ASEAN approach towards Industrial Revolution 4.0

The manufacturing sector is the backbone of ASEAN’s economy as it contributes about $670 billion or 21 percent to the region’s GDP and is expected to reach about $1.4 trillion by 2028. The next industrial revolution presents a threat as the low costs competitive advantage will erode over time. The revolution is also an opportunity as it permits them to rise to the global manufacturing stage by embracing the changes. 

Summit & Workshops:

In 2017 ASEAN summit Manila who held the chair acknowledged the need to be ready for the fourth industrial revolution and attempt to maximize the opportunities which would enable economic growth, promote inclusive and equitable economic development.

Following the recognition on the need to be prepared, Bangkok organized a special session on the fourth industrial revolution on 14 January 2018. During the welcoming remarks, Secretary General Dato Lim Jock Hoi highlighted how new technologies are transforming the society and that everyone needs to work together. The session acted as a platform for discussion on the issue at hand and it also as a guide on what strategies and coordinated response the organization should muster to address challenges and seize opportunities.

Post the special session in Bangkok, ASEAN released a declaration on industrial transformation to industry 4.0 and listed the steps it would take to prepare for the fourth industrial revolution on 2^nd November 2019.

Intensify engagement in and among the members and explore new mechanisms and platforms to provide support. The focus will be on startups, MSME, e-Government, Smart Cities, and lastly vocational education.

Enhance human resource development and capacity building with respect to smart factories, digital value chains and digital literacy through up-skilling and re-skilling of the workforce.

Stimulate adoption and diffusion of innovation in Internet of things (IOT), cloud computing, artificial intelligence, 3D printing through joint research programs, investments.

Emphasize promotion of innovation and technology-driven technologies through a consolidated strategy on the fourth industrial revolution.

Strengthen cooperation to develop a regulatory framework through public-private dialogues, working with international organizations, facilitating digital standards and cross-border data flows.

Last but not the least, address the challenges which impedes industrial advancement.

On 26 November 2020, the first consultative workshop on the development of a consolidated strategy for the fourth industrial revolution was held via videoconference due to the raging pandemic. During the workshop, Australian ambassador to the regional organization recognized how COVID-19 has rushed digital transformation. In the opening remarks the deputy secretary general Dr. Aladdin Rillo stated that “ASEAN needs to focus its resources and efforts on initiatives that can effectively contribute to the foundation of a sound and sustainable digital economy, leaving no one behind”. The main discussions centered around consolidated strategy, key dimensions of digital reality and their implications for ASEAN. 

The second ASEAN sectoral bodies and the stakeholders’ consultative workshops on the consolidated strategy on the fourth industrial revolution took place between 27 and 29 April 2021 via videoconference. The  deputy secretary general Satvinder Singh said that digital transformation is speeding up, although it represents only 7 percent of the GDP at present. ASEAN recognized the need formulate policy responses and, in this regard, the consolidated strategy will act as a guide for ASEAN’s agenda and directions it takes with respect to the fourth industrial revolution. This year’s workshop will not only focus on how best the region can recover from the pandemic but also on long-term resilience.

In the last four years, ASEAN has stepped up its efforts to address the fourth industrial revolution by acknowledging it, holding special sessions and workshops. It also released a declaration with steps they will take to prepare. Although special sessions and workshops alone will not enable the region to get to grips with the issue, but it signals that the regional organization has realized that the next revolution will transform the region’s economy and society and it needs to be ready to address the obstacles which may come up.  

How the biggest economies are preparing:

Indonesia

In April 2018, the government introduced a strategy called “Making Indonesia 4.0” to address the fourth industrial revolution by utilizing artificial intelligence, robotics as well as sensor technology. The first step was to create an industry readiness index which would measure how prepared the firms are to integrate digitalization in their manufacturing process created in early 2019. Indonesia’s ministry of industry is also working with enterprise Singapore to facilitate partnerships between Indonesian manufacturers and Singapore’s solution providers. 

Secretary general of the ministry of industry said that the country aims to prepare for industry 4.0 by empowering the five biggest sectors of its economy through domestic and foreign investments. They are food and beverage industry, automotive industry, electronic industry, chemical industry and finally the textile industry.

Malaysia

Kuala Lumpur plans to prepare through the national policy on industry 4.0 which has four broad goals intended to be achieved by 2025.

Enhance productivity by 30 percent in manufacturing sector.

Elevate the contribution of manufacturing sector to the economy.

Ameliorate innovation capabilities.

Expand the number of highly skilled workers from 18 percent to 35 percent of the total workforce.

Government had formulated F.I.R.S.T. action plan where the focus is on funding (F), enabling ecosystem and efficient digital infrastructure (I), regulatory framework and industry adoption (R), upskilling the current and producing future talents (S), enhancing access to smart technologies (T). The ministry of international trade and industry is driving the nation towards the fourth industrial revolution.

