ASEAN Roundtable Series on The 4IR Reimagined Post-COVID-19
Writer: Eleen Ooi Yi Ling, Research Manager, CARI
Editor: Jukhee Hong, Executive Director, CARI
CARI Viewpoint: ASEAN needs to adopt a holistic approach and reimagine a human-centric economic model to ensure sustainability in adopting fourth industrial revolution (4IR) technologies
Kuala Lumpur, 22 September 2020 – CIMB ASEAN Research Institute (CARI) hosted the ASEAN Roundtable Series, titled “The 4th Industrial Revolution (4IR) Reimagined Post-COVID-19”. The session featured insights from industry veterans Naveen Menon, President (ASEAN) for Cisco; Dato’ Fadzli Shah, Chief Strategy Officer for MDEC; and Chandran Nair, Senior Fellow of CARI and founder and CEO of Global Institute for Tomorrow (GIFT). Moderated by Tan Sri Dr. Munir Majid, Chairman of CARI, the discussion centred around recent technological and adoption changes brought on by COVID-19 and how the future of 4IR will look like in ASEAN.
The discussion had two distinct lines of thoughts, one that is along the perceived unavoidable 4IR adaptation that ASEAN societies must embrace and how to achieve that ambition; whereas the other focuses on examining whether the 4IR idea or narrative is altogether cultural- and region- appropriate based on societal needs in ASEAN and Asia.
During the briefing, among the key insights shared were:
1. ASEAN is poised to benefit from 4IR but needs vary according to local requirements
ASEAN member states are at different stages of readiness when it comes to 4IR, with Singapore and Malaysia positioned well to benefit from 4IR in the future, and the remaining ASEAN members rapidly moving up in 4IR preparedness.
Reduction in manufacturing cost: Focusing on the manufacturing sector, Naveen highlighted the five key technologies projected to transform this sector are the internet-of-things (IoT), artificial intelligence (AI), 3D printing, advanced robotics and wearable technology, which can potentially reduce manufacturing costs by US$210-230 billion through increased yield and quality, labour machine arbitrage and decreased material cost by 2028.
Social innovation: Another benefit from the usage of 4IR technology lies in social innovation. The technologies have the potential to equalise society, increase economic development through sustainable technologies and enable financial service providers with the ability to address the “bottom-of-the-pyramid” or unbanked markets. The 4IR technologies are also potentially useful in efforts to ensure environmental sustainability, through the use of more effective technology in bio-conservation and disaster relief efforts. New digital delivery models in education also improve access to education by reducing costs and increasing the effectiveness of classroom delivery.
Low start-up cost: According to Dato’ Fadzli, the current internet economy is benefitting from the upfront cost for infrastructure that was footed by many large enterprises in the 1990s. In terms of business model, the permeation of 4IR could be seen from the transition of software and platforms as a product to it being sold as a service, thus enabling many new startups to grow due to the lower cost of business.
Fadzli further added that due to COVID-19, border policies will have a bigger impact in policy-making going forward. “COVID-19 could be the impetus to drive 4IR to replace migrant or foreign workers for lower-end jobs in countries like Malaysia when border control kicks in efforts to stem the pandemic,’ he said.
Prioritise basic needs instead: Chandran Nair, however, cautioned that not all countries and its people will be able to benefit from 4IR technologies, especially digital-related ones. In countries where accessible basic infrastructures are lacking and 4IR preparedness is low, many of its populations will not be able to afford access to technology. Chandran also stressed that some ASEAN member states still struggle with basic infrastructures like clean water and sanitation, and the adoption of 4IR technologies should be used to address these problems, rather than focusing on digital adoption.
4IR as a means to an end: Chandran suggests a people’s first approach, with technology as an enabler that will create a more sustainable future for the region, rather than a technology-centric approach without consideration of the long-term effects it has on nationhood and societies.
2. ASEAN needs to overcome some major barriers in infrastructure, human capital, regulations and economic policies in addressing 4IR adoption and to create an ASEAN-centric economic model for the future
The panel sharing highlighted many barriers to 4IR adoption in the ASEAN region.
Job displacement: Naveen highlighted that the technologies will fundamentally alter the nature of work and lead to potential job displacements. Research conducted by CISCO with Oxford Economics found that approximately 28 million jobs will be replaced by 4IR technology in the ASEAN region in 2028.
Reskilling required: The displaced workers will be required to enrol in reskilling programmes that will equip them with 4IR-ready skills to take on new work where they will interact more with machines. According to Naveen, “we need more foundational skills, cognitive skills, interactive skills, operational skills, information technology (IT) skills and management skills. In IT, there are about 800,000 workers in ASEAN will need programming, system analysis and systems evaluation skills.”
Not all jobs can be replaced by machines: Naveen further added that “In the teaching profession or retail, the interactive skills, negotiation, service orientation, persuasion, social perceptiveness are skills that cannot be replicated by machinery. Therefore, the skills that make us more human are important for us to develop so that workers can move from one function to another in a job”.
