COUNTRY READINESS

FOR INDUSTRY 4.0

Chairil Abdini
November 2018
 INDUSTRY 4.0 READINESS DIAGNOSTIC FRAMEWORK

SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018

 COUNTRY ARCHETYPES
Leading: Countries with a strong production
base today that exhibit a high level of
readiness for the future through strong
performance across the Drivers of
Production component. This countries also
have the most current economic value at
stake for future disruptions.
Legacy: Countries with a strong production
base today that are at risk for the future due
to weaker performance across the Drivers of
Production component.
High Potentials: Countries with a limited
production base today that score well across
the Drivers of Production component
indicating that capacity exists to increase the
production in the future depending on
priorities in the national economy.
Nascent: Countries with a limited production
base today that exhibit a low level of
readiness for the future through weak
performance across the Drivers of
Production component.
SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018
 POSITION OF 100 COUNTRIES IN THE ARCHETYPE
• There are 25 leading countries that
are responsible for over 75% of
Manufacturing Value Added (MVA).
Japan, Singapore, Korea, China,
Malaysia are among the leading
countries.
• 10 Legacy countries that are
responsible for 10% MPA (Hungary,
India, Lithuania, Mexico,
Phillippines, Romania, Russian
Federation, Slovak Republic,
Thailand and Turkey.
• 7 High potential countries that are
responsible for 2% MPA (Australia,
Hongkong SAR, New Zealand,
Norway, Portugal, Qatar, United
Arab Emirates.
• 58 Nascent countries that are
responsible for 10% MPA.
Indonesia, Vietnam and Cambodia
are among the Nascent countries.
SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018
 MAP OF INDUSTRY 4.0 READINESS 2018 ASEAN7
10 FAVORABLE DRIVERS PRODUCTION • Singapore and
Malaysia are among
9 the LEADING
Singapore countries (strong
8 current base and
7 HIGH POTENTIALS LEADING well positioned for
Malaysia the future).
SMALL/SIMPLE LARGE/COMPLEX
6
STRUCTURE OF STRUCTURE OF • Thailand dan
PRODUCTION Vietnam PRODUCTION
Phillippines are
5 Thailand among the LEGACY
Indonesia countries (strong
4 Phillippines current base at risk
Cambodia for the future).
3
• Indonesia, Vietnam
2 NASCENT LEGACY and Cambodia are
among the NASCENT
1 countries (limited
current base and at
0 UNFAVORABLE DRIVERS PRODUCTION
risk for the future).
0 1 2 3 4 5 6 7 8 9 10

SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018

 SCORES OF STRUCTURE OF PRODUCTION (ASEAN7)
9 ECONOMIC COMPLEXITY:
8.4
A measure of the knowledge in a society
8 7.68 as expressed in the products it makes.
7.06 The economic complexity of a country is
7 6.86.82 6.64 calculated based on the diversity of
6.44 exports a country produces and their
5.91 5.83 ubiquity, or the number of the countries
6 5.59
able to produce them. Countries that are
able to sustain a diverse range of
5 productive know-how, including
4.31 4.37
3.79 sophisticated, unique know-how, are able
4 3.4 to produce a wide diversity of goods,
including complex products that few
3 other countries can make.
SCALE:
2
Manufacturing Value Added (MVA) as a
1 % of Gross Domestic Product (GDP), MVA
of an economy is the total estimate of
net-output of all resident manufacturing
0 activity units obtained by adding up
outputs and substracting intermediate
inputs. The boundary of manufacturing
as an economic activity refers to
industries belonging to International
Standard Industrial Classification (ISIC)
Complexity Scale divisions 15-37.
SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018
 SCORES OF DRIVERS OF PRODUCTION (ASEAN7)
10.00

9.13
9.02
9.00

8.00 8.00

7.39
7.36

7.00
6.74
6.56
6.52
7.00

6.38
6.38

6.32

6.28
6.10

5.98
5.85

5.77

5.45
6.00

5.22
5.06
5.05

5.01

4.99
4.99
4.94
4.59

4.59

4.59
4.56

4.52

4.51
4.48
5.00

4.35

4.09
4.02

4.00

3.96

3.93
3.75
4.00

3.28
3.09

3.09
3.00

2.00

1.00

0.00
Singapore Malaysia Thailand Phillippines Indonesia Vietnam Cambodia
Technology & Innovation Human Capital Global Trade & Investment
Institutional Framework Sustainable Resources Demand Environment

SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018

 INDONESIA’S WEAKNESSES on INDUSTRY 4.0
Structure of production:
• Economic complexity (rank 73).
Technology and Innovation (Rank 61st):
• R&D expenditures (rank 93).
• Scientific publication number per billion $ PPP
GDP (rank 97).
• Patents application (rank 83).
• LTE Mobile network coverage (rank 82).
• Internet users (rank 93).
• Cybersecurity commitments (rank 69).
Human Capital (Rank 55th):
• Knowledge intensive employment (rank 83).
• Female participation in labor force (rank 73).
• Mean years of schooling (rank 75).
• School life expectancy (rank 75).
• Migration (rank 69).
SOURCE: READINESS FOR THE FUTURE OF PRODUCTION REPORT 2018
Global Trade & Investment (Rank 61st):
• Trade (rank 89).
• Prevalence of non tariff barriers (rank 65).
• Domestic credit to private sector (rank 73).
Institutional Framework (Rank 69th):
• Regulatory efficiency (rank 93).
• Rule of Law (rank 75).
• Incidence of corruption (rank 66).
Sustainable Resources (Rank 94th):
• Waste water treatment (rank 91).
• CO2 intensity (rank 71).
• CH4 intensity (rank 74).
• N2O intensity (rank 76).
• Water stress (rank 69).
 FOR INDONESIA
A STEEP AND BUMPY
ROAD AHEAD
 INDONESIA POSITION TODAY:
Limited Current Base and At Risk For The Future
IMPROVE STRUCTURE OF PRODUCTION:
Improve economic complexity through development of
sophisticated and unique know how to produce a wide
variety of export goods and services including complex
products. Improve knowledge and know how in the
WHAT society.
IMPROVE DRIVERS OF PRODUCTION:
INDONESIA CAN (1) Increase R&D expenditures; (2 Increase scientific
publications; (3) Increase patents applications.; (4)
AND SHOULD Improve LTE mobile network coverage; (5) Improve
internet users; (6) Improve cybersecurity commitments;
DO (7) Improve knowledge intensive employment; (8)
Improve female participation in the labor force; (9)
Improve mean years of schooling; (10) Improve global
trade (non tariff barrier and domestic credit to private
A systems approach is needed in the sector) ; (11) Improve regulatory efficiency; (12) Improve
formulation and implementation of rule of law; (13) Reduce incidence of corruption; (14)
Structure of Production and Drivers of Improve natural environment (reduce emmisions, and
Production improvements.
increase waste water treatment).
ATTACHMENTS
 LEADING COUNTRIES ON DRIVERS OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 LEADING COUNTRIES ON STRUCTURES OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 HIGH POTENTIAL COUNTRIES ON DRIVERS OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 HIGH POTENTIAL COUNTRIES ON STRUCTURE OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 LEGACY COUNTRIES ON DRIVERS OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 LEGACY COUNTRIES ON STRUCTURES OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 NASCENT COUNTRIES ON DRIVERS OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018

 NASCENT COUNTRIES ON STRUCTURE OF PRODUCTION

SOURCE: READINESS FOR FUTURE THE PRODUCTION REPORT 2018