Media Release: The fourth industrial revolution offers opportunities to equalise societies: ASEAN must adopt a holistic 4IR agenda that factors in social equality

The fourth industrial revolution offers opportunities to equalise societies: ASEAN must adopt a holistic 4IR agenda that factors in social equality

Counterclockwise starting from top left: Naveen Menon, President (ASEAN) for Cisco; Dato’ Fadzli Shah, Chief Strategy Officer of MDEC; Chandran Nair, Founder and CEO of Global Institute For Tomorrow (GIFT); and Tan Sri Dr. Munir Majid, Chairman of CIMB ASEAN Research Institute


Kuala Lumpur, 22 September 2020 – CIMB ASEAN Research Institute (CARI) hosted the ASEAN Roundtable Series, titled “The 4th Industrial Revolution (4IR) Reimagined Post-COVID-19”.

The session featured insights from industry veterans Naveen Menon, President (ASEAN) for Cisco, Dato’ Fadzli Shah, Chief Strategy Officer for MDEC and Chandran Nair, Senior Fellow of CARI, Founder and CEO of Global Institute for Tomorrow (GIFT). Moderated by Tan Sri Dr. Munir Majid, Chairman of CARI, the discussion centred around recent technological and adoption changes brought on by COVID-19 and how the future of 4IR will look like in ASEAN.

1. The 4IR agenda must take both economic benefits and social equality into account

Panellists of the roundtable agreed that while the economic benefits resulting from 4IR adoption are obvious and vast, there are some challenges that need to be addressed upfront.

“The adoption of technology has been one of the biggest drivers of ASEAN’s growth in recent years. Businesses across the region have pushed the frontiers with technology adoption, which coupled with growing penetration of smartphones, has improved productivity, created entirely new industries and made geographical borders redundant to new, open markets. The impact on jobs is not negligible and is likely to be very different than what we have seen in the past. Workers will need to build new skills, forge new career paths and enter new industries. The scale of the challenge is enormous but the ASEAN nations’ investments in reskilling should allow workers to make this transition”, said Naveen Menon, President, ASEAN for Cisco.

Chandran Nair, however, cautioned against focusing on just economic benefits as very often what drives business benefits are in conflict with the social purpose in countries where governance systems are weak and unable to manage rent-seeking economic activities or where there is growing economic inequality driven by economic policies that are not inclusive.

“To ensure the balance between economic gains and social equality, the 4IR initiatives have to be led by strong government policies and a vision of the country and region that recognises the existential threats we face. IR4.0 and businesses-led initiatives will not do this. The pandemic has exposed this reality,” argued Chandran Nair.

2. 4IR can drive social innovation, but its potential benefits differ depending on the priorities and context of the society and ASEAN member states

“Depending on the priorities and given the context of the society and country, 4IR can allow urbanites to have their food delivered by drones while they watch 24/7 streaming, or it can be used to target issues like food security, provide better education for the poor and even help build a multicultural regional community in ASEAN,” explained Chandran.

Echoing the same observations, Naveen pointed out that 4IR technologies potentially provide ASEAN with the opportunity to drive social innovation and equalise society in economic development, environmental sustainability, education and workforce. However he also noted that Industry 4.0 also brings with it a fresh set of challenges.

“The Fourth industrial revolution (Industry 4.0) promises a connected and smart manufacturing system where the internet, machine (physical system) and humans are working together. However, unlike other industrial revolutions, this industrial revolution deals more with information. The data underlying Industry 4.0 is the critical factor and brings with it new sources of value. We need to recognize the value of this data, enable cross-border data flows, develop ethical AI/ML frameworks and ensure the multiple privacy challenges are overcome. I do believe that privacy is a fundamental human right and we need regulations as well as contextual privacy awareness among consumers to make this more equitable,” added Naveen.

3. Barriers remain for 4IR adoption in ASEAN countries

Naveen pointed out that there are five main reasons causing the pace of adoption of 4IR technologies in ASEAN to be slow and patchy, largely due to cost-related factors, lack of 4IR technology demand and supply.

“In terms of costs, the low labour cost in ASEAN makes it less attractive for manufacturers to adopt 4IR technologies, and manufacturers also face difficulty in accessing affordable experts and skilled talent. Similarly, the costs of implementing new technologies can be too high to justify business cases in the short term. Apart from that, there is no customer demand in the region that requires manufacturers to incorporate seamless and agile processes in manufacturing just yet. Manufacturers are also often unsure how to navigate the complex and changing 4IR supplier landscape,” he said.

Datuk Fadzli Shah also shared the view that cost factors remain a hindrance to 4IR adoption.

“In ASEAN, the scope to expand business through the 4IR is astounding but affordable transformational technologies are hard to come by and that’s a huge challenge in the 4IR adoption. More so when surviving the COVID-19 pandemic is the top priority for most SMEs in these trying times. Although adopting 4IR is of significant importance, most SMEs will defer the plan and prioritise staying afloat during this difficult time,” he stressed.

Chandran however, suggested that ASEAN need a new definition of “productivity” that caters for the people of ASEAN, that may be different from the traditional Western economic model. He questions “the logic of displacing labour with technology, rather than putting policy in place to pay people a fair wage” and ensuring social prosperity in the region.

4. Governmental policy intervention in capability building and facilitation of public-private collaboration are crucial in ensuring regional readiness

Manufacturing is crucial for the ASEAN region as a core driver of economic growth — contributing about $670 billion, or 21 percent — to the region’s 2018 GDP, with more than a third coming from Indonesia alone. The COVID-19 pandemic has certainly accentuated the need for fast adoption of 4IR technology and governments play an important role in driving manufacturing growth to build capabilities and to facilitate collaboration between the public and private sector to accelerate 4IR adoption in this area.

Policy areas such as rolling out of 5G infrastructure, establishing national level agencies to drive the cyber security agenda, and the digital re-skilling of the workforce are enabling conditions that will drive the development of the IR4.0 agenda.

“National strategies on 4IR vary among member states. For example, Malaysia is mostly focused on strengthening workforce capabilities and building a strong ecosystem to foster investment. However, there is limited support for rolling out 4IR technologies in manufacturing. This is largely because manufacturing covers multiple industries, requiring not only more intervention and technology development but also a significant amount of collaboration among and between companies and governments across a region that is becoming more interconnected through trade and investment.” added Naveen.

Chandran however suggested that the process of 4IR policy making should start by exploring the question of whether the policies improve social well-being in the region, and understanding the type of region ASEAN aspire to, given the nature of existential threats.

Conclusion: Policy response to 4IR has to be holistic and include human considerations in the new world economy

In summing up the session, Tan Sri Dr. Munir stressed that the response to 4IR has to move beyond technology adoption to ensure that the implication on industrial restructuring and trade patterns are understood in terms of developing human capital skills, particularly industry planning, and the structure of the new world economy.

“The need to think beyond technology enablement for the future: the impact of technology has been emphasised in terms of its enablement. But we must also look at its disablement. And disablement is not just about employment displacement. We should reflect also on its implications for the texture of society and on the nature of social intercourse.”



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