Why BIMP-EAGA Needs to Get Ready for the Fourth Industrial Revolution

Date Published
March 05, 2020
Students learn how robotic arms assist in mass production at a school in Indonesia. Photo exclusively licensed to the Asian Development Bank until 2022.

There has been a lot of press lately about the Fourth Industrial Revolution (4IR).

But what exactly is 4IR, or Industry 4.0? And why should BIMP-EAGA get ready for it?

4IR refers to technologies like artificial intelligence, robotics, nanotechnology, the Internet of Things, blockchain, cloud computing, and 3D printing. These technologies are changing how industries, countries, and governments operate and the way people live. Because of 4IR’s potential to disrupt social, economic, and even political systems, there is now a huge pressure on countries to respond. After all, the first, second, and third industrial revolutions, which brought in steam power, electricity, and digital technology, respectively, have made the world to what it is today.

BIMP-EAGA countries are among those preparing to take advantage of these cutting-edge technologies. They are also preparing a collective response.

“As we shift to knowledge-based economic activities, we recognize collective responses are needed to seize opportunities and address challenges in the Fourth Industrial Revolution,” said BIMP-EAGA ministers in Kuching last year. While 4IR can bring benefits, they noted that it also comes with some drawbacks for those not prepared to take advantage of 4IR technologies.

Opportunities

A 2018 report from Bain & Company estimates that digital integration could mean a $1.1-trillion uptick in the gross domestic product of ASEAN, which includes BIMP-EAGA countries, by 2025.

Another report notes that Southeast Asia’s internet economy could grow to $240 billion by 2025 from $72 billion in 2018. Online travel, e-commerce, online media, and ride-hailing platforms make up ASEAN’s internet economy.

4IR technologies can also allow lagging countries to “leapfrog” traditional phases of industrial development A 2017 white paper says 4IR technologies can make infrastructure for energy, health, education, and agriculture more affordable, overcome geographical limitations, and bring high-speed internet, electricity, and social services to isolated communities. Small and medium enterprises (SMEs) can also benefit from 4IR thanks to digital marketplaces, online services, and blockchain technologies, which can allow them to trade and connect with international markets.

Challenges

The BIMP-EAGA subregion includes remote and less developed areas that lack the infrastructure, capability, and means to adopt the 4IR technologies.

SMEs comprise a large part of Southeast Asian economies, but they also lack sufficient knowledge and manpower to participate in the Third Industrial Revolution, much less the 4IR, a 2017 paper notes.

4IR, specifically automation, also threatens jobs, as artificial intelligence and robots replace people in manufacturing and services.

Getting ready

BIMP-EAGA has initiated projects that can help the subregion get ready for 4IR. These include the BIMP-EAGA Submarine and Terrestrial (B.E.S.T) Cable Project and the ICT CEO Forum, both private-sector led.

The cable project aims to improve communication infrastructure and facilities for the BIMP-EAGA community. It is part of the ASEAN Broadband Corridor, which targets faster broadband rollout.

The ICT CEO Forum supports innovative SMEs and helps them network and mobilize resources under the Startuphubs@BIMP-EAGA Initiative, which targets budding technopreneurs. This initiative has been launched in Bandar Seri Begawan, Brunei Darussalam; Pontianak and Makassar in Indonesia; Kota Kinabalu and Kuching in Malaysia; and Palawan, Zamboanga, and Davao in the Philippines.

BIMP-EAGA also recognizes e-commerce as a means of promoting inclusive growth by helping SMEs integrate in global value chains. Under Vision 2025, BIMP-EAGA plans to establish a platform to develop e-commerce, which entails developing reliable and affordable ICT infrastructure and services; logistics and trade facilitation; e-commerce education and awareness; capacity building; policy support, advocacy, and coordination; and information sharing, among others.

A seminar organized in November at the sidelines of the BIMP-EAGA ministerial meeting in Kuching aimed to help BIMP-EAGA and other subregional groupings prepare for 4IR. The Regional Cooperation in the 4IR: Recognize, Rethink and Respond Workshop was organized by the Asian Development Bank, in partnership with the BIMP-Facilitation Center, the Government of Malaysia, and the State Planning Unit of Sarawak.

The workshop helped deepen participants’ understanding of 4IR’s challenges and opportunities; exposed them to assessment frameworks and tools; enhanced their skills in crafting solutions; provided them a forum to share knowledge and experiences on strategies, policies, and planning; and strengthened their network across the Southeast Asia region.

This article is adapted from Regional Cooperation in the 4IR: Recognize, Rethink and Respond Concept Note.