Industry 4.0 in ASEAN: Creating factories of the future
The age of automation has descended upon us. The advent of artificial intelligence (AI) and internet-of-things (IoT) has completely altered the way we manufacture things. This transformation has been so revolutionary that it is dubbed the fourth industrial revolution or Industry 4.0.
When computers were introduced during Industry 3.0, they disrupted and changed how we did everything. Industry 4.0 builds upon Industry 3.0 but takes it another step further. Computers can communicate and interact with the physical world in ways never seen before, allowing them to make decisions with or without human involvement.
Cyber-physical systems exploit the improved capabilities of computers to create new ways of production and value creation. An example of such a solution would be robotic arms equipped with computer vision capabilities to streamline and increase effectiveness across manufacturing lines today. This forms the basis of Industry 4.0 and enables the transformation of traditional manufacturing firms into smart factories.
Taking a closer look at ASEAN
Sources: ASEANStats; BCG analysis
Based on a McKinsey report, ASEAN is predicted to capture productivity gains of up to US$627 billion. Industry 4.0 represents a golden opportunity for ASEAN nations to grow their industries and boost productivity.
With a strong manufacturing foundation alongside a growing and dynamic domestic market, the ASEAN region is well-poised to take advantage of Industry 4.0.
Business leaders in the manufacturing space are also very hopeful about the future of Industry 4.0. Over 90 per cent of business leaders expect that new technologies brought about by Industry 4.0 will bring about improved performance and boost revenues. Governments are also on-board and have shown great excitement about the potential of Industry 4.0.
Countries are hoping that Industry 4.0 can pave the way to either revitalise or boost the growth of their manufacturing sector. By implementing new manufacturing technologies, countries are looking to boost national productivity and provide more jobs for their people.
To harness the full potential of the fourth industrial revolution, most of the ASEAN countries have issued national strategy plans targeted explicitly at Industry 4.0. To supply the demand for innovation, startups become an indispensable part of that equation.
These plans vary greatly between the different countries due to socio-economic factors and the development of existing infrastructure. They range from more broad-based strategies like Singapore’s Industry Transformation Map that targets more than 20 industries to more targeted strategies like Indonesia 4.0 which only targets five industries.
Despite the diversity, every country prioritises infrastructure building, attracting new investors, and driving innovation as key initiatives to cash in on Industry 4.0.
Among the diverse strategies, Singapore’s strategy stands out as one of the most proactive and ambitious. Innovation has always been the key to Singapore’s success, with Singapore being ranked third in the Bloomberg Innovation Index. This innovation streak has also made its way into the manufacturing space.
How Singapore is riding the wave
Being one of the world’s leading financial hubs, you might assume that Singapore might not have a future in the manufacturing space. This is far from the truth.
On the contrary, Singapore has quietly risen to become one of the top global exporters of high-tech products, and its journey to consolidate its position as the world’s leading industrial hub does not seem to be stopping anytime soon.
Today, Singapore has established itself as a key player in the aerospace, electronics, biomedical sciences, and precision engineering. This has attracted industry giants like Micron and Shell to invest and partner with Singapore to research and develop the latest technologies.
Heeding this advice, Singapore has invested heavily in not only R&D but also the wider Industry 4.0 ecosystem. Singapore has invested S$3.2 billion in Advanced Manufacturing and Engineering domains between 2016 and 2020.
This investment is targeted towards bolstering the innovation capacity of companies embracing Industry 4.0. Looking forward to 2025, Singapore has laid out strategic plans to continue its transformation into a global digital manufacturing hub.
This provides companies with the flexibility and the capability to explore the burgeoning startup ecosystem for tailor-made solutions to their problems. This initiative creates a collaborative environment for startups and corporations to research and test-bed solutions before deploying them.
Innovative startup ecosystem
Since 2014, Singapore has achieved the top rank in the Asia Pacific region on the Global Innovation Index. Singapore has an exceptionally dynamic innovation ecosystem with both private and public supporting organisations.
Organisations such as EDB and Enterprise SG provide schemes and grants to major corporations and startups alike to boost their innovation capability. Well-established global companies like Softbank and Intel have also chosen to populate the innovation ecosystem with their corporate venture capitals.
This amalgamation of private and public organisations creates an environment ripe for startups to innovate and develop. This allowed Singapore to be ranked amongst the top 5 ecosystems for startups in Asia, according to the Global Startup Ecosystem Report (GSER) 2021. Over 36,000 startups have chosen to locate themselves in Singapore, and that number has been steadily growing as the scene becomes more and more established.
The thriving startup ecosystem alongside the well-established manufacturing sector has led to a rise of startups focusing on developing Industry 4.0 solutions. One of such notable startups is Structo, a 3D printing solution provider focused on dentistry, which raised over S$3 million.
It is my firm belief that with continued support from the government, the number of successful startups focusing on making Industry 4.0 a reality will continue to increase.
A strong culture of corporate-startup partnerships
Across the ASEAN landscape, many manufacturing corporations are struggling with Industry 4.0 adoption. One of the key strategies to deal with this challenge is to partner up with innovative startups and accelerate the entire process. Manufacturers are looking towards startups to co-innovate and develop tailor-made solutions.
Strong government support and a growing startup scene positions Singapore as one of the key providers of this solution. Many leading manufacturers have begun exploring Singapore’s startup and SME ecosystem for such solutions.
For instance, when German semiconductor manufacturer giant Infineon was looking for a solution for transporting materials across its production floor, it discovered Hope Technik, a Singaporean SME. The partnership was highly successful and was named the “Most Disruptive Collaboration between an SME and a Multinational Company” at the 2017 Singapore International Chamber of Commerce Awards.
Regional Innovation Hub
To further support the Industry 4.0 ecosystem in Singapore, the Jurong Innovation District was planned and developed. It functions as a home to many players along the entire industrial value chain.
One of the key centrepieces of the district and this movement is the Advanced Remanufacturing and Technology Centre (ARTC).
ARTC is Asia’s first manufacturing innovation centre to embrace and push the idea of the public-private partnership model to its full potential and drive innovation in the manufacturing space. ARTC has strong partnerships with over 60 consortium member companies, including members like Rolls-Royce.
This creates endless opportunities for industrial collaboration. Since its establishment in 2012, it has completed over 50 industry projects.
ARTC collaborations do not only stop at leading players in the industrial space, but it also represents an avenue for startups to get into the fray. One of its key initiatives is the A*STAR Advanced Manufacturing Startup Challenge. The crowdsourcing of ideas from startups can provide an access point for startups to collaborate with well-established industrial partners while solving key industry pain points. This win-win initiative functions as a key opening for startups to break into the Industry 4.0 market and establish themselves as key players in this space.
With the Southeast Asia Manufacturing Alliance (SMA), Singapore will become an avenue for startups to break into the entire Industry 4.0 ecosystem in the SEA region. The SMA creates a playing field for Singapore companies to engage global partners and gain a foothold in the region. This provides a unique value proposition where startups can be nurtured in the Singapore ecosystem while having the opportunity to explore the entire SEA landscape once they have developed.
Amongst the various countries that make up the ASEAN region, it is my firm belief that Singapore has positioned itself to be one of the best avenues to join the Industry 4.0 movement.
With a dynamic innovation ecosystem built upon strong government support and diverse industry partners, Singapore has created an unparalleled platform for startups to transform new and innovative ideas into products used on the factory floor.
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