In this webinar, Dr VGR Chandran Govindaraju examines the Malaysian government’s efforts towards embracing Industry 4.0.
REGIONAL ECONOMIC STUDIES PROGRAMME WEBINAR
Tuesday, 13 October 2020 – ISEAS – Yusof Ishak Institute hosted a webinar on “Embracing Industry 4.0: Policy and Progress in Malaysia” which was delivered by Dr VGR Chandran Govindaraju, Associate Professor of Industrial Development at the Department of Development Studies, Faculty of Economics and Administration, University of Malaya. Prior to his appointment at the University, Dr Chandran was the Principal Analyst with Malaysian Industry-Government Group for High Technology (MIGHT), Prime Minister’s Department, Malaysia.
Dr Chandran started off his presentation with an overview of the context of industrialization in Malaysia. He praised Malaysia’s success in moving towards productive sectors such as agriculture, manufacturing and services. However, he noticed signs of premature de-industrialization, and imbalanced labour productivity across the various sectors, sizes of enterprises and ownership structures. Furthermore, he identified several structural weaknesses: declining value-added growth, capability, competitiveness, capability, innovation, product and technology and low knowledge content and lack of learning.
Next, Dr Chandran introduced the Industry 4.0 Policy that had been launched by the Ministry of International Trade and Industry (MITI) in 2018. It is an intervention and reskilling program to enhance competence centers at public higher institutions and create highspeed broadband connectivity to potential industrial parks. Technological drivers will also be utilized to drive the digitalization of production-based industries such as the manufacturing sector. He highlighted the mixed consensus on whether the target should be horizontal (across all sectors), or vertical (through activities and processes). Additionally, he explained the strains posed on the policy initiatives as a result of the COVID-19 pandemic. Hence, he proposed the policy required new and revised sectoral policies. He believed these policies would address both the demand side and supply side issues such as awareness, access to best practices, innovation, digital readiness, skills and financing. Challenges with governance, funding, training providers, ecosystem support, standards and infrastructure could also be mediated.
Dr Chandran then provided an assessment of the policy based on six dimensions: regulatory and institution, human capital, Science, Technology and Innovation (STI) policy, Small and Medium Enterprise (SME) development, digital transformation and trade and investment. He concluded there were a few areas in which the Industry 4.0 policy framework is currently lacking. He pointed out the key challenges faced include the low adoption rate and the need for more attention on SMEs. Additionally, he discussed findings from a recent survey that illustrated the limitations of the provision of government support schemes. Results revealed that 74% of enterprises were unaware of the support schemes availability. SMEs also found the application process complicated and support inadequate for their use.
To end off the presentation, Dr Chandran opined four keys for policy success: policy coordination, financing and fiscal constraints, regulatory reform and data ownership and structure. He remarked that the way forward is to position and align industry 4.0 to a circular economy. He suggested several ways to do so: focusing on cultivating a learning economy, recognizing foreign direct investment (FDI)-led growth limits, diplomatic positioning of trade, human capital and enabling infrastructure.
The webinar concluded with Dr Chandran answering several questions posed by the audience. Some of the questions discussed the effect of the change in leadership at the highest level of government on the implementation of the Industry 4.0 policy, the success of the policy without reassessing affirmative action policies, the role of Government Linked Companies (GLCs) and the impact of a low adoption rate on unemployment rate in Malaysia.