Making Indonesia 4.0: Indonesia’s Strategy to Enter the 4th Generation of Industry Revolution

Recently, Indonesia’s Ministry of Industry has designed ‘Making Indonesia 4.0’ as an integrated roadmap to implement a number of strategies to enter the Industry 4.0 era. The roadmap requires collaborative actions among multiple stakeholders that range from government institutions, associations and industry players, to academic elements.

“Indonesia has been entering the new era of Industry 4.0 which marked by the increasing connectivity, interaction, as well as more convergent people, machines and other resources as the result of information and communication technology advancement,” said the Indonesian Industry Minister Airlangga Hartarto at the Socialization of Implementation Roadmap for Industry 4.0 in Jakarta. Airlangga further explained the first generation of the industrial revolution is characterized by the use of steam engines to replace human and animal power. The second generation is distinguished by the application of mass production concept and the beginning of electric power utilization. The third generation is marked by the use of automation technology in industrial activities.

“In the fourth generation of industrial revolution, it becomes a major leap forward for the industrial sector, where information and communication technology is fully utilized. Not only in the production process, but also across the industry value chain hence creating new business models on a digital basis to achieve higher efficiency and better product quality, “Airlangga said.

In this matter, the national industrial sector needs a lot of improvements particularly in technology mastery aspect, which has become the ultimate key to competing in the Industry 4.0 era. Five main technologies to support the development of Industry 4.0 are the Internet of Things, Artificial Intelligence, Human-Machine Interface, robotic and sensor technology, and 3D printing.

The implementation of Industry 4.0 has tremendous potential in overhauling the industrial aspects, and even being able to change various aspects of human life. According to Airlangga, Indonesia already has a strong domestic market, as well as sufficient talents from the number of universities, thus guarantee the availability of talent pool. Improvement of human resources competencies through the link and match program between education and industry should be the initial step, and this will be accomplished in mutual synergy between related ministries or institutions such as Ministry of Industry, Ministry of National Development Planning (Bappenas), Ministry of State Owned Enterprises, Ministry of Manpower, Ministry of Education and Culture, and Ministry of Research, Technology and Higher Education.

The implementation of Industry 4.0 aims to achieve the great national aspirations, which are bringing Indonesia upward to reach 10 biggest economies by 2030, returning the industry net export rate to 10 percent, doubling the labor productivity rate over the labor costs, and allocating 2% of GDP to R&D and technology innovation fields (or 7 times higher than current allocation). To reach this, Indonesian government has formulated ten national priority strategies as follow: reforming the flow of materials, industrial zone redesign, improvement of human resources quality, empowerment of Micro Small and Medium Enterprise (UMKM), incentives implementation on technology investment, formation of innovation ecosystem, attracting foreign direct investment, harmonization of policy and regulations, building the national digital infrastructure, and accommodating sustainability standard.

Secretary-General of the Ministry of Industry Haris Munandar on the same occasion also revealed that one of Indonesia’s strategies to enter Industry 4.0 is preparing five manufacturing sectors to become pilot in strengthening the fundamental structure of the national industry. The five sectors namely Food and Beverage Industry, Automotive Industry, Electronic Industry, Chemical Industry, and Textile Industry.

The strategy thus will drive the Indonesia Investment Coordinating Board (BKPM) to carry out its role in promoting foreign and domestic direct investment specifically into the five aforementioned industry sectors. Previously, BKPM data mentioned that investment realization in 2011 – 2017 was dominated by secondary sector, those which relate to primary industry. Food Industry reaches the biggest share with total investment realization (both foreign and domestic) worth IDR 302.8 trillion. This is followed by Basic Metal, Metal Goods, Machine and Electronics in the second place (IDR 299.0 trillion); Basic Chemicals, Chemical Goods and Pharmaceuticals in the third place (IDR 285.5 trillion); and Other Transportation Industry in the fourth place (IDR 160.3 T). Textile Industry as the last component of main Industry 4.0 sectors is in the eighth place with investment realization value worth IDR 58.3 trillion. Based on this record, Indonesia is already on the right track to welcoming the Industry 4.0 era.

Manufacturing Revitalization

Meanwhile, Head of Agency for Industrial Research and Development (BPPI) Ngakan Timur Antara mentioned that the implementation of Industry 4.0 will bring great opportunity to revitalize the manufacturing sector and become an accelerator to reach Indonesia’s vision to be the world’s top 10 economies in 2030. The application of Industry 4.0 is predicted to generate more specific new job opportunities, specifically those which need high competencies. Thus, the transformation of skills for Indonesian industrial human resource into the information technology sector would be necessary.

“Recent study in German concludes that labor demand will increase significantly by 98 percent, mainly in R&D and software development,” Ngakan said. He also added that work-shifting preference as the effect of Industry 4.0 implementation will develop not only to manufacturing sector but also into the supply chain, logistics, and R&D sectors. With the use of the latest technology and internet-based, according to Ngakan, there is also a lot of demand for new types of work such as managers and digital data analysts, as well as professions that are able to operate robot technology for industrial production processes.

There are several potential benefits generated as a result of the Industry 4.0 concept, among others are the ability to create higher efficiency, reduce production time and cost, minimize human-errors, and improve product quality and accuracy. To ensure the implementation of Industry 4.0 concept runs optimally, according to Ngakan, some supporting prerequisites must be fulfilled by the industry. The supporting needs include the availability of abundant, cheap, and continuous electricity sources, as well as the availability of Internet network infrastructure with substantial bandwidth and wide coverage.

Moreover, the availability of data centers with sufficient storage capacity, safe and affordable, also the availability of modern logistics infrastructure and employment policies that support industry will be essential for the Industry 4.0 characters. In addition, Ministry of Industry also encourages not only large-scale industries but also small and medium industries (IKM) to participate in capturing opportunities in the era of Industry 4.0.