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Moving past the Pilot Trap to unleash Industry 4.0
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Illustration of Industry 4.0. (Shutterstock/File)
I
mplementing new manufacturing technologies — collectively known as Industry 4.0 — in Indonesia can deliver a substantial boost to the nation’s economy. To succeed, however, government and businesses must find ways to encourage greater confidence, create robust ecosystems, and help early adopters move past the “Pilot Trap”.
Conversations around the Pilot Trap and other hurdles that manufacturers face in adopting the newest technologies are crucial if Indonesia and other countries are to be equal partners amid a changing global economy. Public and private leaders are meeting in Davos, Switzerland, for the World Economic Forum’s annual meeting. Central to this year’s theme is using the “Fourth Industrial Revolution”, or Industry 4.0, to ensure that globalization becomes more inclusive.
Manufacturing accounts for about 18 percent of Indonesia’s gross domestic product, creating an imperative to accelerate the adoption of new digital technologies. One recent McKinsey study estimated that digitization could add US$120 billion to Indonesia’s economic output by 2025, with more than a quarter of this — about $34 billion — coming from manufacturing. No other sector comes close to this potential.
Stakeholders in Indonesia are preparing for Industry 4.0. In April, the country launched “Making Indonesia 4.0”. Among a wide range of themes, the initiative includes incentives for the country’s 3.7 million small- and mid-sized enterprises to adopt new technologies, a critical component since small businesses are generally most reluctant to assume risks.
