panelists speaking at a local event

Panelist share that Malaysia has some outstanding manufacturing and engineering talents and capabilities. However, local businesses remain not convinced, which is dampening the progress of SMEs towards embracing industry 4.0. Source: Tech Wire Asia

SME mindset remains biggest hurdle for Malaysia’s digital transformation

MALAYSIA has some outstanding manufacturing talent and capabilities. However, small and medium enterprises (SME) in the manufacturing sector remain slow to change their mindset in embracing Industry 4.0.

While multinational corporations (MNCs) in Malaysia are actively adopting new technologies to drive the next industrial revolution, SMEs in the country are still using old methods.

As the Asia Pacific region is set to surpass Europe and North America in manufacturing, businesses in Malaysia can no longer afford to adopt a wait-and-see attitude. Any further delays and they’ll be left behind by foreign rivals.

SMEs in Malaysia make up 98.5 percent of the country, contributing to nearly 40 percent of the country’s GDP, according to official figures.

In a recent panel discussion preceding the upcoming Industrial Transformation Asia-Pacific 2018 event, panelist from various industries shared the same observation.

The biggest challenge faced by businesses in Malaysia is the mindset of the people. Alan Goon, an Executive Partner at Gartner pointed out that a majority of the local companies he works with can’t relate the urgency to their own business.

“The threat is imminent – the question is how do we make the threat and challenges real, to push people to do something? 97 percent of the businesses adopt a see-to-believe attitude,” he exclaimed.

He added that the remaining 3 percent are the visionaries, which would be the people who can help the 97 percent see, believe, and make the change.

During the panel discussion, speakers noted that the resistance to change could stem from the local perception of the industry.

Dr. Yeong Che Fai, Director at DF Automation & Robotics, is also a professor at Universiti Teknologi Malaysia. He observed, “Students are green and want inspiration. However, there are no obvious and notable inspirations locally.”

This is not to say Malaysia has a lack of outstanding talents. Naguib Mohd Nor, President, Malaysia Aerospace Industry Association, shared his frustrations at the reluctance of Malaysians to recognize local capabilities.

“A lot of the moving parts on an Airbus are designed and built in Malaysia, for more than 30 years now. Malaysia is an aerospace country. But if I went to the streets with this information, Malaysians wouldn’t believe it,” he explained.

Vicks Kanagasingam, Chief Operating Officer of local IoT network provider Xperanti IoT suggested that the burden of education shouldn’t fall on the government; instead, companies should directly engage with local universities.

“Students want to see the real world,” he said. “We shouldn’t wait for government or universities to educate students. Companies should spend about 10 percent of their time educating employees. At the end of the day, companies are the ones who are going to hire. Private sectors must play a part, work with the government sector to bridge the divide between them.”

Simon Song, Managing Director of Robert Bosch in Malaysia, was also part of the panel discussion. To him, the country needs to emphasize on building a collaborative, innovative ecosystem.

“Ecosystem is important. No single player can supply everything needed to enable Industry 4.0,” Song said. “The speed of innovation is much faster than the revolution. To catch up we have to move faster and build up the ecosystem in a short time.”

He also advised that Malaysia should move towards the mindset of being an export-oriented economy, and not just in products and services, but also in manufacturing capabilities.

Malaysia’s domestic market is not big. For it to remain competitive in the region, it must look at competing with rivals from foreign markets. It is crucial for SMEs to look at improving productivity with industry 4.0.