Anticipating Industry 4.0

KOMPAS/DIDIE SW

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In the past four years or fewer, the Indonesian nation had experienced two revolutions. However, as exemplary as they were, it seems they have been poorly understood.

As fluid as the meaning and form of the intellectual revolution presented earlier, perhaps only a few people understand the meaning of the current industrial revolution. That is, if we dare to be honest, and moreover, if we trace its progress since the industrial revolution in England several centuries ago. Without thinking about its origins, it appears that present-day thinking and intention are not far from developing the nation’s industrial power, whether through foreign direct investment (FDI) or non-FDI. The government has also introduced a roadmap to realize the revolution. Of the 10 sectors on this roadmap, the four sectors of human resources, innovation, technology and harmonization of policies and regulations are important to study.

Do we need a revolution? Forget the play on words. Previous governments also had a need to develop industry. Various policies, including on the above four sectors, were discussed. The map was created in 1969, during the era of the State Guidelines (GBHN) and the Five-Year Development Plan (Repelita) according to the history of national development. The difference was that it did not come from a revolution, but from a plan, and was issued by the People’s Consultative Assembly (MPR)!

In the third Repelita, aside from developing a strong agriculture sector, the focus shifted gradually to the industry sector.

The story tells that the spectrum and scope of industrial development was improved during the fourth Repelita (commencing just before the mid-1980s), with a focus on manufacturing machinery for agricultural processing. This was done gradually. However, this is just a story of the past. Just like during the 10 years of the previous administration, the implementation of all intents and plans to develop industry, only one of which was truly national, did not result in the expected outcome because of many causes and particular conditions.

The industry approach should be taken. Although the agriculture sector must be prioritized (whether because of the ideological, economic, political or sociological fact that most people make a living from rural farming or because of the will to develop strong food security), we must accept the fact that the industry sector offers broader opportunities and job creation amid the exponential growth of the workforce.

Technology and its role

Then, what should we learn from all this? Experience has left the message and teaching, especially at the government level, on the importance of shared thinking as a basis of planning and action. The message and teaching to design and apply social engineering will improve the culture of industry in society. Without a common understanding in all elements of governance in strategy and policy, it is hard to realize harmonious and concurrent plans and actions across sectors.

All possess the roadmap, but journey according to their own interpretations. They are neither interlinked nor do they aim for the same target. In the end, every new government has to start over. Learning from experience also, it is not wrong that the roadmap’s final sector gives primary and priority attention to the harmonization of policies and regulations.

The same is true among the public. Industrial life has been taken hostage conceptually in the history of industrial growth and development, especially since the “development era” was co-opted by the "trader" mindset.

Take, for example, the role and function of technology, which is not only pivotal to industrial ventures, but often appears as a minor element on the government\'s industrial revolution roadmap. In addition to funds and skilled labor, it is impossible to develop industry while neglecting the technological factors.

Among the other components of capital, it is no exaggeration to call technology the most important factor. Some even call technology the soul of industry. The more advanced, better, more effective and more efficient the technological invention, the higher its value as a business asset, and the stronger the competitiveness of the products, in both price and quality.

Technology must be seen as something that is not given. Finding new technology or expanding it is obviously a time-consuming process. In addition to the readiness of quality human resources and a climate that stimulates it, it is also costly. As a product of the human intellect, technology is not something that falls off a tree. It is birthed and developed amid a society that knows the value of hard work that acknowledges, respects, and supports the protection of intellectual property. Developing human resources in the context of this technology, as revealed in the roadmap, should be understood in its relevance to education, law enforcement and the growth of an industrial society.

Only through technology can we simultaneously manage and plan the many aspects that require determination of intent, similarity or action. In recent years, we have been buoyed by words and rhetoric about innovation. Innovation is clearly important and necessary. However, industry needs the courage to be more honest in accepting that the primary need is technology.

Without exaggerating, the acquisition of technology, whether through its creation, research, development or other means, is at the core of the industrial activity and strength. Innovation, the word that refers to the context of method, follows. Under the framework of an increasingly open market and competition, this factor needs critical attention.

Moreover, the invention, creation or development of the necessary technology (though this possibility is small) or, further, the basic selection and acquisition of technology should be encouraged, counseled and aided in an effort to cultivate and encourage early industry – small, medium or large.

Need for “workable” incentive

The academic circle talks a lot about the triple helix. Government circles talk about the synchronization and integration of research policies – research institutions and industry/university development. The discourse has not only been long, but has been repetitive and tends to be boring, but a conclusion has not yet materialized. Policies were implemented one after another, but the universities that now have good access or ease in obtaining research funding are still shouting about the difficulties they face in marketing the technology that its inventors have produced.

At the same time, the new/early industry sector, especially the small and medium-sized ones, is experiencing difficulties not only in financing, but also in obtaining technology for their business activities. The latter is less of an issue for businesses that grew considerably during the development era. They operate initially with the technology provided or under license from the principal.

Even if the current industrial revolution is being undertaken to build a strong national industry as part of the nation’s economic development (and must stay away from discriminatory thoughts as prohibited under the WTO principles), the nation’s interests still need direction and clear guidance to help grow and develop small and medium-sized industries.

In the context of the policy for linking research and development activities with industrial activities, it seems that the direction and scope of applied research activities have not been honed. There must be not just willingness, but also a clear political and policy approach that research must be industry-based and oriented to real industrial needs and capabilities. Only then can synergy materialize and the technological findings of research or development be absorbed by the industry sector.

The tax incentive introduced in Government Regulation (PP) No. 35/2007 for engineering, financing, innovation and technological diffusion that reportedly has not run effectively, should be pursued. The concept of tax amnesty appears to need clarification in relation to the tax law. This will not be simple, because in addition to clarity on whether the idea can be understood clearly from the language of the taxation legislation, the PP is also constrained by psychological problems in both legislative techniques and bureaucratic approach. PP No. 35/2007 derives from Law No. 8/2002 on research and development and science and technology implementation, which is far from the law that forms the basis of work for tax officials.

It is not just research activities, and perhaps the trouble that haunts industry is the financing aspect. Will the banking sector be ready to help start-ups? Will and can a general venture capitalist help an early industry effort whose success is as yet uncertain? Encouragement and assistance is required to generate capital, including an incentive scheme for establishing businesses and venture capital financing (particularly in R&D productivity at higher education institutions), so that it can be established near these early industry ventures.

This is important, because the new, technology-driven efforts at industrial growth do not stop merely at the business’s merit, but also require assistance in production and marketing management. Is it not true that these three areas of assistance are the true aim of a venture capitalist’s formation, nature and scope of work?

Again, the small picture of the technology issue summarizes the relevance of almost every element on the roadmap: the preparation of human resources, including intellectual property rights (IPR) for the creation of a climate more conducive to technology discovery/creation (and other intellectual works); IPR education for the development of qualified human resources in managing and protecting technology and IPR in general; and building technological development and implementation capacity and financing and incentive schemes, in addition to the development of other supporting forces, including the growth of industrial culture.

In the era of this government, which has promised quality human resources and the use of science and technology as a paradigm from the beginning, its effort to build a revolution around technology has actually gained momentum. It would be great if one really knows how to use it and intends to do so.

Bambang Kesowo, Public Policy Observer