It’s easy to get lost in the hype surrounding artificial intelligence (AI), but Malaysia is taking a distinctly pragmatic approach by focusing its AI strategy on small to medium enterprises that make up the backbone of its economy.
Mimos Bhd, Malaysia’s leading government technology provider, alongside Microsoft, recently revealed that they are setting up a Centre of AI For Future Industry, aimed specifically at SMEs to learn about AI and the Internet of Things.
“We want SMEs to adopt (the) latest technologies in the face of Industry Revolution 4.0 and one of the key elements is AI,” says MIMOS chief technology officer Thillai Raj. “Companies who want to conduct research and technology development could not do so as cost is quite high and moreover, there are not many capable AI technology companies in Malaysia.”
“Hence, MIMOS will develop the infrastructure using Microsoft technology to enable SMEs and young entrepreneurs to adopt AI in their business.”
The projections for how these new big data, machine learning (ML) and automation capabilities will transform countries, companies and societies are startling. By 2021, AI will allow the rate of innovation to almost double and increase productivity improvements by 60% in Malaysia, according to a study from Microsoft and IDC Asia/Pacific. And previously published MGI research estimates that currently demonstrated technologies have the potential to automate 51% of the work activities in Malaysia.
The focus on building up SME’s AI capabilities is a smart move by the Malaysian government as they account for 98.5% of Malaysian businesses and contribute 36.6% of the country’s GDP.
Malaysia has made “promising early signs” in AI adoption, according to a McKinsey report on Artificial Intelligence and Southeast Asia’s Future. The country is the second most prolific contributor of AI-related papers within Southeast Asia. Since 1985, the country has produced 8416 publications, which make up almost 34% of the total for the region.
Hazlina Selamat, director of the Centre for Artificial Intelligence & Robotics (CAIRO) at the Universiti Teknologi Malaysia, which has overseen several AI application pilots, agrees that Malaysia’s focus has to be on the country’s core sectors.
“AI and robotics firms in Malaysia need to focus on technologies for specific local applications (such as palm oil or fisheries) and affordable technologies for local and regional industries,” she says.
Yet certain challenges still stand in the way of Malaysia’s AI ambitions, such as the lack of talent. According to a survey conducted by MIT Technological Review on Asia’s AI agenda, some 47% of Malaysian respondents said that the shortage of internal talent was the biggest challenge to deploy AI in their company.
This is by no means a Malaysia-centric problem, however, as respondents from almost every other country in Asia from Indonesia to Singapore have also singled out the lack of talent as their biggest challenge. The Centre of AI for Future Industry is definitely a great start to SME’s AI education. But the imperative also lies with Malaysia’s SMEs to take up these opportunities, or risk being side-lined by bigger, cheaper and more tech-savvy competitors.
POS Malaysia Berhad is on a mission. From automation to improving connectivity, the country’s postal delivery service is racing to adopt technology to keep ahead of the surge in parcel deliveries spurred by e-commerce. Head of operations, Rahman Abbas, says that the number of packages that POS Malaysia deals with on a daily basis has more than tripled from 200,000 five years ago to almost 600,000 a day at peak today.
Relative to the tedious process of manual sorting, the group has increased efficiency by 70-80% after adopting LG CNS technology to sort parcels autonomously. The subsidiary of South Korea’s LG Corporation supplies the company with machinery and software for sorting.
The machines are fitted with optical character recognition (OCR) cameras that read parcel labels and determine where they are supposed to go, says Abbas. All that the mail staff need to do is correctly position items on the conveyor belt so that the labels can be read.
Despite this rapid digitalisation of postal processes, Abbas is upfront about “struggling” with parcel volumes in meeting service agreements. Not only are there a growing number of low-cost competitors, but inefficiencies such as frequent and numerous unsuccessful delivery attempts increase the load exponentially.
As Malaysia’s national postal service, the group’s remit and service expectations are mandated. “We can’t say no to deliveries if they’ve been requested, but other delivery services can work within whatever their capacity is,” says Abbas. We suffer penalties “from breaching service licence agreements with contract customers.”
The group’s most recent first quarter 2019 earnings results show operating profit plunging 74.4% to MYR 10 million from a year ago. Much of this loss can be attributed to postal services, the company’s second largest revenue generator, which made a loss of MYR 33 million for this quarter. POS Malaysia’s stock has fallen almost 50% in the past year.
