Policy Review: Preparing Roadmap for Industry 4.0 Era

Industry Minister Airlangga Hartarto (2nd from left) received a token of appreciation from the Head of GAPMI ( the Indonesian Food & Beverage Association) Chairman Adhi Lukman after giving key speech on Industry 4.0 seminar. (Photo (Industry Ministry)

JAKARTA (TheInsiderStories) – The world is currently entering the Industry 4.0 era, in which is marked by the integration of artificial intelligence, internet of things, advanced robotic and virtual reality and 3D printing.

Indonesia does not want to be left behind. This triggered the government to prepare a Roadmap for Industry 4.0 Revolution, which will be used as guideline and reference for the policymakers and industry players to achieve the digital economy.

Over the past few months, the Industry Ministry has conducted numerous events to disseminate the Industry 4.0 policy and at the same time gain the inputs on how to make the roadmap more comprehensive.

The first generation of the industrial revolution was marked by the utilization of steamed machine in Europe, replacing human and animal power. The second generation of the industrial revolution was highlighted with the introduction of mass production and the use of electricity and third generation industry revolution was marked by the use of technology automation.

The fourth generation of industrial revolution, known as Industry 4.0 marked by the ubiquitous connectivity of people, machines and real-time data (cyber-physical systems).

The roadmap sets out integrated steps as well as collaboration among stakeholders – government, associations, industry players, academics, in order implement strategies for entering the Industry 4.0 era

Infographic source: AT. Kearney

The Industry 4.0 revolution has actually begun in 2011, marked by the increasing connectivity, interaction and convergence between human, machines and other resources through information technology and communication.

According to the Industry Minister Airlangga Hartarto, in the fourth generation of industry revolution, there has been a leapfrog in the industrial sector, in which information technology and communication is fully utilized, not only in the processing industry but also in the whole industry chain, which leads to the creation of new business model based on digital system. This reflects in the high-quality product and improved efficiency.

Therefore, the country’s national industry needs to undertake overhaul in all aspects and be prepared to implement the information technology throughout the industry chain.

As part of preparatory steps, the Coordinating Minister for Economic Affairs Darmin Nasution on Thursday (29/3) held a coordinating meeting to finalize the Roadmap of Industry 4.0 which is expected to be launched in the near future. The meeting was attended by Industry Minister Airlangga Hartarto and Minister for Communication and Informatics Rudiantara.

Airlangga said the Industry 4.0 will encompass five main areas, namely beverage, electronics, automotive, textile, footwear, and chemical. The implementation the roadmap will require coordination and support from other ministries to harmonize regulations as well as fiscal incentives related to telecom infrastructure.

As part of the conclusion of the meeting, the ministers agree to set up a national industry committee to implement and develop the Industry 4.0 concept towards 2020.

The Industry 4.0 Roadmap is an effort by the Industry Ministry and the Joko Widodo government, in general, to boost the country’s exports by 2030 to 10 per cent of GDP as well as lifting the contribution of industry to 25 per cent of GDP from 20 per cent at present as well as accelerate the development.

The five sectors were prioritized given that they are part of 10 manufacturing sectors that have recorded high demand in the world trade.

Over the past 15 years, Indonesia has been showing tremendous growth. The country’s Gross Domestic Product (GDP) jumped significantly from US$165 billion in 2000 to US$ 861 billion in 2015, surpassing Saudi Arabia, Thailand, and Argentina.

The next 15 years will be a golden period for Indonesia, with its society benefiting from a demographic bonus. A factor that needs to be concerned is whether Indonesia might be falling behind global peers such as Singapore, Japan, Malaysia, Thailand and China in technology investment, according to AT Kearney, a business consultant.

The government realizes that embracing the Industry 4.0 concept is vital for the country to accelerate the country’s economic growth. However, there are challenges needed to be addressed.

Minister Hartarto said the Roadmap has set out four strategic steps in order to implement the Industry 4.0 model. The first step is to encourage the workforce in Indonesia to upgrade their skills and keep updating their knowledge of information technology and its application to production lines. This can be done by adopting the ‘linking and matching’ the curriculum of vocational schools with the needs of industry. The program to prepare ready-to-use workers for the industry has set a target of one million skilled laborers by 2019.

The second step, Hartarto said, is to exploit digital technology to boost productivity and competitiveness, especially in small and medium scale industries (SMIs), so as to penetrate export markets through the ‘SMIs e-smart’ program.

The third step: the national industry has to use digital technology such as Big Data, Autonomous Robots, Cybersecurity, Cloud, and Augmented Reality. The Industry 4.0 System will provide benefits for industry, such as raising efficiency and reducing costs by about 12-15 percent.

According to him, a number of national industrial sectors have already entered the era of Industry 4.0, including food and beverages, cement, petrochemicals, and automotive. The automotive industry, for example, already employs robotic systems and the internet of things in their production infrastructure.

The fourth step is innovation through startup development, by facilitating business incubation sites. This effort has been achieved by the Ministry of Industry by creating technology-based entrepreneurs through several technoparks built in regions around Indonesia, such as in Bandung (Bandung Techno Park), Denpasar (TohpaTI Center), Semarang (Incubator Business Center Semarang), Makassar (Makassar Techno Park – Home Software Indonesia, and Batam (Mobile Design Center).

The innovation development centers, Hartarto said, will be integrated with the Apple Innovation Center. Thus, from all these ecosystems, the government wants to locate a strategic policy to spur growth and competitiveness of the national industry, including preparing incentives.

The industry players and the general public are now eagerly waiting for the launching of the Industry 4.0 Roadmap. The next step would be implementing the roadmap.

Written by Roffie Kurniawan, email: roffien@theinsiderstories.com