The potential of IoT in Indonesia

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Photo: Teresa Umali/OpenGov

The market share of the Internet of Things (IoT) in Indonesia, according to the Indonesian Minister of Industry, is expected to grow rapidly.

As reported, the value of IoT in the country is expected to reach US$ 30 billion (IDR 444 trillion) by 2022.

The reported value is a summation of all the contributions of several components: content and application, platform, IoT devices, and networks and gateways.

The value of content and application is expected to reach US$ 13.1 billion (IDR 192.1 trillion); the platform will be contributing US$ 11 billion (IDR 156.8 trillion); IoT devices is expected to reach US$ 3.8 billion (IDR 56 trillion); and the networks and gateways will reach US$ 2.7 billion (IDR 39.1 trillion).

The Minister furthered that there are 5 digital technologies fundamental in implementing Industrial Revolution 4.0 in Indonesia.

These technologies are IoT; artificial intelligence (AI); augmented reality and virtual reality (AR/VR); advanced robotics; and 3D printing.

However, the focus, for now, should be, according to him, on IoT, and that is what the young generation needs to master.

IoT comprises of the networks of physical devices, vehicles, household appliances, and other items with electronic devices, software, sensors, actuators, and connectivity.

IoT devices are able to connect to the internet and are capable of collecting and exchanging data.

Based on the Indonesian IoT Forum data, there are possibly around 400 million sensor devices installed in the country.

16% are in the manufacturing industry, 15% are in the health sector, 11% in insurance, and 10% in banking and security. Retail, wholesale, and computer repair sector all have 8% each.

Moreover, the government has 8%, transportation has 6% and utilities have 5%. Real estate, business services, and agriculture have 4% each. The remaining 3% is in households.

The Government is currently developing the Palapa Ring, which is a 36,000 km fiber optic project in 440 cities in Indonesia.

This is being done in order to provide high-speed internet access for the country in 2019.

That way, no IoT connectivity problems will be encountered.

In order to successfully adapt to the changes brought about by IoT, the Minister of Communications and Informatics highlighted the significance of human resource (HR) development.

The Government is continuously facilitating initiatives that will accelerate the quality of the country’s human resources.

The government needs the involvement and cooperation of all stakeholders coming from the business sector, the academe, and the community to make this successful.

 

 

 

 

 

This article was first published on Open Gov on 17th November 2018

Indonesia rolls out index to assess progress on Industry 4.0

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“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.

Indonesia Industry 4.0 – Focus on Ready Made Garment (RMG) Sector

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Indonesia is one of the top largest manufacturing nations in the world, defined by output. The manufacturing sector employs more than 25 million workers and accounted for ~20% of Indonesia’s GDP in 2017, totaling roughly USD 203 billion. The sector has seen 67% growth annually for several years and is the backbone of the Indonesian economy.

Indonesia has rolled out a roadmap for industry 4.0 for its most vital sectors. Food & beverage, automotive, textile, electronics, and chemical jointly accounted for close to 2/3 of Indonesia’s total manufacturing output in 2017 and will be prioritized by the government under the new roadmap.

Manufacturing contributes significantly to employment in Indonesia with close to 1/5 of the working population being employed by the sector. The glory days of Indonesian manufacturing, however, has long since passed and Indonesia today faces immense competition from countries such as Vietnam, Thailand, and China.

The roadmap aims to improve the flow of goods, empower SMEs, increase foreign investments, strengthen the national digital infrastructure and sharpen the quality of human resources. This roadmap implementation will see new opportunities generated in IoT, automation and robotics, human-machine interface and AI…etc.

There’s a target of 5% of the global share, which may sound ambitious in the current situation but not impossible. There are lots of challenges, but the government has already taken lots of positive and potential initiatives to achieve the goal. These include funding and subsidies, as well as tax holiday programs. To ensure maximum impact by the roadmap, a wide range of stakeholders are being involved. Leading industry companies, industry associations, tech companies, as well as research and educational organizations are some of the stakeholders being engaged by the government.

Manufacturing, being one of the major priority sectors of Indonesia, it can become a global leader under this roadmap, with manufacturing forecasts to account for 21 to 26 percent of GDP by 2030, up from 18 percent in 2016. It will make seven million to nineteen million new jobs by 2030 and that will contribute a sustainable GDP growth 1 to 2 percent.

Efforts to advance Industry 4.0 implementation in Indonesia will bring massive opportunities for foreign companies and investors. Indonesia’s most important industries are in strong need of productivity improvements to increase efficiency and the government’s ambitions to support these industries will be vital in the coming years to increase effectiveness.