Embracing Industry 4.0 - A Malaysian Strategic Technology Outlook

Published by
Malaysian Industry-Government Group for High Technology (320059-P)
MIGHT Partnership Hub,
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63000 Cyberjaya,
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© MALAYSIAN INDUSTRY-GOVERNMENT GROUP FOR HIGH TECHNOLOGY (MIGHT), 2018
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ACKNOWLEDGEMENT
We would like to acknowledge the contribution and assistance of many individuals and
organizations involved in this project. More specifically, to the authors, reviewers and editors
that took part in the completion of the Malaysian Strategic Technology Outlook 2017/2018
document. Without their support, this publication would not have become a reality.
On a personal basis, we would like to thank each and every one of the organizations for their
contributions. Our sincere gratitude and thanks goes to the authors who contributed their time
and expertise to this document. We are immensely grateful. Second, we wish to acknowledge
the valuable contributions of the reviewers and editors in ensuring the quality, coherence, and
content presentation of the document. Last but not least, many thanks goes to the team for their
effort and commitment to deliver the publication.:
External Contribution
Aerospace Malaysia Innovation Centre (AMIC)
Agensi Innovasi Malaysia (AIM)
BAE Systems (International) Limited
Boustead Heavy Industries Corporation Bhd (BHIC)
CMC Engineering Sdn Bhd - Haniff Ghazali
DreamEDGE Sdn Bhd
FAVORIOT Sdn Bhd – Dr. Mazlan Abbas
Indah Water Konsortium Sdn Bhd (IWK)
Keretapi Tanah Melayu Bhd (KTMB)
Majlis Amanah Rakyat (MARA)
Malaysian Investment Development Authority (MIDA)
Ministry of Education Malaysia
MYBiomass Sdn Bhd
Neuroware - R1 DOT MY - Mark Smalley
Petroliam Nasional Bhd (PETRONAS)
Pharmaniaga Bhd
Rolls-Royce Malaysia Sdn Bhd
Sime Darby Plantation Sdn Bhd
System Consultancy Services Sdn Bhd (SCS)
Telekom Malaysia Bhd (TM)
Tenaga Nasional Bhd (TNB)
The Business Year
UST Global Sdn Bhd - Basheer Kalanchera
Internal Contribution
Ani Suzila Anas
Ayuni Mohd. Rashid
Azmil Mohd Amin
Datuk Nik Ahmad Faizul
Dr. Ibrahim Abu Ahmad
Dr. Raslan Ahmad
Farah Abu Bakar
Ida Semurni Abdullah Ali
Iliana Maziah Ismail
Izzatul Huda Mohd Jalil
Mastura Ishak
Mohamad Azreen Firdaus
Mohd Hasan Mohd Saaid
Mohd Nasir Md Ibrahim
Mohd Nurul Azammi Mohd Nudri
Norsam Tasli Mohd Razali
Nur Suraya Mustafar
Priscilla Annabel Bisop
Robert Tai Chiang Vun
Suzie Ismail
Tengku Saifullizan Rahim
Consultant Copyeditor
Abdullah D.
Editorial Team
Rushdi Abdul Rahim
Mohd Nasir Md Ibrahim
Dr. Ibrahim Abu Ahmad
Farah Abu Bakar
Noraida Md. Zain
Priscilla Annabel Bisop
Izzatul Huda Mohd Jalil
Rosniwati Hasan
Natrah Mohd Emran
Ani Suzila Anas
Zeti Akmar Tajudin
And last, but not least, special thanks to the
members of our Management for their thoughtful
encouragement and close supervision:
Advisor
Datuk Dr. Mohd Yusoff Sulaiman
Project Director
Mohd Zakwan Mohd Zabidi
3

