This article first appeared in The Edge Malaysia Weekly on October 23, 2017 - October 29, 2017

THE idea of having smart robot help has been on mainstream TV for over half a century — from Rosie the robot maid in the cartoon The Jetsons in the 1960s and the cute R2-D2 in Star Wars in the 1970s to David Hasselhoff’s cool self-driving car KITT in the 1980s TV series Knight Rider.

Yet, robots mopping the floor might not be so “cute” if there are many people who are only qualified to be a maid or factory worker (Rosie does not need time off and may cost less). KITT may not be as “cool” to families whose breadwinner is a chauffeur, truck/taxi driver or delivery guy.

That’s the simplistic way of saying the world as we know it is set to drastically change in the coming decade, thanks to advancements in robotics and artificial intelligence (AI).

While this fascinating evolution spells new opportunities, for policymakers, the coming wave is less about “cute” robots or “cool” gadgets helping mankind and more about those that could displace many existing jobs and disrupt (or upend) entire industries.

That significantly raises the need to ensure there is a well-diversified government revenue source as well as a wide enough social security net to aid the people affected, more so as society ages.

Even skilled healthcare professionals are not spared the coming wave: AI can already detect cancer earlier, make medical diagnosis and prognosis by efficiently going through vast amounts of medical information much quicker than doctors. Robots are already doing the jobs of nurses and pharmacists.

Bank tellers have long been displaced by automated teller machines (ATMs) that can operate 24/7. Sweden’s biggest bank SEB, for example, has an always-on AI customer service chatbot called Aida to quickly handle straightforward customers’ needs and another called Amelia to work with internal IT support.

Up to 54% of Malaysian jobs at risk

In Malaysia, some 18,000 people who lost their jobs in 2015 were from the banking industry due to what the Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan calls the introduction of “disruptive technology”. He expects more layoffs to come.

“More than 70% of all semi-skilled and 80% of all low-skilled jobs are at high risk. These occupations cut across all major economic sectors. Skilled jobs are also not spared — about 40% of skilled jobs are at medium risk,” he says, citing data from the Khazanah Research Institute (KRI).

“Applicability of artificial intelligence and other technologies is not confined to the banking industry but has the potential to disrupt many different, if not all, industries. The insurance industry is introducing robotics that can do at least 10 employees’ work in a more efficient manner,” he adds.

A case in point is Fukoku Mutual Life Insurance, which earlier this year replaced 34 employees with an AI system that can calculate policy payouts more efficiently. The Japanese insurer expects to save ¥140 million a year from the ¥200 million investment in IBM’s Watson Explorer AI system that will cost about ¥15 million a year to maintain.

Between 11% and 54% of current jobs in Malaysia could either be fully displaced or see their nature “considerably change” over the next two decades due to advancements in automation, KRI says in a recent report.

Four out of five of these jobs are middle-skilled and mostly held by Malaysians while up to 77% of low-skilled jobs that are held by migrant workers could go.

“But just because a task or job can be automated, it does not mean it will be,” the KRI report goes on to say.

Disruption or opportunity?

Still, there are concerns. Privacy and the need for regulation to catch up with change is a major factor, as is the potential of inequality of income and the digital divide widening with the advent of Big Data and AI.

Then, there’s the interest of established or incumbent firms that are major revenue contributors to the national coffers and may be government-controlled or owned by pension funds, observers note.

Stanford University economist Tony Seba, for instance, in May this year predicted that petrol or diesel cars could vanish in eight years in favour of electric vehicles (EVs), which are 10 times cheaper to run than fossil-based cars. The tipping point of his prediction would be when EV battery ranges surpass 200 miles and electric car prices in the US drop to US$30,000. Seba also expects low-end models to sell for US$20,000 by 2022 and the long-term price of crude oil to fall to US$25 per barrel.

While Malaysia has reduced its dependency on oil-related revenue, national oil company Petroliam Nasional Bhd (Petronas) is paying close attention. For instance, Petronas Dagangan Bhd has teamed up with Malaysian Green Technology Corp (GreenTech Malaysia) and a unit of Tenaga Nasional Bhd to install 100 EV charging stations and solar photovoltaic (PV) panels by next year and increase that in tandem with market demand.

Changes such as alternative means of schooling or cheaper and speedier healthcare diagnostics may save costs for consumers but potentially threaten some traditional revenue models.

