Creating Industry 4.0 Champions in Malaysia

THE Covid-19 pandemic has clearly impacted business entities and the corporate world, especially those in relation to the Fourth Industrial Revolution (IR 4.0) – a revolution that will change how we live, work and communicate.

However, the health crisis has also created an unprecedented change in how companies think about and approach their production processes and business models. It is very likely that businesses that are more receptive to Industry 4.0 technologies, have the ability to speed up their recovery from Covid-19 implications.

The Government has roped in the International Trade and Industry Ministry (MITI) as one of the three main players to lead this initiative. On Oct 31, 2018, MITI launched the National Policy on Industry 4.0 aimed at boosting digital transformation in the Malaysian manufacturing sector and its related services by facilitating companies to embrace the related technologies in a systematic and comprehensive manner. 

The end goal is for Malaysian manufacturers to be stronger through smart technologies. 

Since then, MITI has introduced various initiatives such as readiness assessment, intervention programme, high speed broadband connectivity to potential industrial parks, enhancing competence centres at public higher learning institutions, and reskilling programme to address the technology and skills gaps among the industry players especially small and medium enterprises (SMEs).

MITI is among three main players to lead Industry 4.0 initiatives

Industry4WRD Readiness Assessment (RA) is a comprehensive programme to help companies in the manufacturing sector and its related services to understand their present capabilities in adopting Industry 4.0, by using a pre-determined set of indicators, and to embark on digitalisation. The hybrid RA model was introduced to gauge the readiness of Malaysian companies to adopt Industry 4.0. 

This consists of online assessments on technical capabilities and knowledge of the companies’ workforce and management, as well as on-site assessment to evaluate the process and technological aspects.

Assessors are required to complete the RA report within seven working days after the on-site visit. On this note, MITI highly advised all companies to only engage with appointed assessing bodies to undertake the Industry4WRD RA.

Additionally, the intervention programme is the next step for companies which have undergone RA to adopt Industry 4.0-related technologies with funding facilities offered by the Government.

The implementation of RA and intervention will continue in 2020 whereby 450 SMEs will enjoy the Government-funded RA and 65 SMEs for intervention fund. Since the online application for RA commenced on Jan 28 last year, MITI has received 1,164 applications from companies across Malaysia.

A total of 665 companies have been approved for the Government-funded RA and 25 companies for intervention funds, whereby 256 companies have received their RA reports which have been finalised by the assessing bodies appointed by Malaysia

Productivity Corporation (MPC) and the remaining companies are in various stages of on-site assessment.  

Industry 4.0 is the future for businesses moving forward

To facilitate and assist more companies, the RA is now open to companies that have undergone Malaysia External Trade Development Corporation’s Mid-Tier Companies Development Programme (MTCDP), the Fraunhofer Programme by Sirim, and Lean Management by MPC.

The screening of eligible companies is made by RA technical and steering committees chaired by MITI, comprising representatives from both public and private sectors. The chosen companies will then be assisted by assessors in identifying areas of improvement in three thrusts – namely people, process and technology – and will receive an RA detailed report which will include recommendations on intervention strategies to adopt Industry 4.0.

Upon completion of the RA, SMEs are encouraged to apply for the Industry4WRD intervention fund from the Malaysian Investment Development Authority (MIDA). The RA is a prerequisite for SMEs to be considered for a 70:30 matching grant up to a maximum of RM500,000 (with a maximum of RM150,000 upfront upon approval) for implementation of intervention strategies.

Companies (MNCs, LLCs and SMEs) not selected for the RA may undertake assessment with any assessing bodies and be eligible to claim for tax deduction on expenditure of RA fees of up to RM27,000. 

They can also apply for intervention grants allocated under the Industry4WRD Domestic Investment Strategic Fund (DISF) and Industry4WRD High Impact Fund (HIF). These grants are available as a 60:40 matching grant.

MITI, as the key driver in making Malaysia the preferred destination for quality investments and enhancing the nation's rising status as a globally competitive trading nation, aims to further intensify the implementation of all programmes, particularly the RA and intervention programme. This is to assist companies in adopting advanced technologies which are essential to business recovery and provide resilience moving forward.  

Moving forward, MITI and its agencies will continue to organise outreach programmes nationwide, as well as facilitate SMEs to apply for RA.