While technology can be expensive to integrate, it also can create new business opportunities. According to a report by the U.S. Postal Service and IBM, the Internet of Postal Things could help protect postal companies by generating cost savings, operational efficiencies, and user value. Over time, it could also create new revenue opportunities and foster new business models. For example, a smart and sensor-connected mailbox that would allow larger parcels to be delivered securely, even without residents being home, and could notify recipients when a delivery is done. Postal services could generate revenue by renting the connected mailboxes to households. According to the report, France’s La Poste and mailbox manufacturer Renz have already successfully tested connected parcel buildings in a few buildings in Paris.
With the vast infrastructure that postal services have of both stationary and moving elements from post boxes to delivery vans, if these objects were able to “talk”, collect, and communicate data, this could create an information network to complement the physical network.
Malaysia’s Communications and Multimedia Minister Gobind Singh Deo said recently that the commercial use of drones in the postal and courier industry will be implemented in the next five years. POS Malaysia’s longer-term ventures also include drones, says Abbas, but concerns about the short battery life remain.
“Most drones have less than one hour of air time,” says Abbas. “So, the proximity of the drone towards the warehouse is a factor, and security is another one; kids with just a slingshot could take down a drone easily.” Abbas is also on the fence about autonomous delivery robots, noting that the technology backing these robots is not yet mature.
More promising is the ‘Internet of Postal Things’ actually helping with one of POS Malaysia’s most basic challenges, which is standardising addresses. “Sometimes in rural areas, we receive addresses like ‘the house behind the yellow building’ and if you aren’t familiar with the area you wouldn’t know where to go,” says Abbas.
In circumstances such as those, familiarity combined with technology could go a long way, so that the next generation of post-workers, drones, or delivery robots know exactly where that yellow building is.
2019 will be the year where the transition from 4G to 5G in Malaysia is expected to kick into higher gear. By September, the National 5G Task Force set up by the Malaysian Communications and Multimedia Commission is expected to recommend a holistic strategy for 5G deployment in the country.
As the 5G era dawns, the promise of massive bandwidth, lower latency and large connected device ecosystems is prompting an R&D flurry as companies explore new use cases. From smarter cities to futuristic factories and autonomous vehicles, all technology categories will be upgraded by 5G.
A report by IHS Markit predicts that 5G, which could be up to 100 times faster than 4G, will enable $12.3 trillion of global economic output by 2035.
Within Malaysia, Cyberjaya and Putrajaya will become the first 5G testbeds. “The aim is to explore the practical uses and modes of implementation of 5G as well as to learn and iron out policies, regulations and spectrum planning of 5G,” said Communications and Multimedia Minister Gobind Singh Deo in October.
In a survey produced by MIT Technology Review alongside Huawei last year, some 69% of respondents from Malaysia said they expected 5G to be available by 2020. Survey respondents are also proactive regarding the 5G transition, with 65% already discussing how it will impact their business, and 54% investing in technologies that can be deployed when 5G has been launched.
Currently, Malaysia ranks 14th in the Economist Intelligence Unit’s Automation Readiness Index from 2018, which measures countries’ preparedness to access the opportunities, and fend off the challenges, of automation. That’s two spots above where the country was previously. The country has a particular strength in education policies where strong career guidance provisions and counsellors were available in almost every Malaysian school.
Unique features of Malaysia’s digital transformation also include its burgeoning partnerships with China, the regional powerhouse, notably collaborations with Alibaba in AI-driven solutions to traffic congestion in Kuala Lumpur. It is also a testbed for Tencent as Tencent begins exporting its WeChat digital wallet.
Out of the different industries, respondents from Malaysia felt that manufacturing, financial services and public safety would benefit the most from the roll-out of 5G in that order. However, uncertainties do remain with some 82.86% saying that infrastructure upgrade costs or complexity will be the biggest challenge while some 48.57% think that a lack of business models to integrate 5G use cases is the biggest hurdle.