Dr Yeah Kim Leng, professor of economics at Sunway University’s Business School, agrees that “some structured learning programmes could be better handled by robots or e-learning” but reckons that good teachers “who are able to motivate and nurture their students to develop an inquisitive, analytical and thinking mind besides equipping them with the requisite technical knowledge, theories and skills” continue to be assets.

“Rather than robots replacing human educators, it is likely that better technology-based teaching aids will be available to bring education and training closer to what the industry needs. A broader purpose of the technology will be to make learning a fun and creative activity,” he says.

In any case, Yeah reckons that “the appropriate policy response is not to reject or impede technological progress but rather to embrace it as a means to raise living standards, complementing it with re-skilling and retraining programmes for the displaced workers. Digital divide and income inequality should be viewed as natural consequences of market forces that could be tackled through appropriate tax and benefit system design”.

Challenge the status quo

Technology guru Vivek Wadhwa, for one, says Malaysia should harness technology to move ahead and just let uncompetitive companies fail.

“You can’t protect companies that are in the wrong place. If Malaysia starts protecting industries, it will sink because it will become uncompetitive. This is how competition works. You will now have to adapt or perish ... Malaysia should start nurturing the next generation of start-ups and let them challenge the industries. That’s the way it has to be. That’s the way Malaysia will be globally competitive,” he explains.

“Businesses, learn or you’re going to be toast! You need to lead the disruption. It’s very simple, either lead or you get crushed,” says Vivek, distinguished fellow and adjunct professor at Carnegie Mellon University, who was in Kuala Lumpur recently the invitation of Khazanah Nasional Bhd to speak at the 13th annual Khazanah Megatrends Forum 2017.

Khazanah executive director (investments) Tengku Azmil Zahruddin Raja Abdul Aziz seems to share this view. “In this fast-changing world, the organisations that are open to change and growth are those that last and thrive.

“We live in a volatile, uncertain, complex and ambiguous (VUCA) world. For businesses, history is littered with tales of how incumbents underestimated disruptors, holding fast to the belief that ‘if it ain’t broke, don’t fix it’. Kodak was once the market leader in print photography but chose not to embrace the business of digital photography, believing it to be a mere addition to the core business rather than the evolution of the core business itself — and as a consequence, failed,” he says, noting that businesses today are challenged to invest in digitisation and using the data harnessed effectively to their competitive advantage.

“For individuals, the advice is not to be afraid to fail. Where there are threats, there are also opportunities. As automation and AI redefine what it means to be relevant, we have to constantly learn new skills and reinvent ourselves. In this day and age, there are a variety of platforms to learn new skills that are much more accessible than before. Start with a flexible mindset, and you will go far,” he adds.

Teach children, do good

What is the one thing Malaysia needs to do right fast? “Start learning about the future of technology and start teaching the children about it. Let’s change the mindset. The [current] mindset is we have to follow, we can’t lead. The mindset needs to change from following to leading to leapfrogging. How can we jump ahead? How can we lead the world? This is what has to happen and it all starts by learning,” says Vivek. He drives a Tesla electric vehicle and pays close to zero energy bills at his solar-powered home in Menlo Park, California, where Facebook Inc is headquartered.

“Malaysia has to understand that it has great opportunities. It’s a level playing field. By teaching its children about advancing technologies, by getting its experience with executives working with the start-ups and companies, it can build world-class companies, it can create new opportunities, solve the problems of the world. This is what’s possible today,” Vivek says, noting that advancements in AI mean education can be tailored to a child’s learning pace with the help of personal digital tutors and virtual reality headsets, regardless of their physical location.

Even before that, a vast amount of knowledge is already available on the internet. “Everything can be learnt … start learning and reading and building apps, learn how to build robots, learn how to programme AI, learn how to use sensors, learn how to use technology to uplift,” he adds.

One example of technology alleviating social hardships is the HealthCube, a portable and reusable diagnostic test kit that costs less than US$1,000 and is capable of performing at least 30 common medical tests in a matter of minutes. These include tests for blood pressure and blood sugar, as well as diseases such as dengue, hepatitis, malaria and HIV. The HealthCube has helped make healthcare accessible to millions of underserved people in India.

Investing in the future

The potential benefits notwithstanding, there is no doubt that investments in the future are needed fast because jobs are already being displaced in other parts of the world where technology companies and entrepreneurs are seizing the chance to become tomorrow’s leaders.

