The Indonesian government has launched the “Making Indonesia 4.0” roadmap to boost the country’s economy. This initiative aims to implement new manufacturing technologies in the most vital sectors of Indonesia. These sectors contributed to two-thirds of the country’s total manufacturing output in 2017. These sectors included automotive, food and beverage, electronics, textile, and chemical. They will be prioritized under the “Making Indonesia 4.0” roadmap. The government is optimistic that this initiative will lead to a massive transformation, including more jobs in the Indonesian market and an increase in exports. President Joko Widodo is confident that implementing Industry 4.0 will help Indonesia become one of the top ten global economies by 2030.
Industry 4.0 refers to the fourth industrial revolution, which transforms manufacturing by implementing new technologies and innovations, particularly in digital technology, cyber-physical systems, biology, and hardware automation. The vision of Industry 4.0 is to make smart factories a reality and fully utilize digital manufacturing. It is believed to be end-to-end digitization in the manufacturing sector and will create an ecosystem across the entire supply chain. Currently, Industry 4.0 is supported by five vital technological innovations: artificial intelligence (AI), Internet of things (IoT), robot and sensor technology, human-machine interface, and 3D printing.
The world is now moving towards Industry 4.0, and Indonesia is also preparing to join the new trend. As the backbone of the Indonesian economy, the manufacturing sector in Indonesia accounted for 20% of Indonesia’s GDP in 2017. Almost one in five of the working population in Indonesia is employed in this sector. Thus, if Industry 4.0 is thriving in Indonesia, the country will see a growth in GDP of at least 7% annually between 2018 and 2030; the manufacturing industry will contribute to 26% of the nation’s by 2030 as well.
Indonesia faces tough competition from countries like China, Vietnam, and Thailand. The government has implemented positive strategies to tackle the challenges, but four significant obstacles remain for Industry 4.0 in Indonesia. These include capability issues, funding problems, lack of technology/digital infrastructure and system suppliers for Industry 4.0, and regulation and policy overlap that require further synchronization. For funding and capabilities problems, not only does the manufacturing sector need a large number of fresh funds, but the implementation of Industry 4.0 also requires foreign talent and technology to help improve the capability and quality of the domestic industry. As for the need for more technology and system suppliers, many manufacturers have been discouraged from migrating to Industry 4.0. Last but not least, harmonization is needed for rules and policies, and the Indonesian government still needs to solve this issue.
Industry 4.0 has great potential in Indonesia due to its large population and high number of smartphone and internet users. A study by McKinsey in 2018 found that almost 78% of Indonesian companies were aware of Industry 4.0, which is second only to Vietnam. Interestingly, countries like Singapore, Malaysia, and Thailand have lower rates of Industry 4.0 awareness than Indonesia. Industry 4.0 will contribute approximately US$121 billion to Indonesia’s GDP if appropriately executed by 2025. It may also help Indonesia earn up to US$150 billion annually by 2025.
4.0 industry in Indonesia is on the horizon, marked by the integration of machine automation and the Internet of Things. It impacts various aspects of daily life, leading to the rise of new startups, job losses for conventional workers, and closures of retail stores, among other changes. The World Economic Forum predicted the loss of 75 job types in the next four years, offset by the creation of 133 new jobs due to technological advancements. Despite the challenges, Industri 4.0 presents new business opportunities. Here are four business opportunities in this era:
1. Startups
The government’s Making Indonesia 4.0 initiative focuses on five industrial sectors: food and beverage, automotive, electronics, chemicals, and textiles. Starting a startup in these sectors may benefit from government support. However, other sectors like artificial intelligence, augmented reality, crypto, and fintech offer untapped potential.
2. Online Buying and Selling
Indonesia already has major marketplaces like Tokopedia and Bukalapak. Regardless of business size, these platforms provide equal opportunities for all. With a large user base, businesses can avoid promotional costs, and online transactions eliminate expenses such as rent and operations, maximizing profits.
3. On-Demand Services
On-demand services cater to user requests, as seen in platforms like Gojek and Grab. Opportunities exist in various sectors, such as housekeeping, custom products, and painting services. Success lies in identifying sectors with a broad market and no dominant players, making it easier to succeed in business competition.
4. Online Marketing
Online marketing is integral to both online and offline businesses. A robust online presence enhances visibility, trust, and customer interaction. Services like Google My Business help offline businesses appear on Google Maps, facilitating customer location discovery.
Industri 4.0 brings challenges and opens doors to innovative business ventures across diverse sectors.
The Indonesian government has launched several key initiatives under the “Making Indonesia 4.0” roadmap to advance the nation’s industrial sector into the Fourth Industrial Revolution. Notable projects include:
1. Indonesia Industry 4.0 Readiness Index (INDI 4.0): This program assesses the preparedness of industries to adopt Industry 4.0 technologies, providing a benchmark for companies to evaluate and enhance their capabilities.
2. Implementation in Textile and Garment Sector: The government is promoting the adoption of Industry 4.0 technologies within the textile and garment industry to boost productivity and competitiveness.
3. Material Flow Improvement in Petrochemical Industry: Efforts are underway to optimize material flow processes in the petrochemical sector, aiming to increase efficiency and reduce production costs.
4. Establishment of Pilot Projects: Pilot projects are being set up in various industries to serve as models for implementing Industry 4.0 technologies, facilitating knowledge transfer and best practices across sectors.
These initiatives reflect the government’s commitment to integrating advanced technologies into key industrial sectors, thereby enhancing productivity and global competitiveness.