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Malaysian IR 4.0: manufacturing sector expects US$30B growth

Malaysia is well on its way towards productivity gains of up to US$30 billion for its manufacturing sector over the next decade. This is because the country continues to adopt Industry 4.0 technologies.

This was among the findings of a recent joint study a major management consulting company and an American multinational technology conglomerate.

At the release of the results of the study titled “Accelerating 4IR in ASEAN: An Action Plan for Manufacturers” in Penang in April 2019, the Chief Minister of Penang, disclosed that work is already underway with Penang 2030, an action plan for balanced development that the government launched last year.

He noted that as one of the key manufacturing hubs in Malaysia, it is imperative for Penang to lead the way in Industry 4.0 efforts, adding that with the support of companies like the tech conglomerate, incorporating 4IR technologies to prepare for the next era of human-machine collaborations and to realize our vision for a digital future will definitely happen.

4IR refers to the five technologies that underpin the fourth industrial revolution (Industry 4.0) — internet of things (IoT), artificial intelligence (AI), 3D printing, advanced robotics, and wearables.

However, the study showed that manufacturers across the ASEAN (Association of Southeast Asian Nations) bloc, including those in Malaysia, are in the early stages of their digital journey.

The study noted that the firms are operating in an outdated model, and the adoption of 4IR technologies remains slow and patchy.

This was attributed to, among others, enduring low labour costs, no immediate customer demand, difficulties in accessing required experts, a complex and fragmented supplier ecosystem, and unclear and short-term oriented business cases.

According to Malaysia’s Department of Statistics, the value of the gross output of the country’s manufacturing sector was MYR1,275.8 billion in 2017 and employed 2.2 million people.

The Managing Director for the Malaysian branch of the tech conglomerate noted that manufacturing is a core driver of economic growth for Malaysia. Accelerating the adoption of 4IR technologies will ensure that the state maintains its competitive advantage, which has so far relied on relatively low labour cost.

The study highlights that in adopting 4IR technologies, growth will primarily be driven by productivity gains – increasing between MYR82.71 ($20 billion) to MYR103.3 ($25 billion) and driven by the creation of additional revenue streams through new products and quality improvements.

Hence, it suggests a six-point action plan that can chart the journey for advancement in 4IR for Malaysian manufacturers — focusing on critical pain points, identifying technology use cases, conducting collaborative pilots, building a partner ecosystem, and sustaining the transformation momentum.

It also emphasizes that governments play an important role in driving manufacturing growth.

The study stated that national strategies in these countries, including in Malaysia, are mostly focused on strengthening workforce capabilities and building a strong ecosystem to foster investment. However, there is limited support for rolling out 4IR technologies in manufacturing.

Penang 2030

The Penang 2030 is reportedly an action plan that focuses on improving livability, economy, civic participation and balanced development to achieve a “family-focused, green and smart state.

Officials have informed the press that the direction the state government was taking would be holistic and inclusive. The state government has four teams that will be assigned to spearhead the four initiatives.

The first of the four initiatives would be to ‘Increase Livability to Enhance Quality of Life’ in the state. This would address housing affordability, public safety and enhance the welfare and care system, among others.

The second initiative is to ‘Upgrade the Economy to raise Household Incomes’, which would emphasise local manufacturing industries heading towards the digital age, as well as diversifying sustainable agriculture and fostering an ecosystem that nurtures creative industries.

The third initiative is to ‘Empower People to Strengthen Civil Participation’, to uplift vulnerable communities and reduce inequality. The aim is to create more platforms for public involvement in social development. The focus will be on programme delivery and institutional reform.

The fourth initiative would be to ‘Invest in the Built Environment to Improve Resilience’ to see balance development through effective spatial planning. This would include strengthening mobility, connectivity and digital infrastructure and integrate municipal services with smart technology.

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