Hazami Habib, CEO of the Malaysian Academy of Sciences, sees a number of use cases for 5G when it does arrive. “Remote control of robotics in healthcare and manufacturing can be the future for Malaysia once 5G is in place,” she says. “There are pockets of AI initiatives and testbeds for IoT, and with 5G these can be launched and applied. The development of IoT systems for food traceability and halal logistics are all in the works.” The halal economy is a major global segment, with 1.5 billion consumers, set to rise to 2.2 billion by 2030, says Habib.
There is no doubt that technology always takes time to mature and 5G is no exception. While there has been a lot of talk about new network capabilities, commercially 5G is still in its infancy. For Malaysia to truly become a leader in the space, a collaborative 5G ecosystem between governments, businesses and telcos is key. Thankfully, that is already under way.
Digital Transformation has become a core driver of organisational change in the current era. In the meantime, the Energy industry has played a pivotal role in global economic transformation since the industrial revolution.
Opportunities are abound for the Energy sector to expand its boundaries through digitalisation, as industry players are expecting to see a recovery supported by better economic conditions this year. Oil prices have strengthened to above USD 65 per barrel and are expected to remain fluid in the short term, driven by escalating tension in the Middle East and traders’ position to capture opportunities from rapid movements of oil prices.
To support the Energy industry in their digital transformation, TM ONE has recently hosted an open day forum which discussed Digital Transformation within the Malaysian Energy sector. They were exposed to several innovative technologies, such as the Accelerated Artificial Intelligence (AAI) and Smart Helmet. 85% of the participants, representing various organisations, found that the forum was beneficial to them.
The participants noted that they have already embarked on their organisational digital transformation initiatives, and are gearing up their digital transformation in 2018. The remaining 15%, who are still planning their digital transformation in the next few years, noted that operational challenges such as connectivity and infrastructure, data management, cybersecurity and business processes are the reasons why they are taking some time to implement digital transformation in their own organisation.
Half of the organisations that are yet to implement digital transformation consider it to be important and view it as a priority in 2018, while the rest are looking to explore their organisational Digital Transformation within the next 3 years. For these organisations, their technology priorities for the next 6 to 12 months include Mobility (wearables, handled), Data Centre and Cloud services, Smart services (IoT, Sensors, Smart Building), Collaboration and Safety & Security.
Most Energy companies who are leading the way in digital are devising strategies that enable the convergence of IT and digital innovations with operations technology (OT). They continue to invest in systems to handle huge volumes of data in a fast, secure and flexible way. They are looking at harnessing the power of cloud and mobility to create cost-effective, efficient and safer operating environments.
Development in technologies such as Cloud, Social Media and Big Data & Analytics are driving trends that have immense potential for the Energy sector.
Nonetheless, the Energy industry needs to tackle a series of historic and structural inhibitors, which include data security regulations, standardisation of data collection platforms, integrated ecosystem, realignment of corporate culture and employee mindset, digital talent / workforce empowerment and cybersecurity, to unlock the full potential of Digital Transformation.
Digital enablers, from process digitisation to robotics and automation, can help realise this potential by supporting business processes in dynamic ways. Many new technologies and platforms are available for the Energy industry to exploit and enable themselves to move to the forefront of the digital industrial revolution. Digitally-led transformation initiatives are important levers in creating differentiation and help Energy players to remain financially afloat, and relevant, in their region.
Security is crucial to inspiring consumer confidence and to achieving commercial success for new emerging technologies. However, the world of cybersecurity is ever-changing, with new threats and countermeasures emerging daily.
With organisations actively adopting cloud-based delivery models and committing to digital transformation, the traditional cybersecurity models becomes unsustainable and obsolete. How can the businesses enable their digital transformation journeys in a secure and compliant manner?
No industry is spared by the disruptions wrought by the digital era. Businesses that do not keep up with the current digital trends and do not take pre-emptive measures to apply digitalisation as part of their business’s competitive edge will not survive the market.
According to a survey by TM ONE, 75% of 40 CXO key manufacturing players in the market believed that digitalisation will drive organisations within the next 3 years. Half of the respondents (50%) from the IT professional field said that their organisations are in the midst of implementing cloud computing, system integration, addictive manufacturing and internet of things (IoT) as part of their readiness for Industrial Revolution 4.0, or IR4.0.
Certainly, Malaysia is gaining a huge awareness here, as exemplified by its efforts in adopting digital transformation in various industries, resulting in rapid transformations in the manufacturing and/or automotive sectors.
