KUALA LUMPUR, April 17 — Many small and medium enterprises (SMEs) in the manufacturing sector outside the Klang Valley are facing difficulties in adapting to the Industry 4.0 (I4.0) as they remain heavily reliant on physical labour.
With most conferences, seminars and roadshows on I4.0 geared towards the deep-pocketed and where only massive corporations or large-scale companies can afford to implement the changes, many local SME owners are left wondering: “How does this apply to me?”
However, the Malaysian National Computer Confederation (MNCC), P2P Talent Development and the Malaysian Productivity Corporation are aiming to address this void by organising a conference of not just talks but networking opportunities between the SMEs and implementers as well as investors.
Titled “Industry 4.0: Demystify, Funding and Roadmap” the conference aims at providing baby steps to the local SME industry on how they can adapt to the future, remain competitive, and not be left behind, all while ensuring they can afford to change.
Local players still stuck in Industry 2.5
In an exclusive interview with Malay Mail, MNCC president Professor Ahmad Zaki Abu Bakar said his aim in organising this conference on April 30 at Hilton Petaling Jaya was to ensure that Malaysian SMEs keep astrid with global advancements.
He recalled a worrying fact revealed when the International Trade and Industries Ministry (Miti) made an assessment regarding the nation's readiness to embrace I4.0: Many local players are still stuck in Industry 2.5.
“And there's also assessment being done — are they I4.0 ready? When I was in the MITI task force for I4.0, not many companies are I4.0 ready.
“Actually many are I2.5 ready, that means they are still in the industrial zone. This means that many of our own companies in Malaysia is still labour intensive, especially production and manufacturing. They are still at that level,” said Ahmad Zaki.
Apparently, many in the SME sector are aware and interested in adapting to I4.0 but they are not sure what is in it for them besides having to fork out a lot of money for investment.
The reason behind their reluctance to adapt and its severe consequences
One of the speakers for the conference, Jimmy Cheah, said the reasons behind their refusal to adopt I4.0 are complex.
One major factor for their reluctance to invest in new technology is that Malaysia had adopted industrial technology earlier than countries such as Vietnam and South Korea.
Therefore, many local SME manufacturers have already spent heavily on machinery and equipment, and feel that they have not fully utilised their investments to its maximum capacity.
"The analogy I can give is simple, someone from Generation X or baby boomer is used to desktops or laptops — these are the Malaysian SMEs because we adopted technology earlier than South Korea or Vietnam.
“However, South Korea and Vietnam adapted to the current technology quickly because they started later than us and they began with more modern technology — just like how a millennial easily adopts the iPad or smartphones when compared to the older generation,” Cheah pointed out.
He has also observed recalcitrant manufacturers who still have a labour-intensive mindset and who believed it cheaper to simply hire more workers instead of automating their factories.
The Enterprise Online chief executive officer warned that this attitude will leave these companies in a lurch, saying they might be rendered obsolete in roughly 10 years time or less by their inability to compete with other markets.
“Their lifespan will be slightly longer than 10 years but they will be less competitive and we are talking about the domestic market. For industries competing outside of Malaysia, then their lifespan will be shorter.
“Some countries can produce things cheaper, using the same (outdated) technology. But if these companies branch into newer technologies they can be even cheaper,” he warned.
What can 'Industry 4.0: Demystify, Funding and Roadmap' offer?
Unlike many other I4.0 conferences, “Industry 4.0: Demystify, Funding and Roadmap” is geared towards ensuring that local SMEs outside Klang Valley will have something they can take home and implement.
It is not targeted at large corporations or those with big budgets, but rather manufacturers that are still producing at the I2.5 level.
“The way we structure our programme is actually not very much product centric. So the speakers we invited are implementers. They are not selling boxes.
“Some of the speakers I talk to, they have this observation and they provide feedback to the organiser — when people come in and they just listen to the speakers in other I 4.0 conference they just talk about products and they cannot relate to it.
"So our afternoon session is more on implementation. We talk about success and failure cases. We give people a feel about where they should start and not to aim too high," Cheah explained.
He added that there will be a two-hour guided networking session in the afternoon with various luminaries and speakers in diverse fields such as Bank Pembangunan's Chief Business Officer Ahmad Mochtar Hashim, Malaysian Industrial Development Finance Bhd head of marketing and market development Norazlan Zakaria, Ashisuto Global Technologies CEO Tham Kok Tong, Ernst and Young Advisory Services Director Tan Chiaw Hooi and Favoriot co-founder S Gopinath Rao among others.
Participants will have an opportunity to engage with the speakers during the afternoon’s guided networking session.
Here, they can learn on other forms of financing they can utilise to invest in I4.0 equipment besides the usual SME financing.
“We also have funding agencies that come in (to the conference) such as Bank Pembangunan, they only handle loans of RM20 million and above.
“MIDF is giving RM20 million and below, so we have two groups of people coming in. If certain organisations require short term funding, they can get direct from fintech. Or if they are a start up and not eligible for funding, they can go through equity crowdfunding.
“So the base is actually broad. A lot of the initiative currently everyone is aiming at SME funding, which is quite limited,” said Cheah.
Those interested can contact O'Neil Lim at +6016-4194343 or email him at [email protected]