Low awareness, adoption of Industry 4.0 among Malaysian manufacturers

PETALING JAYA: The low awareness and adoption of Industry 4.0 among Malaysian manufacturers may be due to the lack of market size to incentivise them to automate, said Second Minister of International Trade and Industry Datuk Seri Ong Ka Chuan.

Industry 4.0 refers to the trend of automation and data exchange in manufacturing technologies. It is described as the fourth industrial revolution, smart manufacturing or digital factories.

Ong said the world is moving towards Industry 4.0, a process where the manufacturing process is digitalised and automated. As such, production will be accurate, eliminating human errors and improving consistency in the quality of products that can be produced in large quantities.

“To achieve Industry 4.0, it’s not only technology, you also need a market size big enough to incentivise you to go into that. Our achievement in Industry 4.0 is low, but I realised there is an important challenge that we need to look into, which is the market size. Malaysia is a small market, so we can’t say everybody should go for Industry 4.0, as you don’t have the market big enough to sustain, so we have to help them (manufacturers) to go into a bigger market,” he told a press conference at the Federation of Malaysian Manufacturers (FMM) Industry 4.0 Conference today.

According to the FMM-Malaysian Institute of Economic Research Business Conditions Survey in 2H2016, only 12% of the respondents are very aware of Industry 4.0. About 41% are somewhat aware, 28% need more information and 19% are not aware at all.

Ong opined that sometimes manufacturers are not ignorant, but the market size or production is not enough for them to embark on automation.

“If they have the market size and get more market penetration, from there, they will adopt (Industry 4.0) themselves and change their strategy in manufacturing. They’re not totally passive and the government is not giving a blanket incentive to help everybody. We only help those who are ready to adopt and we give them some incentives. For those who’re not, we’re not forcing them because they may not have the market size to incentivise them to go for that. Looking at the reality, there are some reasons behind that. They need to explore new markets,” said Ong.

He said the government is committed to assisting SMEs make the leap into Industry 4.0, since they face a different set of challenges compared with the multinational corporations. This includes strengthening digitalisation among SMEs through e-commerce and adoption of innovative technology.

Ong said the government needs to assist manufacturers and provide incentives in the beginning for them as automation requires investments. It has proposed such incentives for Budget 2018.

“This is an agenda that we need to give priority to because it affects the production and competitiveness in the international market, so we need to digitalise our manufacturing process,” said Ong.

Other initiatives already embarked on leading up to the overall Industry 4.0 concept includes the National Strategic Roadmap on Internet of Things, the Digital Free Trade Zone and framing 2017 as the year of the Internet Economy for Malaysia.

The National Policy on Industry 4.0 is also being developed and the policy framework is targeted to be completed by year end. Ong said the role of the government is more of an enabler for Industry 4.0 transformation to be realised.

He added that industry associations echo the sentiments of the government that digitalisation through Industry 4.0 should be bottom-up instead of top-down and industry associations need to take charge and advocate rapid adoption in the manufacturing and manufacturing-related services.