Industry 4.0 set to add $50bn in productivity

Industry 4.0 set to add $50bn in productivity

Thailand's manufacturing sector could see incremental growth of US$50 billion in productivity gains over the next decade by embracing Industry 4.0 technologies, according to a study by Cisco and A.T. Kearney.

"Singapore, Malaysia and Thailand are the leading Asean countries with readiness to adopt Industry 4.0 as these countries have complex, large and export-oriented industries, with government policy support and technology infrastructure," said Naveen Menon, president of Cisco in Asean.

Moreover, the recent US-China trade war and rise of labour costs and automation in China are opportunities for Asean, in particular Thailand, to digitise manufacturing, attracting overseas factories to migrate here for a connected supply chain, he said.

"Cybersecurity and Industry 4.0 are two main agendas for Asean this year and Thailand is a chairman of Asean, which can capitalise on the opportunity," said Mr Menon.

Citing a study by A.T. Kearney commissioned by Cisco entitled "Accelerating Industry 4.0 in Asean: An Action Plan for Manufacturers", he said in 2018, the Asean manufacturing sector was worth $670 billion, or 21% of Asean GDP. The value should double by 2028.

In 2018, Thailand was the second largest manufacturer in Asean at $136 billion, behind Indonesia. Food, beverages and tobacco, electrical products and electronics, and motorcycle vehicles and parts are the top three largest contributors to Thai manufacturing.

According to the study, the growth will largely be driven by productivity gains: an incremental gain of $45-50 billion in Thailand from additional revenue streams via new products and quality improvements as well as lower cost as manufacturers adopt Industry 4.0 technologies.

"The impact for Asean's value-added manufacturing from Industry 4.0 is up to $275 billion," said Mr Menon.

Industry 4.0 is characterised by an intelligent and connected ecosystem of people and machines, underpinned by five emerging technologies being used across the manufacturing value chain. Those are: Internet of Things (IoT), artificial intelligence, 3D printing, advanced robotics and wearables.

Asean manufacturers are at the beginning of their digital journeys because of lower labour costs, a lack of demand, a shortage of experts, unclear business cases and complex supplier ecosystems.

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