The fourth industrial revolution or Industry 4.0 has been a key area of investment and interest for countries across the globe. Invariably, ASEAN countries have been navigating this wave to facilitate the use of disruptive digital technologies to become a leader in this space. As a part of ASEAN, Indonesia has been making great strides with its efforts and investments, with Indonesia 4.0, fostering a conducive ecosystem for the rise of digital manufacturing. Through this article, we will cover the various ways Indonesia 4.0 is enabling digital manufacturing, key technologies, and much more.
Operations LeaderStrategINK Singapore
Indonesia 4.0 at a glance
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Opportunities for Indonesia 4.0
There are a few factors that are particularly in favour of the country to reap the benefits of the fourth industrial revolution and pave the way for Indonesia 4.0. Some of the top opportunities include:
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Key sectors driving Indonesia 4.0 and digital manufacturing
The country’s drive to Indonesia 4.0 started about half a decade ago when the government identified 5 major sectors or categories within manufacturing as important and facilitated investments and resources for boosting them. These categories have been selected based on tier GDP size, potential impact, and market penetration among other factors. However, in 2020, two additional categories were added, keeping in mind their growth potential and impact on Indonesia 4.0. The key sectors include:
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Technologies guiding Indonesia 4.0
Led by technological interventions, Indonesia 4.0 is accelerating significantly with a few digital disruptions at its helm. Research shows that these technologies could create productivity gains equivalent to 6% to 9% of manufacturing costs, clearly depicting the economic impact of digital manufacturing for the country. The key technologies driving Indonesia 4.0 include IoT, artificial intelligence and big data, robotics, and additive manufacturing.
Indonesia 4.0 initiatives
Focused on the key sectors and technologies identified above, the country has set forth a few initiatives to achieve its goals for Indonesia 4.0 with incentives, training, and business support. Some of the top initiatives include:
- Government incentives including R&D and CAPEX tax incentives for tech startups
- Targeted roadshows to attract Original Equipment Manufacturers (OEMs)
- Vocational schools for reskilling and upskilling on digital skills for industry 4.0
- Digitalization of 10 million+ small and medium businesses
Indonesia Digital Innovation and Capability Center Initiative
Focused on advancing Indonesia 4.0 goals, the center has five core functions, developed in collaboration with McKinsey:
- Showcase Center: Observing the implementation and process of industry 4.0 transformation in real-time.
- Capability Center: Developing necessary capacity and technical skills required for industry 4.0, by upskilling 400,000+ members of the labour force or 4,000 firms.
- Ecosystem for Industry 4.0: Building a network of industry 4.0 stakeholders to stimulate skill and knowledge transfer or have 100-200 organisations or stakeholders join within the next 5 years.
- Delivery Center: Assisting companies in their industry 4.0 transformation journey, from assessment to implementation and development (scale up) via field services, forums, or do-it-yourself (DIY) portals.
- Innovation Center: Fostering research and development between private sector stakeholders and research institutions and provide a test bed for new technologies applications.
Way forward for Indonesia 4.0
With manufacturing being a key contributor to GDP for the country, Indonesia 4.0 has the potential to facilitate economic impact catalysed by digital disruption. The country has been actively focused on garnering investments and efforts to augment industrial productivity with the ultimate aim of ensuring more than 25% of manufacturing GDP by 2030. The right balance between upskilling, network-building research and innovation, and DIY support can help accelerate the pace of success for Indonesia 4.0, unlocking unparalleled opportunities to become a regional and gradually global leader.
Stay tuned to this space to know more about the latest developments and insights on the technology landscape of Indonesia and other ASEAN countries.