Is Downstreaming Possible Without Mastering Technology?

Allowing downstream industries to be run by personnel who do not understand how the industry works will endanger safety.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Mungkinkah Hilirisasi Tanpa Penguasaan Teknologi

SUPRIYANTO

Illustration/Supriyanto

In his speech at the 2024 Manufacturing Day Summit, Friday (19/1/2024), Minister of State for the Ministry of Trade and Industry of Singapore Alvin Tan proudly said, "Singapore is the 'power house' of the manufacturing industry in the region." In size, the contribution of the manufacturing industry to Singapore's gross domestic product reaches 20 percent.

All of it was achieved through a lengthy process. Singapore has been developing its manufacturing industry since 1972.

Consistency in implementing policies is one key to the success of industrial development in the country.

This includes education which is oriented towards providing talents to support the development of the manufacturing industry.

Hewlett-Packard Chief Executive Officer Enrique Lores, when asked why the computer equipment company chose Singapore as its production base for more than 40 years, gave three reasons. First, Singapore is a strategic hub for entering markets in the region.

Second, Singapore provides ease of doing business to every company that wants to invest in that country. Third, it's easy to get the talents needed. Even if they are not from Singapore, workers from outside do not mind being placed in Singapore.

When speaking at the World Economic Forum in Davos, Switzerland, Singaporean President Tharman Shanmugaratnam conveyed the idea of the need for industrial development policies that are supported by social development policies on an industrial scale.

In this case, it is important to outline a systematic approach in preparing human resources (HR) and this is done through high quality education for all people (education for all).

Consistency in implementing policies is one key to the success of industrial development in the country.

All of these are necessary because in the end, industrial development must be supported by resources that have capacity and skills. This stage cannot be achieved overnight, but must go through constant skill maturation.

In fact, nowadays with changes so fast, the education system must also be able to respond quickly. Because, we know that technology is developing very rapidly with the presence of artificial intelligence (AI), not to mention the issue of digitalization, as well as green energy, which requires the mastery of even more different skills.

Long-term

The journey that Singapore has undertaken to become an industrialized nation can be a reference point, especially regarding how to synchronize the education system with industrial development. Industrial players are not merely users, but they are also actively involved in providing input regarding the curriculum that needs to be implemented.

Especially for polytechnics, entrepreneurs in Singapore even sit as members of the board of trustees. Some companies donate technology that is used in their companies to be used by students as well.

It is not surprising that today's young Singaporeans choose to enter polytechnics rather than attend junior college to enter university. Last year, around 21,100 young Singaporeans chose to take three years of education at polytechnics.

With the special skills acquired from polytechnic education, graduates can immediately work in companies within their desired field of expertise. The companies do not need to go through the trouble of re-educating the polytechnic graduates because they are already accustomed to operating the equipment during their education.

While Indonesia is currently rushing to implement its downstreamization policy, the problem that many companies face is the availability of talent. The number of skilled workers available to run the industry is very limited.

If we look at the existing education demographics, it is fitting that we need to hurry to catch up. Imagine, according to data as of June 2022, the number of master's and doctoral degree holders we have is less than 0.5 percent or less than one million people. The number of bachelor's degree holders is less than 5 percent or only around 12 million people.

This is only talking about the issue of quantity, not expertise. Because other data shows that Indonesia has more social science graduates than engineering graduates.

What about the number of people who will become industrial operators? The number of D-3 graduates is 1.28 percent or around 3.5 million people. Meanwhile, the number of D-1 and D-2 graduates is only 0.41 percent or around 1.1 million people.

Don't be surprised if when the government wants to develop the nickel industry, which will be the backbone of the electric car battery industry, for example, many workers are brought in from China.

While Indonesia is currently rushing to implement its downstream policy, the problem that many companies face is the availability of talent.

Apart from the fact that the industrial development concept uses turn-key, there is not enough manpower available within the country.

We should be more concerned about the development of smelters from the downstreaming program. Almost all of the capital goods used practically have to be imported from abroad. For example, the PT Freeport Indonesia smelter development project, both its capital goods and contractors, is a Japanese company that will soon be inaugurated.

Almost all industrial capital goods in Indonesia have to be purchased or imported from abroad because we do not have many metallurgy experts in the country. The machining industry in Indonesia is still largely capable of producing basic industries, but not yet able to build for high-end industrial needs, such as smelter industry, petrochemical, and power plants.

do not stop

In 2011 there were good policies adopted by the government to improve the quality of Indonesian human resources. The government sets aside its budget to be managed by the Education Fund Management Institute (LPDP) so that it can send Indonesian children to continue their postgraduate education abroad.

Currently, the collected budget has reached Rp 140 trillion or nearly 10 billion US dollars. If the cost of education for one student abroad reaches 100,000 US dollars, then there could be 100,000 graduate students produced.

Compared to China, we have a far smaller number of students we can send abroad for education. In 10 years, from 2010 to 2020, China sent more than five million students to study overseas. It's no wonder that China's industrial development has seen exponential growth.

Therefore, we hope that the plan to temporarily halt the allocation of education funds through LPDP will not be implemented. In fact, Indonesia should increase its education budget because we want to build industries and become an industrialized nation. If we cannot utilize LPDP funds effectively, it means that there is a concept of scholarship distribution that needs to be improved.

Sending students to study abroad must actually be accelerated and more focused on the field of engineering. We must deliberately have the courage to determine that 80 percent of students who receive LPDP scholarships must take engineering and the rest should study social sciences.

The government's downstreaming program will not be successful without the support of skilled experts and skilled field personnel.

We must also be able to make extraordinary leaps to equip Indonesian children with technology skills and produce high-tech capital goods.

We must realize that there is no such thing as technology transfer. No country will ever want to share their knowledge of the technology they have mastered. We must, therefore, seize, develop and master the technology that we create ourselves.

Various incidents of smelter explosions that have occurred repeatedly in the nickel industry in Morowali recently serve as a warning that we need more competent resources. The higher the developed industry, the more complex and high-risk it becomes. Therefore, skilled, disciplined, and knowledgeable workers who understand the workings of high-tech industries are needed.

Sending students to study abroad must actually be accelerated and more focused on the field of engineering.

Allowing downstream industries to be run by individuals who do not understand the workings of the industry can pose a danger to the safety of citizens. The region certainly does not want more victims to fall because we are capable of preparing skilled workers who are needed.

Our journey to become an industrial nation is still long. Singapore can become an advanced industrial country because 41.6 percent of its population has a bachelor's degree or higher. All advanced industrial nations have a minimum of 25 percent of their population with bachelor's degrees. It will take time to raise the percentage of Indonesians with bachelor's degrees from the current 5 percent to above 25 percent.

Also read: Downstreaming and Increasing Economic Complexity

SuryopratomoIndonesian Ambassador to Singapore

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