Embrace Industry 4.0 or risk being left behind

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In Cambodia, the economy is still driven by low-skilled industries despite attempts to move a step further to semi-skilled manufacturing industries. KT/Ven Rathavong

The essence of Industry 4.0’s vision is the “Internet of Things” – the ubiquitous connection of people, things and machines – and Blockchain – a technology that enables the decentralised and secure storage and transfer of information. These technological breakthroughs enable the production of a variety of new goods and services.

Towards this end Cambodia’s new cabinet 6.0 has to take into serious consideration, especially since some senior officials who will be involved in the budget preparations were in WEF, the multifaceted aspects of Industry 4.0 in strategising the country’s industrial strategic plan. The public and the private sector has to move in tandem to embrace Industry 4.0 and we cannot afford to be left behind.

In essence, Industry 4.0 transforms the global landscape of the manufacturing industry while reducing the relative competitive advantage of low-cost regions that rely on cheap labour. Countries and manufacturing firms that take lead in embracing Industry 4.0 technologies and processes will gain competitive advantages. Technologies, data mining and analytics, and innovative ideas are the defining factors of the future economy.

The competitiveness hinges on the ability to transform by responding to market shifts and technology trends. In Cambodia, the economy is still driven by low-skilled industries and despite attempts to move a step further to semi-skilled manufacturing industries or other forms of assembly lines where skills have to be imparted for employees to function, the results of this are at best inconclusive if not unfavourable.

The transformation of the manufacturing industry, through Industry 4.0, is also in line with the United Nations’ Sustainable Development Goals (SGDs), especially in support of Goals 9 and 12. However, the setback here is that Cambodia is far from being an industrial nation.

The kick start towards moving rapidly in that direction would be cheap energy supply chains, possibly by utilizing natural gas and hydropower to attain this. The first production facilities for the offshore extraction of oil by Kris Energy must be accelerated to facilitate the government’s industrial policy (Kris Energy’s apsara field does not contain any gas deposit). Onshore and offshore LNG exploration and exploitation can help supply cheaper energy sources.

Why does energy become such an integral part of Industry 4.0 and its attainability? One of the core aspects envisaged for Industry 4.0 elsewhere, like in neighboring countries such as Malaysia, is the emphasis on sustainable consumption and production patterns. Energy is one of the key components in realizing Industry 4.0.

Sustainable consumption and production is about promoting resource and energy efficiency, sustainable infrastructure, and providing access to basic services, green and decent jobs and a better quality of life for all.

Its implementation helps achieve overall development plans, reduce future economic, environmental and social costs, strengthen economic competitiveness and reduce poverty, says extracts from the Malaysian Policy Framework towards attainment of Industry 4.0.

Achieving Industry 4.0, even partial, is about having in place 11 key elements. They are: additive manufacturing, artificial intelligence (AI), big data analytics, advanced materials, cybersecurity, simulation, cloud computing, augmented reality, internet of things (IoT), autonomous robots and systems integration as identified by neighboring Malaysia.

Industry 4.0 is a complex, interconnected issue that requires holistic solutions and whole-of-government approach. The very nature of Industry 4.0 is hard to comprehend, at least for the policy makers in Cambodia. Hence, there is a need to inform and educate policy makers at all levels, create national committees, and prepare a national budget to develop and implement national policy on Industry 4.0.

Several of the globally leading manufacturing countries have already embarked on their Industry 4.0 transformation and are in advanced stages of implementation, e.g. Germany, US, Britain, China and Korea. It is, thus, imperative for Cambodia to both learn from these experiences and to move fast in its own Industry 4.0 adoption. The Kingdom has the advantage of hindsight, as usual, learning from the experiences and mistakes of others in moving towards this while new world of Industry 4.0. This could mean more challenging and competitive investment and manufacturing criteria but also more importantly, added incentives and motivations for higher skills training for the labour force to learn and adapt and do it quickly as well.

Cambodia is trying hard to move away from being an investment destination for the low cost labour manufacturing sector. At the same time, it is challenged by lower cost competitors from emerging economies and rapidly changing technologies.

Cambodia’s position as a production investment destination is slowly being eroded in line with the global trends where major factors will impact on the future of low cost manufacturing and its competitive position, offering opportunities for growth, but also challenging its position. They are shifting global value chains, quality of labour and competitive labour cost and development of new technologies which makes this unskilled labour force redundant.

Having identified all of the above from nations which have done critical analysis and studies on the impact of Industry 4.0, where is Cambodia heading to in its preparations, especially given a new generation who are tech savvy, innovative in developing technology related apps and related products and hungry for government aid to initiate an incubation centre.

This is the million dollar question which Cambodia’s cabinet 6.0 has to study and tackle and set as a priority. Hopefully, there will be a mid-term cabinet reshuffle paving the way for more young professionals and technocrats to help steer Industry 4.0. The days of the geriatric, technologically-left-behind cabinet members could be coming to an end. The priority now is to get the country moving forward on the path of the Fourth Industrial Revolution.

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