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Why Malaysian SMEs are struggling with Industry 4.0SMEs in Malaysia are slow to adopt Industry 4.0 concept due to lack ofcollaborations between the public and private sector, according to experts.Source: ShutterstockINDUSTRY 4.0, in a broad sense, refers to the adoption of smart digitaltechnologies, such as data analytics, automation, and artificial intelligence(AI) in manufacturing and business operations.Though the concept has been around for about a decade now, small- and medium-sized enterprises (SMEs) in certain parts of the APAC region are stillstruggling to embrace it.In Malaysia, the disappointingly low rate of adoption among SMEs is attributedto the lack of sufficient structure and collaboration between the public andprivate sectors in driving the country’s Industry 4.0 agenda, local industryexperts say.Penang Skills Development Center (PSDC) CEO Muhamad Ali Hajah Mydin, in arecent Industrial Transformation Asia Pacific 4.0 Forum, said that only 10 to15 percent of Malaysian SMEs have taken concrete steps towards Industry 4.0adoption.“This is a rough estimate that only 10 to 15 percent of the SMEs that aredealing with tier one MNCs are migrating to I4.0 because they don’t have achoice,” he said.According to him, the state of Penang – Malaysia’s high-tech manufacturing hub– has been promoting the migration to Industry 4.0 for the last three years.“There are migrations by some companies but the numbers are not many andbigger migration can only happen when the government lay out their plans underthe I4.0 Blueprint,” Mydin explained.## Strong government push for Industry 4.0The Malaysian government announced the country’s Industry 4.0 Blueprint lastyear and made US$480 million (MYR2 billion) available in loans to businessesembarking on the digital journey.However, Muhamad Mydin said that many in the industry are still unsure abouthow to apply for the loans.“There were no structured paths or clarity for the SMEs to move forward or totake advantage of the facilities offered by the government under itsblueprint”.Thus far, only 90 SMEs are found to be eligible for funding under the nationalblueprint, Industry 4.0 Malaysia Association President Raja Teagarajan toldmedia.To put this in context, Malaysia has over 500,000 SMEs, which contribute up to22 percent of the country’s GDP.As the capital expenditure needed for digitalization remains a major challengefor many of these organizations, streamlining loan application processes aswell making the funds more accessible will go a long way.Meanwhile, the government of Malaysia, via many of its agencies, has beenpushing for digital adoption by the local SMEs.Malaysia Digital Economy Corporation (MDEC) CEO Surina Shukri, had, in thepast, opined that Malaysian SMEs are ready for digitalization, but they mustbe bold in pursuing the digital journey.In its national budget last year, Malaysia announced a US$720 million“Industry Digitalization Transformation Fund”, outlining the country’sambitions to prepare for the oncoming digital economy.Finance Minister Lim Guan Eng said the fund is to accelerate the adoption ofsmart technology which includes automation, robotics, and AI.* * ** * ** * *