Current education system is unable to offer reskilling: Fadzli, however, opined that the education system is not ready to address the need for re-skilling in the near future. “Misleadingly, from a tech point of view, we can quickly get to an answer, but the more fundamental point to address is the structure of the education system itself. In the Malaysian education system, we train people through rote learning, you know to learn the steps and repeat them. It doesn’t give them (the workers) the right kind of foundational soft skills to be able to innovate and adjust. As a result of the latent workforce, traversing between careers or moving horizontally across industries for different roles is going to be a major challenge.”
SMEs are short term oriented due to lack in resources: According to Fadzli, the majority of Malaysian enterprises are also small and medium enterprises (SMEs) that do not have the short-term capacity to invest in and adopt new technology. “Due to COVID-19, a survey found that 78% of SMEs reported that they did not have enough money to survive the economic shock as a result of COVID-19, even for the next few months. As such, they are most likely to take a short-term lens to things, rather than thinking of investment items like 4IR technologies.”
Western economic models need to be localised to suit ASEAN’s 4IR needs: Chandran is also concerned that the norming of the western economic model of underpricing resources, externalises costs, encourages people to essentially consume will lead to an ASEAN economic model that works against its people and the biology of the region. Despite the potential of technology in resolving social and environmental issues, Chandran believes that the issues are currently not addressed as it is not in the interest of the western economic model, and thus the policymakers prioritise the use of 4IR in resolving issues in these areas. Naveen agreed that ASEAN needs to reframe how we look at the future and Fadzli supported the argument by adding that ASEAN needs to reimagine a future that is culturally unique to itself, that does not follow the standard western model of development.
3. Governmental policy intervention in capability building and facilitation of public-private collaboration is crucial in ensuring regional readiness and successful implementation of 4IR initiatives
Naveen recommended the following key areas that require policy makers attention in facilitating 4IR; adoption in relation to 5G, privacy and security (cybercrime vs cyber securities) and cross-border data flows, trust and ethics.
5G adoption is a key 4IR infrastructure: 5G rollout is a key area for government intervention with spectrum licensing at 60 gigahertz, harmonising spectrum across ASEAN and allocating spectrum for private networks as major areas needing address. Private and public partnerships and investments could be key to ensure access to infrastructure.
Build cyber security capacity: Developing critical information infrastructure, a national coherent strategy, enacting cybersecurity legislation and establishing information sharing, incident reporting capabilities, community awareness building on cyber security issues and finally capacity building to increase the number of cyber security experts in the region. Naveen noted that many countries have cyber crime laws in place, but there is a need to include cyber security regulation in the future legal framework.
Set up infrastructure for cross border data flows: There is a need to enable cross border data flows. Currently organisations and countries are required to set up their own infrastructure and this is very expensive, slows down progress, and doesn’t give us a head start as a regional ASEAN block in 4IR adoption. Naveen also highlighted the need to ensure that privacy is protected as a basic human right especially where child users are concerned.
Planning and policies need to be short term focused: Dato Fadzli re-emphasised the three areas related to Capitals that requires attention: financial, human and skills and the culture of capitalism, and the need to focus on the short term as he believes the middle and long term agenda is irrelevant if short-term solutions do not work out. There also exists a need to ensure that policies and technologies are localised for the ASEAN needs and conditions.
Governments need to incentivise people to adopt new skills: About reskilling, Dato Fadzli commented that, “This is not something we can address within the next 3,5 or 10 years without significant overhaul of the education system. Primarily in the Malaysian context, if you want to change something in the syllabus, the cycle to change or address something new in the system is a minimum 3-year cycle”.
Tan Sri Dr. Munir noted that technology disables by creating unemployment; where education foundation is weak, there will be instability in the society as a result of the disablement. The quicker way is to align economic benefits with skill adoption. “People will move heaven and earth to adopt new skills and effectively transform themselves, because of the promise of better livelihood after that,” according to Dato Fadzli.
ASEAN needs strong institutions to drive changes and adoption of 4IR: Chandran noted that we need strong institutions and states that put collective welfare ahead of norms in the ASEAN region to ensure that the 4IR adoption is sustainable in the long term. “Insured resilience is important. Policies in ASEAN that creates a safe and secure society built around economic policies, deployment of technology and basic rights to life, for example, water sanitation, food security, housing, education and public health. Technology can help with this, but it would call for a very different policy than the one we are currently looking at. Technology should be an enabler, but should not drive the notion of prosperity. In using technology, we need to understand the world that ASEAN lives in to ensure that technology is used to create prosperity rather than impoverishing the region.”
4IR provides a myriad of opportunities, but ASEAN needs to move beyond prioritising economic and technological concerns, to take into consideration the broader opportunity areas relating to social and environmental benefits in ensuring a sustainable future for the region.
In summing up, Tan Sri Dr. Munir stressed that “fundamentals of social organisation, society and nationhood should be defined before we embark on these kinds of challenges and opportunities offered by technology. Otherwise, we will be heading for another kind of crash of society.” Tan Sri Munir also noted that the accumulation of multiple micro benefits from 4IR technologies does not necessarily result in a macro benefit or social stability.