IR4.0 will help SMEs boost revenue

KUALA LUMPUR: The small- and medium-sized enterprises (SMEs) can boost revenue growth by eight to 12 per cent a year, by shifting their conventional businesses into the realm of Industrial Revolution 4.0 (IR4.0).

Knowledge Com Corp Sdn Bhd chief executive officer, S.T. Rubaneswaran, said the government expected to see between 30 and 40 per cent revenue increase in the sector within the next five years at a cost reduction of five to eight per cent a year.

IR4.0 is the next phase of digitisation in the manufacturing sector which can assist SMEs expand their businesses and help reduce costs as well as eliminate Malaysia’s dependency on low-skilled foreign labour.

“So if you look at the good side, you can increase your revenue and reduce your cost and you already have a high profit, so that is how it works by using IR4.0 technology,” he said in an exclusive interview with Bernama recently.

Rubaneswaran said the IR4.0 landscape in Malaysia presented a different set of challenges.

While many local companies were still focusing on survival and sustenance, there are some which already have advanced systems in their businesses, he said.

“Industry experts have predicted the need for Malaysian SMEs to continue efforts towards reaching IR4.0 standards. This is necessary to ensure Malaysia is not left behind in the global manufacturing sector,” he said.

According to the National Empowerment in Certification and Training (NECT-Gen) Industry 4.0 Report, Malaysia’s economy is the fourth largest in Southeast Asia and the third richest by gross domestic product per capita values, after Singapore and Brunei.

Yet, a large number of Malaysian SMEs hire low-cost foreign workers rather than quality skill-based workforce.

“It is clear that we are still somewhat dependent on labour-intensive systems. However, this does not mean that we have not made strides into the realm of Industry 4.0. Fact is, we are already on the right track in embracing the new revolution while making progressive changes to our manufacturing practices,” it said.

The Ministry of international Trade and Industry (MITI) has highlighted the fact that cheap labour would not be sustainable in the long run and proned to human errors, eventually reducing the quality of products.

On its website, MITI also quoted a study by the Boston Consulting Group stating that the rapid adoption of Industry 4.0 could boost labour productivity by as much as 30 per cent by 2024.

Asked whether there would be less job creation after the implementation of IR4.0, Rubaneswaran said, there was no such thing.

He pointed out that the revolution would improve efficiency management, delivery systems as well as operation which was digitally run, hence this called for the need for more local talent and expertise especially in automation and cloud computing system.

Meanwhile, IR4.0 is being extended to the current and future workforces nationwide via state learning centres, universities, and polytechnic, which run under the Centre of Excellence in Technology (CoET).

CoET has trained about 1,000 students in 11 states last year, most of them from SMEs.

“So this year, we are looking to double the number of those interested to be trained in IR4.0 and from there, we can see the growth of SMEs coming on board and getting ready for IR4.0,” he said.

According to the NECT-Gen Industry Report, the need for more technologically-empowered workforce moving forward, can be satiated through increased investment in educating and training the current and future workforce.

“By empowering them with relevant, updated knowledge, we will be empowering SMEs to drive the Malaysian economy forward,” the report said.

Strategic solutions are already in place, including the NECT-Gen programme which is just one of many efforts developed by the Human Resources Development Fund, Penang Skills Development Centre and Knowledge com.

“Collectively, these efforts will help transform the Malaysian manufacturing landscape towards Industry 4.0 and drive efforts to hit a skilled workforce target of 35 per cent by 2020,” the report said. — Bernama