Majority of Malaysian SMEs yet to adopt Industry 4.0, say industry experts

Penang State Exco Datuk Abdul Halim Hussain (centre) pose with panellist and participants during the Industrial Transformation Asia Pacific 4.0 Forum in Penang August 19, 2019. — Picture by Sayuti Zainudin
Penang State Exco Datuk Abdul Halim Hussain (centre) pose with panellist and participants during the Industrial Transformation Asia Pacific 4.0 Forum in Penang August 19, 2019. — Picture by Sayuti Zainudin

GEORGE TOWN, Aug 19 — The lack of structure and collaboration between public and private sectors in pushing through the country’s Industry 4.0 Blueprint has led to a dismal number of local small-medium enterprises (SME) taking the leap to upgrade to Industry 4.0 (I4.0) technology, industry experts say.

Penang Skills Development Centre (PSDC) Chief Executive Officer Muhamad Ali Hajah Mydin estimated that only between 10 to 15 per cent of the SMEs in the country had taken steps to adopt I4.0 technology.

“This is a rough estimate that only 10 to 15 per cent of the SMEs that are dealing with tier one MNCs are migrating to I4.0 because they don’t have a choice,” he said in a press conference at an Industrial Transformation Asia Pacific 4.0 Forum at PSDC today.

He said Penang has started the promotion and awareness on migrating to I4.0 since 2016.

“There are migration by some companies but the numbers are not many and bigger migration can only happen when the government lay out their plans under the I4.0 Blueprint,” he said.

He said the blueprint was launched last October with RM2 billion loans announced but many in the industry do not know how to apply or access the loans.

“There were no structured paths or clarity for the SMEs to move forward or to take advantage of the facilities offered by the government under its blueprint,” he said.

He said the next Budget is coming up and yet the system under the blueprint was still lacking.

According to Industry 4.0 Malaysia Association President Raja Teagarajan, up to date, only 90 companies were found to be viable for subsidies under the blueprint.

“They have a key performance index to assist at least 500 companies under the blueprint,” he said.

There are over 500,000 SMEs in the country.

Messe Worldwide Sdn Bhd sales director Foong Lai Lyn said the main issues in the implementation of the I4.0 blueprint were that too many agencies wanted to take the lead in it.

“There is a need to establish a one-stop centre, a single agency, to take charge of this I4.0 and to channel information such as how to apply for the subsidies, the criteria for the subsidies and the steps to take,” she said.

She added that this is an issue that was not only confined to Malaysia but it is also the same in Singapore and other Asean countries.

“All sectors, the public and the private too, needed to work together on this rather than having different agencies giving different information that could confuse the SMEs,” she said.

Another reason why SMEs are reluctant to embrace I4.0 were the repercussions in terms of costs and workforce.

Foong said many SMEs were scared of repercussions if they adopt I4.0 especially on the costs.

“They are worried about how much they had to spend and how long before they can get a return on investment,” she said.

She said this was why forums on I4.0 are being held to help SMEs look at how they can start adopting the I4.0 in baby steps that do not swallow huge investments.

SingEx Exhibitions Pte Ltd executive director James Boey the slow uptake of I4.0 among SMEs was not only confined to Malaysia but also in other Asean countries including Singapore.

“SMEs are starting to adopt I4.0 but they are stuck in the pilot tract and sometimes, it was the cost factor that are holding them back,” he said.

He said this was why SMEs are encouraged to attend I4.0 forums and also the Industrial Transformation Asia-Pacific 2019 trade show and conference in Singapore. 

The event, organised by Deutsche Messe and SingEx Exhibitions, will be held between October 22 and 24 at the Singapore Expo Convention and Exhibition Centre.

Raja said about 50 to 60 Malaysian companies are expected to take part in the event.

“We hope that we can get more than 100 companies to take part so that they can learn more about I4.0 processes, technologies and how to adopt new business models to remain competitive,” he said.

The Transformation Asia Pacific 4.0 Forum here is the first of four roadshows to share, collaborate and network with local companies on the adoption of I4.0.

The forums will be held in Kuala Lumpur (August 22), Sabah (August 27) and Sarawak (August 28) after this.

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