe.
Kr: How is COVID-19 affecting Aerodyne’s business and operations?
KM: It has affected us primarily because of two things: travel restrictions, and budget cuts from clients. We couldn’t travel overseas so our operation activity shrank around 50%. We also lost quite of business in the US because of travel restrictions. Another challenge is that some of our customers are experiencing budget cuts. For example, we’ve got total cancellations from clients in the hospitality sector.
Because of all these situations, we shifted our focus to research and development, and I’m happy that we have developed several new tech solutions during this difficult time, and some of them are already giving us results. However, things are getting significantly better now. In Malaysia, business is running almost as usual, we just hired more than 25 people in the past two weeks and we’ll be hiring more.
Kr: Which business line generates the most revenue for Aerodyne?
KM: Historically, it has been infrastructure. Almost 70% of our business is in infrastructure asset management, with the power line industry as one of our keys, not only in Malaysia, but also in Indonesia, Japan, the Middle East, and America.
Today, there are other emerging sectors coming in, like telco and solar. We have also started delivering solutions for the port sector in the UK. The next growing segment for us is agriculture, which we believe would be a key revenue contributor within two or three years.
I do feel that COVID-19 is accelerating drone use for delivery as well. Logistics has become more important during the pandemic and the use of robots to do deliveries is certainly a huge opportunity for us.
Kr: Speaking of agriculture, Malaysia has a reliance on food imports, but, could drone technology help the country to improve its agricultural practices?
KM: Malaysia annually imports around RM 50 billion in food and we are relying on foreign labor. Drone automation can help to solve our reliance on foreign labor. For example, we use smart monitoring with multispectral sensors that can give us insights into the conditions of the crop. By doing this, we can reduce cost and increasing output at the same time. Malaysia has enough land, so if we can increase the output, we’ll be able to solve this food reliance issue.
The challenge is to do precision agriculture with drones on a large scale, and this is expensive. Therefore, we’re committed to investing good money to deliver this solution nationwide.
Kr: How do you see the future of drone tech in Southeast Asia?
KM: The Asia Pacific is the fastest-growing region in the world when it comes to drone tech, and Southeast Asia comes only second after China. Drone use in the region still focuses on infrastructure and agriculture, but another segment coming in is goods delivery for logistics.
In the long term, I believe human transportation, using drones, or as we like to call it, urban air mobility (UAM), will become a reality, the question is when. My prediction is that UAM will become commonplace in 2030, and by 2040, we could see flying vehicles everywhere.
Kr: Please tell us about your plans in 2021 and beyond? Are you currently fundraising or in the process to do new M&As? Do you have a plan to go public?
KM: We are perpetually open for fundraising, we have potential investors who come to us from time to time, but we’re not in a rush as we still have dry powder to fund our growth.
In terms of M&As, we have quite a large target, we’re currently in talks with four or five potential partners and we’re doing due diligence, so there could be some major announcements this year.
We’ll continue expanding our business in the near future. We have a presence in Chile, Mexico, and Brazil, and will look into the rest of Latin America. Africa is the second priority, and we’re also looking at expanding our operations in the US. Regarding an IPO, our deadline is to go public by 2025, but it all depends on the market, so the timeline is not certain.
