Disruptive technology, an alternative to increase labor productivity and competitiveness

Jakarta, 29 June 2016 –The Habibie Center in collaboration with the Ministry of Finance of the Republic of Indonesia and the World Islamic Economic Forum Foundation held a public dialog entitled “Seizing the Benefits of Disruptive Technology for Manufacturers in Increasing Labor Productivity” today at The Habibie Centre in South Jakarta. This public dialog was part of the 12th World Islamic Economic Forum (WIEF) series of events that will culminate at the forum main event on 2 – 4 August 2016 in Jakarta.

Speaking at the event, Senior Economic Researcher of LIPI Dr. Zamroni Salim says, “Disruptive technology does not always oppose conventional operations with massive labor forces. Manufacturing operations such as big data and the Internet of Things (IoT) that help analyze details of operations, real time data from suppliers’ inventory, shipments in transit; to downstream customer demand does complement conventional operations.”

Disruptive technologies can in fact serve as an alternative for Indonesia and other ASEAN countries to widen profit margins and lower costs in manufacturing, and potentially create US$25 to US$45 billion in annual ASEAN economic impacts by 2030. This is also in line with Indonesia’s industrial development master plan (RIPIN) of 2015 – 2035, which targets the contribution of non-oil and gas industry to reach 30% in 2010.

It is true that the development of disruptive innovation and technology are still concentrated in countries with high levels of commitment and pools of experts in research and development, such China, Japan, India, and South Korea. Nevertheless, ASEAN countries, including Indonesia, have the opportunity to attract more cost-conscious global manufacturers and embed themselves deeper into the global supply-chain. One of the reasons is due to the increase of China GDP per capita and its shift from an export-driven economy to a consumption-driven model that have caused wages to rise in the country.

Special Staff of Vice President of The Republic of Indonesia for Economic and Finance Wijayanto Samirin says, “Manufacturers in Indonesia and other ASEAN countries need to access these disruptive innovation and technology in a cross-border global partnership. Cooperation between large and small companies is needed to create global competitiveness.”

In Indonesia, where the majority of its workforce is employed by SMEs; digital disruption will particularly offer many small businesses opportunities that would have been beyond their reach before. Indonesian SMEs should therefore understand that their business and customers could potentially go global regardless how small their businesses are. This is because the technology is there, and the emerging global economy is totally interdependent. Identification of the right technologies and relevant experiences are therefore key in making SMEs in Indonesia global ready. Such opportunities are available through networking platforms, or global business-to-business networking events such as the upcoming 12^th WIEF in Jakarta that allow for business-to-business collaboration and synergy to materialize. To be held from 2-4 August this year, the 12^th WIEF is themed “Decentralising Growth, Empowering Future Business”, to promote inclusive growth that will benefit the business ecosystem.

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About the World Islamic Economic Forum (WIEF)

The WIEF Foundation, a not-for-profit organisation based in Kuala Lumpur, organises the annual World Islamic Economic Forum, a world-class business platform showcasing business opportunities in the Muslim world, and runs programmes of the various initiatives of the Foundation that strengthen people partnership and knowledge exchange between Muslim and non-Muslim communities across the globe.

The WIEF has previously held forums in Malaysia, Kazakhstan, Indonesia, Kuwait and
Pakistan, the United Kingdom and United Arab Emirates and aims to bring together Muslim and non-Muslim communities through the common language of business.

The 12th WIEF will be held at the Jakarta Convention Centre from August 2 – 4, 2016.

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