Why should Malaysia focus on Industry 4.0?

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There is a gap to be filled, and Malaysia needs to do it quickly to keep up with the rest of the world.

By S.T. Rubaneswaran

It all started with the Industrial Revolution, when the world was first introduced to steam power, mechanisation and factories that marked the new era of modernisation.

The enablers were no other than the world’s powerful imperialists, the British that cultivated their growing interest in scientific investigation and invention – creating endless opportunities and jobs for their people.

As time progressed, the rapid growth of technology sparked the Second Industrial Revolution, taking mankind to the age of electricity.  As demand grew, many new products were invented and significant developments were made in the structure of mass production.

The third epoch of the Industrial Revolution – better known as the Digital Revolution – began decades after World War II, welcoming the advent of computers and the initial stages of automation – subtly substituting manpower in assembly lines with robots and machineries.

Today, we are in the era of Industry 4.0 – where there are little to zilch human operations and are instead replaced by robotics that are equipped with necessary algorithms.

Invented by the Germans, this newest means of automation and data exchange in manufacturing technologies includes cyber-physical systems, Internet of Things, big data and analytics, augmented reality, additive manufacturing, simulation, horizontal and vertical system integration, autonomous robots as well as cloud computing.

With all these at hand, we start to wonder where Malaysia’s present position is. And yes, you guessed it: We are currently in Industry 2.0. Since the British colonial era, 70-80% of Malaysian industries are still wedged in the second industrial era where the labour intensive phase is very much prevalent.

Although Malaysia was one of the leading industrial countries back then, a majority of our neighbouring countries and beyond that are already building the bridge from Industry 3.0 to 4.0.

Based on research conducted by PwC, Industry 4.0 sees a promising future in the digitisation of products and services and means of robotic manufacturing and engineering – companies expect to reduce operational costs by 3.6% per annum while increasing efficiency by 4.1% annually – over the course of five years.

Organisations are willing to pay the mammoth expense in the hopes of fortifying their influences and positions in the multifaceted industrial ecosystems.

Indeed, most industries always begin at Industry 2.0. In contrast to Germany that employs advanced automation, China has managed to climb the modernisation ladder with its high dependence on low cost labour.

Following its rapid and massive vicissitudes in demographics and economics, the younger generation is opting out of cheap labour work. The most apparent solution for China to sustain their rank as an industrial powerhouse is to shift their traditional manufacturing practices towards contemporary computerised machines and robots – that will be implemented in the Made in China 2025 plan.

Even though Malaysia shares a simulacrum of labour intensive system, 80% of the organisations here employ low-cost, foreign workers rather than quality skill-based workforces. This reliance on a labour-intensive system tells us one thing: we are too comfortable with Industry 2.0.

Now, I’m not in any way implying that we are far off; rather, we have all the fundamentals that our various industries need but do not know how to utilise or develop well enough to compete in the global industrial arena.

With the emergence of policies such as the ASEAN Economic Community (AEC), Malaysia has an even higher export potential – giving our country access to Asian to European countries’ economies – through the implementation of free trade.

As Malaysia’s open economy is greatly dependent on global trade, these agreements may come in handy for the free flow of goods and services, in which a huge margin of the economic expansions will most like be attributed to lower non-tariff dealings.  The determining factor of a country’s revenue focuses primarily on its production and capacity for export rather than on its local consumption alone.

Nonetheless, these progress and possibilities may be slightly harder to achieve if we don’t tap into the latest technological innovation. Most ASEAN countries (such as Vietnam, Laos and Cambodia) have seen major progress in the productivity and growth of their vast manufacturing industries from an agricultural-driven industry.

In fact, these countries are making the transition from Industry 2.0 all the way to Industry 4.0. Malaysia still holds great prospects in evolving our manufacturing sector – that is made up of the electronics, automotive and construction industries – to meet rising consumer demand while considering the modern augmented factory and machine operations that are catching on worldwide.

However, our manufacturers and industries are in high jeopardy due to the lack of competitiveness on a global scale, let alone in Asia.

The best possible solution in this case is to first understand the potential of Industry 4.0. With only three years left to 2020, companies need to start generating new applications and find ways to leverage on these technologies to their competitive advantages – that are not only beneficial to consumers but also profitable to the market.

This, in turn, can be achieved through the investment in proper education and training institutes to cultivate more skill-based workers rather than depending solely on foreign labour. Besides lowering unemployment rates among Malaysians, this fourth wave of industrial revolution will help equip the younger generation to take on the future-ready workforce in the years ahead.

The adoption of this system would allow for the control of capital flow out of the country through the limitations of unskilled foreign workforce – engendering and shifting towards a knowledge-based economy.

Ultimately, it comes down to our government and policy-makers. Initiation of the necessary policies and support should be given to the implementation of technological advancements in order to move a more sustainable and promising future. Who knows, we might even achieve it earlier than TN50, the new 30-
year vision for Malaysia.

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About the author: S.T. Rubaneswaran is an accidental entrepreneur. An engineer by qualification, he chose to begin his career as a door-to-door salesman.

He successfully turned around the formerly loss-making Knowledgecom Corp Sdn Bhd to become the multi-million dollar company it is today.

Write to him at: ruban@eknowledge.com.my

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