Many Malaysian-based businesses are predicted to position themselves in adopting IR4.0 in the next few years. Manufacturing accounts for over 80% of all exports and 23% of GDP, according to the Malaysia External Trade Development Corporation (MATRADE) and Department of Statistics Malaysia (DOSM). The Electrical and Electronics (E&E) industry, with its products and services related directly to IR4.0, was expected to lead Malaysian exports in 2018.
IR4.0, also known as “smart factory”, is the cutting-edge development in the digitisation and automation of manufacturing processes. It incorporates the most advanced and innovative technologies such as advanced sensors, big data analytics, intelligent robotics, 3D-Printing, machine learning and cloud computing, not forgetting cybersecurity and Internet of Things (IoT).
This cyber-ecosystem enables businesses to monitor the physical processes of the factory, which in turn enables them to make intelligent decisions. Physical systems make up part of the sensory mechanism of the Internet of Things - communicating, analysing, cooperating and interacting with each other, and with humans in real time via wireless web-platforms.
IR4.0 covers the entire end-to-end value chain – from suppliers, procurement, production, design, logistics to sales in order to achieve higher productivity and output flexibility.
In a nutshell, businesses can reduce operational cost as IR4.0 emphasises on streamlining overall business operations by minimising wastage or storage, enhancing supervisory processes and maintenance of machinery, at the same time instilling streamlined security and safety efficiencies.
Even though Malaysia is slow in embracing digital transformation as compared to other APAC countries such as Vietnam, Thailand or Singapore, the digitalisation and automation journey will soon push businesses to the forefront of our industrialised world, and set to fast-track business transformation in today’s digital economy - allowing us to work smarter, optimising work streams and enabling growth.
In the next few years, the manufacturing sector in Malaysia will continue to embrace and adopt new technologies in order to help increase visibility in both of their raw production lines and to streamline operational processes.
“IR4.0 covers the entire end-to-end value chain - from suppliers, procurement, production, design, logistics to sales in order to achieve higher productivity and output flexibility.”
In general, Malaysia is still struggling to adopt IR4.0, and many businesses are stuck at Industry 3.0, in terms of manufacturing technology. The common challenges faced by many manufacturing businesses in implementing IR4.0 are:
Because of these challenges, many manufacturers still rely on low cost labour i.e. foreign workers and are hesitant to invest in innovative automation technologies.
Manufacturers need to move with the market, but movement will only happen when it is justified by a viable business case. The Malaysian government, industry leaders, private sectors and the local academia need to work together to prove, with practical and pragmatic business cases, that digital transformation is fundamental for an organisation to enhance customer service and experience.
The Ministry of Commerce and Industry (MITI) is already in the process of formulating a national policy or framework on IR4.0. MITI and its agencies, in collaboration with other relevant Ministries and Agencies, are undertaking various outreach programs to increase public, industry, academia and training institute’s awareness on IR4.0. Targeted incentives and funding are provided to promote the adoption of IR4.0 under the Technical Working Groups (TWG) for Incentives and Funding.
The private sector industry is also being urged to invest in their own digitalisation efforts. Many are already putting in effort in implementing IR4.0, however, more concerted efforts from industry leaders need to be seen. There are organisations from the Electrical & Electronics (E&E), aerospace and the automotive sectors who are more advanced in terms of IR4.0 adoption. These success stories by industry captains can then be set as a benchmark for others to emulate moving forward.
Pacing automation and robotics into the seams of a manufacturing foundation is crucial in the elimination of human errors, and enables businesses to refocus their effort in areas which drives revenue for the company.
It drives and encourages greater enhancements in manufacturing processes and sets local market benchmarks in attaining quality production output, efficient practice and better profit-gaining opportunities for businesses.
With AI riding alongside IR4.0, smart factories will mushroom in high industrial areas fully equipped with smart solutions. It consists of technology enablers such as robotics arm, machine learning, augmented reality, autonomous vehicles and 3D printing that will enable lean, accurate, and real time production, creating business performance efficiencies throughout the manufacturing process.
With an efficient supply chain in place, it will allow businesses to adjust itself to constant shifts in market demand and mitigate risks of unforeseen incidents that will directly impact production and the business.
