KUALA LUMPUR (July 2): Yesterday’s launch of the National Fourth Industrial Revolution (4IR) Policy was met with mixed reactions from local players within the digital economy. Most market participants agree with the policies highlighted but do not effectively address the existing gaps within the market.

CEO and founder of Vectolabs Technologies Faizal Ali says that the policy seems to revolve around supply, such as upskilling and growing digital talents. In practice however, local technology development requires technology consumption, that is, demand, but existing national policies seem to counter this.

“The relative ease of hiring foreign labour at low wages removes many business cases of artificial intelligence (AI) and automation,” he says.

“Large government and GLC project-purchasing methods also do not favour locally-developed technologies, as they tend to favour lower-risk technology that is proven and has been deployed elsewhere, with little consideration of local technology content. It is far easier for companies to import technologies wholesale, rather than developing them locally.”

In the electrical and electronics (E&E) sector, the National 4IR Policy urges greater participation in higher value-added activities, such as generating intellectual property. However, Faizal says it fails to create sustainable and lasting demand for locally developed 4IR technologies.

He fears that the E&E sector will start to shrink as companies move to lower-cost countries. If Malaysia continues to import technology wholesale, demand for technology workers will decline. He points towards the stagnant engineering salaries for the past few decades as evidence of this, with the exception of software engineers.

Everpeaks CEO Joachim Sebastian describes the National 4IR policy as putting the cart before the horse, as there are unresolved fundamental issues that can derail or compromise the execution of the national 4IR agenda, such as the lack of proficiency in the English language.

“When we participated in a government programme to help companies, particularly those from rural areas, export products, the businesses could not even read the agreement documents from Amazon because they did not understand English. The language proficiency in our country is just not at the right level to execute these policies effectively,” says Sebastian.

“Next, our education system does not effectively emphasise and support critical thinking and problem solving sufficiently to build a strong foundation for the execution [of these policies]. When our education system is memory-based, how do you expect us to execute strategies that require cutting edge processes and agile methodologies?”

From initial impressions, Sebastian says that the policy document is impressive and covers a lot of ground. However, the key driver of these policy objectives is the commercialisation of these technologies, which were not adequately addressed. He worries that companies will pay lip service adhering to the policies, but are integrating 4IR technology in a shallow, non-holistic manner.

“If demand for 4IR is not yet here in Malaysia, there needs to be a focal emphasis on the policy itself — to establish demand,” says Sebastian.

“We have to incentivize the implementation of 4IR beyond a reasonable doubt, so that it will be a no-brainer for any company to implement this, because the alternative will not be feasible in terms of manpower costs, market adoption and industry expectations.”

Aaron Sarma, general partner at ScaleUp Malaysia, believes the National 4IR Policy is a great complement to the Malaysia Digital Economy Blueprint (MYDIGITAL), where 4IR technology was only lightly addressed.

However, he is concerned about the execution of these policies, as the document does not adequately pinpoint the parties responsible for the policies’ execution.

“We should not be announcing new policy frameworks every quarter, without a focus on execution. I would love to see an execution document, which highlights what is going to happen in the next 18 months, rather than just making an announcement,” he says.

“I wish there were more details, such as which government agencies are responsible for which particular initiative. That is one thing we do not have real visibility on. For a ten-year policy document, we need to know who is accountable at the end of the day.”

Sarma is also concerned that the policy document is trying to address every single technological opportunity, rather than focusing on two or three key areas. He fears that the nation will be a jack of all trades but a master of none, without a specific “shining star” industry.

He points towards the success of several growing companies, such as Aerodyne in the drone ecosystem, and recommends the government pick two to three key industries and technologies and double down there instead.

Despite the abundance of policy papers on the subject matter, Datuk Fadzli Shah Anuar, managing director (MD) of Awesome Digital Assets, believes such policies still need to exist. Fadzli is the ex-chief strategy officer of Malaysia Digital Economy Corporation (MDEC), one of the parties consulted during the drafting of the National 4IR Policy during his stint there.

“Touching on MYDIGITAL, the digital economy and 4IR are related, but they are not the same thing. Digital technologies are inputs into a subset of 4IR technologies, whereas the digital economy is an outcome of many technologies, including 4IR tech,” says Fadzli.

“So this latest policy document, instead of addressing the overall economic activity, concentrates on the supply side — which kind of technologies Malaysia should be adopting into which industries.

“For example, the needs of Japan with its aged population, versus Germany with a manufacturing-based economy, are different from the needs of Malaysia. We have lots of primary industries and natural resources, so how we adopt 4IR technologies is going to be different from other countries.”

On a similar note, Fadzli points out that the Industry4WD policy announced in 2018 is different from the National 4IR Policy. The former is geared towards the manufacturing sector, with the document going much deeper in terms of prescriptive recommendation, while the latter applies to sectors outside of manufacturing.

While endorsing the need for such policies, Fadzli also identifies a few weaknesses in terms of executing them. He believes many policies are over-reliant on the competency of the civil service, and held back by the speed at which the public sector usually operates.

“I would argue that this is not really the fault of the civil service because it takes time to build these competencies. It is also not the civil service’s day job to be technology experts either, so I think there must be a high degree of dependency pushed towards the private sector, especially on the originators or companies developing these technologies,” he adds.

“Regardless if it is drone technology, Internet of Things (IoT) or blockchains, the core producers of those products will be the common denominator. So there needs to be a lot of knowledge transfer, both from foreign industries and the private sector to the Malaysian civil service.”

Launched on July 1, the National 4IR Policy provides guiding principles and strategic direction to ministries and agencies in formulating policies and action plans in matters related to emerging technologies.

The policy revolves around four major thrusts: Equipping Malaysians with 4IR knowledge and skillsets, strengthening digital infrastructure, future-proofing regulations to be more agile, and accelerating 4IR technology innovation and adoption.

Through these thrusts, the policy aims to improve citizens’ quality of life, enhance local capabilities, and preserve the nation’s ecological integrity by embracing 4IR technologies.

Technologies identified as foundational to the national 4IR agenda are artificial intelligence, Internet of Things, blockchain, cloud computing and big data analytics, as well as advanced materials and technologies.