Simple tasks like train or movie ticketing, toll collection or even ordering a McDonald’s burger can be done and paid for without human contact. Domino’s in Australia and New Zealand has delivered pizzas using drones and Amazon Inc has been open about its ambition to make drones deliver parcels. In June, McDonald’s announced plans to roll out 14,000 mobile ordering units in the US and install digital ordering kiosks at 2,500 outlets, which could cut the need for human cashiers.

Robots, which can work day and night on factory floors, can already replace bricklayers. Australian company Fastbrick Robotics’ Hadrian X can lay more bricks in an hour than two human bricklayers can do in a day. In the US, Schnucks grocery store has Tally robots wandering the aisles to check inventory and verify prices. In October last year, a driverless truck (Uber’s Otto) successfully made a 120-mile (193km) delivery of 50,000 cans of beer in the US.

Just across the Causeway, there are at least four autonomous driving tests being conducted — the first of which was in August 2016 by the MIT spin-off tech start-up nuTonomy (which has a partnership with ride-hailing company Grab) — for invite-only driverless taxi rides. Singapore’s Ministry of Transport and PSA Corp are also testing the use of autonomous trucks at the city state’s port terminals. South Korea’s transport ministry has also approved at least 20 self-driving car tests, including by Samsung. China’s Didi Chuxing (which beat Uber in the country) is also working on self-driving cars and AI.

And these are only some of the things reported by the media. It remains to be seen what would come of the ride-sharing leaders’ interest in self-driving vehicles.

Ruben Gnanalingam, CEO of Westports Malaysia, is also keenly “studying” advancements in areas like robotics and autonomous vehicles. “Our new expansion phases will definitely have automation as a key part of their design,” he says, without providing a timeline apart from revealing Westports’ willingness to invest in technology once the returns justify the cost of investment.

Tengku Azmil says one of Malaysia’s key strengths over the years “has been in providing an open, enabling ecosystem to encourage investments and entrepreneurship, including in AI”.

“Policy-wise, talent availability and rebalancing the workforce remain critical elements to a well-functioning ecosystem. As Malaysia transitions towards a knowledge-based economy, we must wrestle with the rise of AI technology in an informed, strategic manner. This means embarking on the development of a workforce equipped to participate in the job market of tomorrow,” he adds. He is in favour of greater focus on science, technology, engineering and mathematics (STEM) education, continuing educational reforms and forward-looking re-skilling programmes, entrepreneurship and enacting policies that promote a flexible labour market — all of which will prepare the economy to dynamically adjust to the coming disruption.

The need to upskill

Nurhisham Hussein, head of economics and capital markets at the Employees Provident Fund, is cognisant of the impending changes but chooses to emphasise the ability to upskill.

According to him, the types of jobs most at risk of automation are those that involve basic decision-making. “Driverless vehicles, for example, cut out bus and truck drivers. Software has already taken the place of accounting clerks. As AI improves, the greater the level of skills that can be replaced. Can economists be replaced? Yes, just like in any other profession. For example, we’re already using machine-learning techniques for forecasting.

“The big prospect here is that AI and Big Data promise to make a quantum leap in living standards, even for those at lower income levels. The threat is that it will exacerbate the class divide as the premium on skills grows larger. This is pertinent to the average citizen because it’s precisely the middle of the income and skill distribution that is likely to be disrupted the most.”

Nurhisham strongly favours the strengthening of the social safety net as the nature of work changes (see accompanying story).

“Sometimes, crying wolf is necessary. The potential for job losses is certainly there, but they are likely to be replaced by other types of jobs. The key question from a societal and policy standpoint is, can workers make the transition from one type of work to another? The evidence suggests that for most people, this transition can be made but at a cost in terms of lower income. Education can prepare the young for the jobs of the future but mid-career changes are expensive and risky for those already in the workforce,” he says.

Lower income for workers, some of whom may need to spend money on upskilling, could spell lower consumption as well as lower tax income for the government. That has sparked a debate on whether robots should be taxed to fund the reskilling of displaced workers (see accompanying story).

No matter who foots the bill, MEF’s Shamsuddin says it is important for employees to be multi-skilled to remain relevant to the needs of employers as the world goes through the fourth industrial revolution.

Judging by discussions at the recent Khazanah Megatrends Forum, Vivek says he is impressed by the depth of the dialogue that is taking place in Malaysia, which, according to him, is more advanced than that happening in Silicon Valley. “[Putting discussions into action] is something that Malaysia needs to figure out. This is why you need to have a national-level dialogue and start realising, learning and educating [to harness the benefits].”

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.