Technological Advantage in an Open Regional Economy

Businesses need to ramp up technology adoption to remain globally competitive.

Does everyone see the burning platform? Based on the slow adoption rate of technology in businesses, we may reasonably conclude that adopting technology to improve productivity is seen as not an urgent nor a crucial matter but as a nice-to-have effort that can be done in good times. Despite all the efforts done by the government to promote IR4.0, the rate of adoption is still rather slow, especially from the SMI/SME communities. 

The pandemic, however, was a more effective accelerator towards technology adoption. The “pain” felt as a consequence of the lockdowns, and the resulting inability to physically attend meetings, make a face-to-face appearance for sales and marketing, and deliver goods, have made many businesses see the urgency to adopt appropriate technology to circumvent the limitations. This clearly shows the mindset and attitude of our businesses; one that is reactive rather than proactive i.e., having the foresight to adapt towards future demands to remain competitive. 

It is easy to attribute this reactive nature and lack of strategic foresight as a weakness. However, it is equally important to understand why this mindset is prevalent. We know that many SMI/SMEs’ main concern is business survival, and therefore their priority is to ensure sufficient profitability and maintain a healthy cash flow by allocating their effort and resources towards immediate tangible business needs. But why is adopting technology such as IR4.0 so crucial and not just a nice-to-have? Why is adopting technology, especially IR4.0 now, a question of business survival?

The notion that technology adoption is a nice-to-have effort rather than a crucial matter of survival lies in the “pain” level that businesses felt. While the real hardship caused by the pandemic can be truly felt immediately, the industry at large still does not feel the real loss by not adopting technology. 

At best, any losses felt are only marginal and any business advantage gained seems to be only incremental. Ironically, government assistance to keep their businesses afloat is a possible contributor towards the non-urgency of technology adoption. After all, even without technology adoption businesses will still receive all forms of assistance. 

The Turning Point

Beginning January 2022, we have started to see a slew of articles and reports about the Regional Comprehensive Economic Partnership (RCEP). The RCEP in brief is a regional trade agreement involving the ten members of ASEAN nations together with five others, namely China, Korea, Japan, Australia, and New Zealand. 

Adapt to Survive, Adopt to Thrive

Businesses that are more competitive will have a much bigger market to benefit from. Product differentiation either in quality or price competitiveness will define the winners and losers. On the contrary, businesses that thus far survive on subsidies and protectionism will slowly feel the heat until it becomes unbearable and will naturally lead to eventual closure. 

The trajectory of our country’s economy has seen us moving from an agricultural and mineral nation towards a manufacturing and trading nation. Our country can no longer rely on cheap labour to compete. With an exception of one or two countries, we have a relatively small population compared with the rest of the RCEP partner countries. Thus, we must move away from industries that are highly dependent on cheap labour, and move towards an industry that has high added values and technology content. 

We need to have the foresight to adapt to future demands.

Similarly, by moving away from agriculture, we do not have an abundance of cheap basic ingredients for food products as compared to our neighbours. Japan is a good example of using technology to improve agriculture production. To remain in the agriculture industry, we need to employ IR4.0 technology to raise our productivity. Fortunately, our strongest export sector is in the Electrical and Electronics industry. 

There are no reasons why our businesses are not able to adopt IR4.0 with the ample supporting industry we already have. It is imperative that we leverage our strength to compete in this integrated regional economy and differentiate ourselves from our competitors. In this global competitive open market, nobody can afford to stand still. Only those who can create their own competitive advantage will be able to survive in a crowded market, and the competition at the SMI/SME level will be even fiercer than ever before. The platform is burning, and we need to act fast to survive. IR4.0 will be our lifeboat towards safer shores.

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About the Author

    

Ir. Dr Mohd Shahreen Madros has over 30 years of working experience in various capacities. He was a lecturer in Universiti Kebangsaan Malaysia (UKM), with over 20 years of experience in the Oil & Gas industry. He was also the appointed CEO of MATRADE from early 2017 until Feb 2019 during which he represented Malaysia in many international trade missions. Dr Shahreen is currently an independent advisor to industries, a board member of a public listed company, a certified coach, and an Adjunct Professor at the Graduate School of Business, UKM.