Philippines

The department of trade and industry (DTI) plans to address digital transformation by designing an industry readiness index, assessing the impact of digital technologies on manufacturing through simulation and implementing a digital enterprise portfolio to tackle the issues facing the manufacturing sector. A pilot factory is being established which will be utilized as a training hub and help push for digitalization. An SME academy, innovation centre and manufacturing revitalization and transformation program is being made to enhance innovation and human resource capabilities.

Electric vehicle incentive strategy is made to specifically target the automobile industry’s transformation. Artificial intelligence roadmap to study the impact of AI on manufacturing, agribusiness, service sector. Finally, DTI working with skills future Singapore to enhance human capital and upgrade the skills of the workforce.

Singapore

Singapore has devised three strategies to enable transition towards the fourth industrial revolution.

Smart industry readiness index was made in 2017 by the economic development board to direct firms to employ technological solutions to enable them to become smart factories.

Industry transformation maps launched in 2016, the aim is to address sector-specific challenges and enable industries to adapt to digital transformation using modern technologies such as automation.

Smart nation initiative is built to help the citizens of the country from small children to seniors be familiarized with the latest technology. National artificial intelligence strategy to enable researchers, collaborators and businesses learn to work with AI. Digital government blueprint to enhance digitalization of public service.  

Thailand

In 2016, the government launched Thailand 4.0 strategy through which it aims to attain high income status. The five agendas of Thailand 4.0 are:

Reforming the educational framework which would include focused, generative, heedful, and result-oriented learning. New subjects such as AI, cybersecurity will be taught along with on-the-job training.

Development of technology cluster and future industries- plan to build future industries through knowledge, innovation, and technology.

Incubate entrepreneurs and develop networks of innovation through budgetary support, capacity building measures and building connectivity with local and world community.

Strengthen internal economy through the mechanisms of 18 provincial clusters and 76 provinces meant to ensure widespread economic growth.

Integrating with ASEAN by building international headquarters, trading centers and the eastern economic corridor.

Vietnam

In 2020 the ministry of science and technology had proposed an initiative to build a roadmap and adopt solutions to foster smart production in the region. Under Industry 4.0, “it aims to promote digital production through digitalization of and connectivity between products, value chains and business models”. Hanoi is working domestically to prepare for the next industrial revolution for example Prime Minister Nguyen Xuan Phuc issued a directive to enhance the capacity of the industry.

A national program to improve productivity as well as quality of goods for 2021-2030 period was decided by the Prime Minister. The politburo passed a resolution to develop national development policies for this decade with a vision for 2045. Ministry of information and communications launched a program called “Make in Vietnam” to push for digital transformation. 

Final Standpoint:  

ASEAN is preparing to address the fourth industrial revolution which will have huge ramifications for not only the economy but the society as well. At the collective level in past four years, it has utilized a summit, a declaration, a special session, and workshops to construct a framework on how industry 4.0 will be addressed and what it would look like.

Secondly, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam have tried to address the issue at the domestic level through various strategies specifically targeting the next industrial revolution. Although the specificities of the strategy employed differs as the needs of the economies differ, but the collective aim is to become a global player. The regional organization is actively working to reap the rewards and tackle the challenges which may arise along the way, only time will tell whether ASEAN succeeds in doing so or not.

End Notes

1)https://www.i-scoop.eu/industry-4-0/

2)https://www.kearney.com/documents/20152/1849225/Accelerating+4IR+in+ASEAN.pdf/c1fd001b-a5cb-4a96-c73b-e666c0b88692

3)https://www.asean2019.go.th/en/news/asean-declaration-on-industrial-transformation-to-industry-4-0/4)

4)https://asean.org/wp-content/uploads/2017/04/Chairs-Statement-of-30th-ASEAN-Summit_FINAL.pdf

5)https://asean.org/asean-makes-headway-fourth-industrial-revolution/

6)https://asean.org/asean-discusses-strategy-fourth-industrial-revolution/

7)https://asean.org/consultative-meetings-discuss-aseans-fourth-industrial-revolution-strategy/

8)https://www.asean2019.go.th/en/news/asean-declaration-on-industrial-transformation-to-industry-4-0/

9)https://www5.investindonesia.go.id/en/why-invest/indonesia-economic-update/making-indonesia-4.0-indonesias-strategy-to-enter-the-4th-generation-of-ind

10)https://www.businesstimes.com.sg/asean-business/guides/opportunities-in-indonesias-industry-40

11)https://www.miti.gov.my/miti/resources/09._R2_._Industry4WRD__Preparing_Malaysia_for_Industry_4_.0_.pdf

12) http://innovate.dti.gov.ph/programs/industry-transformation/

13) https://cerexio.com/blog/industry-4-singapore

14) https://oxfordbusinessgroup.com/overview/high-gear-economies-around-world-are-preparing-opportunities-and-challenges-brought-about-next

15) https://www.newdelhitimes.com/thailand-4-0-aims-to-bring-out-positive-changes-in-the-country/

16) https://en.vietnamplus.vn/asean-moving-towards-smart-production/198150.vnp

 Pic Courtesy- https://readwrite.com/

(The views expressed are those of the author and do not represent views of CESCUBE.)