Digitalization as a crucial part of the development of Industry 4.0

From the perspective of Agus Gumiwang Kartasasmita, Minister of Industry

Indonesia is predicted to be Southeast Asia’s biggest player in the digital economy. What are the challenges to encourage the reinforcement of the digital economy in Indonesia?

A study conducted by the Ministry of Finance and the Asian Development Bank (ADB) entitled “Innovate Indonesia: Unlocking Growth Through Technological Transformation”, in which a survey conducted to 502 domestic companies, found that the level of technology adoption of companies in Indonesia is mostly in the basic category (64%), while for the advanced category, it is still relatively small (6%). The main barriers to technology adoption include funding and human resource capacity.

This is in line with the Indonesia Industry 4.0 Readiness Index (INDI 4.0) where some of the challenges in applying digital technology are the commitment of top management, access and technological investment, human resources that can adapt to digital technology, and company’s readiness to operate at a medium level. In addition, Indonesia’s budget allocation for ICT is lower than other countries. Access to ICT is also still dominated by the upper middle class. Indonesia’s research and development (R&D) spending is also still low, only 0.1-0.3% of gross domestic product (GDP).

What is the government’s strategy/roadmap to make the digital economy sector more resilient to support the economy?

Among the “Making Indonesia 4.0” implementation agenda items related to digital are building a national digital infrastructure, establishing an innovation ecosystem, and implementing technology investment incentives. We also issued regulations regarding assessing the company’s level of readiness to transform towards industry 4.0. Currently, we are formulating incentives for industries transforming towards Industry 4.0.

In support of Making Indonesia 4.0, the Industrial Human Resources Development Agency (BPSDMI) constructed the Digital Industry 4.0 Center (PIDI 4.0). PIDI 4.0 was established as a one-stop solution for implementing Industry 4.0 in Indonesia. PIDI 4.0 will also become a digital manufacturing learning center that helps companies develop value chains.

Indonesia will enter the demographic bonus in 2030. How is the push towards the readiness of human resources in terms of digital capabilities?

Industry 4.0 system causes industrial expansion specifically due to the widespread application of the Distributed Manufacturing concept. The reduced technical workforce in an industry can be distributed to new types of industries that require higher workforce competencies (skilled labour). For this reason, there will be a shift in competence from low-skilled labor to high-skilled. We are currently developing industrial vocational education based on digitalization competencies. Some of them are vocational education that can align industry and vocational schools.

We also have the E-Smart program for Small, Medium and Multifarious Industries (IKM). This program will utilize digital platforms by facilitating collaboration between IKM and start-up companies, especially those engaged in e-commerce. This program is intended to build an IKM database system that is presented in industry profiles so that centers and products will be integrated with existing marketplaces. It aims to expand market access and open up opportunities for government guidance.

What collaborations can be developed between the Ministry of Industry and startups to increase industrial growth?

We have an Industrial Technology 4.0 Startup (Startup4Industry) coaching program. Through the Startup4industry program, we seek to direct the potential and innovation of startups to transform technology in the industry through implementation projects of startup solutions.

Since 2018, the Startup4Industry program has been participated by 723 startups, resulting in 73 finalists and 35 implementation projects. In 2021, we facilitated 20 implementation projects as a model for the impact of technology adoption for other industry players. In addition, this program is intended to increase public and industry trust in startups. Another thing we continue to work on is promoting startups through business meetings and innovation showcasing so that they are better known and leveraged by industry players.