Indonesia rolls out index to assess progress on Industry 4.0


“If properly done, Industry 4.0 could contribute nearly $121 billion to Indonesia’s gross domestic product by 2025.”

The government has devised an index to measure the productivity and competitiveness of domestic manufacturers as the world enters the fourth industrial revolution, popularly called Industry 4.0.

The Indonesia Industry 4.0 Readiness Index (INDI 4.0) supports a government road map called Making Indonesia 4.0, which was launched by President Joko “Jokowi” Widodo in April last year.

The head of the Industry Ministry’s Industrial Research and Development Agency (BPPI), Ngakan Timur Antara, explained that INDI 4.0 consisted of five main development indicators: people and culture, management and organization, products and services, factory operations, and technology. Scores for each of the indicators range from 0 to 4.

“Currently, about 10 companies have signed up for the index, but we actually scored 20 companies before the index [was officially launched],” Ngakan told reporters at a recent press briefing. “We have trained 40 people to assess these companies and guide them in upgrading themselves once they receive their assessment results.”

The ministry, he added, would announce the index scores of all participants from March 20 to 21, following a conference and an opportunity for the companies to showcase themselves at the ministry’s headquarters. The registration and scoring process began this week.

Few of the companies the ministry had assessed were ready for Industry 4.0 in terms of their manufacturing activities, said Ngakan, adding that most of them had at least acknowledged the revolution.

He encouraged manufacturers to immediately take action, quoting undisclosed corporate research claiming that, if properly implemented, Industry 4.0 would “slash production costs by between 15 and 20 percent and the number of rejected products by 40 percent.”

Ngakan also addressed the issue of capital to obtain Industry 4.0 technology, noting that a factory owned by France-based Schneider Electric in Batam, Riau Islands, had earned back within a year all the money it had disbursed to implement Industry 4.0.

In accordance with President Jokowi’s road map, the index would prioritize five industries to score: food and beverage, textile and garment, automotive, chemical and electronics.

“Nevertheless, other industries are very much welcome to join the scoring […] as it would be useful for manufacturers’ self-assessments,” said Ngakan.

All costs of the index assessment will be borne by the 2019 state budget funds allocated for the ministry, which in 2018 had been granted an additional budget of Rp 2.57 trillion (US$181 million) dedicated to the Making Indonesia 4.0 road map.

According to a 2018 study by global consulting firm McKinsey, 78 percent of Indonesian companies are aware of the Industry 4.0 concept. The figure was beaten only by Vietnam at 79 percent, while countries like Thailand, Singapore and Malaysia saw lower awareness rates.

If properly done, Industry 4.0 could contribute nearly $121 billion to Indonesia’s gross domestic product by 2025, McKinsey calculated.

An Industry 4.0-ready manufacturing sector is expected to provide more than a quarter of the GDP increase at $34 billion, followed by retail at $25 billion, transportation at $16 billion, mining at $15 billion, agriculture at $11 billion, telecommunications at $8 billion, health care at $7 billion, public sector and utilities at $5 billion and financial services at $2 billion.

Indonesia Cloud Computing Association (ACCI) chairman Alex Budiyanto lauded the initiative, saying the association would support the ministry in the scoring effort, as cloud computing was the heart of a state-of-the-art Industry 4.0.

“Getting internet bandwidth and electricity as the enablers of cloud computing, I believe, is no longer an issue in Indonesia these days,” Alex said following the briefing. “[Industry 4.0] could help even more conventional businesses, in fact, by eliminating risks from things like blackouts or broken computers.”

The ACCI, he added, was currently working with the International Data Center (IDC) to measure the efficiency changes from incorporating Industry 4.0 technology and cloud computing in manufacturing environments.