Malaysia has been developing its high
technology and manufacturing sector since
the 1970s. and is now ranked tenth in the world
in terms of high-tech manufacturing exports
according to the World Bank in 2015/16.
Moving forward, MITI and its agencies will
ensure that no efforts will be spared so that
the nation will continue to improve our export
performance and become the leading center
of excellence for high-tech manufacturing.
Recently, the world has seen a flurry of
innovative technologies that are creating a
huge impact; and at the same time disrupting
the manufacturing sector. Advancements in
robotics and automation, Internet of Things
(IoT), big data and others are impacting
productivity and competitiveness of
businesses globally. The World Economic
Messages from
Dato’ Sri Mustapa Mohamed
Advancements in robotics and
automation, Internet of Things
(IoT), big data and others are
impacting productivity and
competitivenessofbusinesses
globally.
Forum describes this phenomena as the
Fourth Industrial Revolution where the virtual,
physical and biological combine to produce
new technologies and products.
In this regard, MITI has embarked on
formulating the Malaysia Industry 4.0
Framework. The framework serves as a
reference document for industry players
that are involved in manufacturing and
manufacturing-related services to transform
their companies to become Industry 4.0
compliant. Inordertorealisethisaspiration,five
(5) aspects are critical, namely, Infrastructure &
Ecosystem, Funding & Incentives, Technology
& Standards, Human Capital and Talent &
SMEs development. This initiative will prepare
the local industry to reap significant business
opportunities in the digital economy and
Dato’ Sri Mustapa Mohamed
Minister of Ministry of International Trade and Industry
(MITI)
This initiative will prepare the
localindustrytoreapsignificant
business opportunities in the
digital economy and embrace
the fourth Industrial Revolution
(4IR).
embrace the fourth Industrial Revolution (4IR).
It is heartening to note that more than 5,000
multinational companies (MNCs) in Malaysia
havealreadyappliedsomeelementsofIndustry
4.0 in their operations. At the same time, there
are companies that are still unaware or unable
to implement any of the advancement brought
by Industry 4.0.
I strongly believe that this publication
‘Embracing Industry 4.0’ will serve as an
important preamble to the Industry 4.0
Roadmap that MITI will launch in the near
future. The close collaboration between
MIGHT and MITI will ensure that both reports
are qualified representations of the multi-
stakeholders’ views on the development of
Industry 4.0 in Malaysia.
54

With these continuing waves of revolution,
there is a need to address such development
impact and its value creation competently. All
the elements are inter-related and connected.
Talent development, knowledge capacity and
capability will warrant that the advancement of
S&T to be treated in a more holistic manner.
Our desire and taste for new innovation,
lifestyle and culture will need to be balanced
delicately. Environmental issues especially will
require viable STI-based solutions. The ability
to quickly adapt and adopt or more importantly
innovate will be the key; which when coupled
with a green mindset; will indeed bring
sustainability features to the forefront for all
activities.
As such, under the S2A publication series;
the Malaysian Technology Strategic Outlook
Many activities and initiatives have taken
place in our bid to drive the country towards
a high-income nation by the year 2020.
Correspondingly, the launching of the inclusive
Science to Action (S2A), a national agenda
created to streamline and mainstream Science
and Technology (S&T) into nation building; has
been able to galvanize whilst complimenting
the various initiatives and stimulating the
ecosystem.
Information and insights gathered from the
Deliberations of Global Science Innovation
Advisory Council (GSIAC) and National
Science Council (NSC) are imperative to
providing the required impetus to ensure
that the governance and implementation of
activities are according to the shared agenda.
With these instruments, local STI ecosystem
can be regulated and enhanced as appropriate
to meet industrial needs as we move forward
towards meeting Industry 4.0 challenges.
However, assistance and support in terms of
policy, financial and legal matters can only be
provided to a certain extent, since the state of
readiness from the industry players themselves
is pivotal in ensuring they successfully navigate
the dynamic technological advancement. Even
a component of Industry 4.0 e.g. the Digital
Revolution will impose enormous pressure
that will determine whether the competing
organizations can survive. Another area to
consider is the Social Media Revolution,
where the social web and mobile technologies
have created new opportunities as well as
challenges.
Prof. Tan Sri Zakri Abdul Hamid
Joint Chair, Government | MIGHT
Tan Sri Dr. Ir. Ahmad Tajuddin Ali
FASc | Joint Chair, Industry | MIGHT
Datuk Dr. Mohd Yusoff Sulaiman
President & Chief Executive Officer | MIGHT
Messages from the
Joint Chairs MIGHT and
President & Chief Executive Officer,
MIGHT
Malaysian Technology Strategic Outlook (MTSO) is our humble effort
to promote awareness of the challenges that are affecting and will
continue to shape; similarly, the local high technology arena.
SciencetoAction(S2A),anational
agenda created to streamline
and mainstream Science and
Technology (S&T) into nation
building; has been able to
galvanize whilst complimenting
the various initiatives and
stimulating the ecosystem.
(MTSO) is our humble effort to promote
awareness of the challenges that are affecting
and will continue to shape; similarly, the local
high technology arena. Respectively, it will be
our continuous effort to provide not only the
knowledge sharing by organizations within the
country but also to provide the essential bits
and pieces of the future that are influencing
Malaysia’s S&T landscape. Most assuredly,
MTSO is MIGHT’s contribution towards
advancing high technology aspects for the
nation, where we hope to serve not just our
members and partners but across industries
and the government alike.
On behalf of MIGHT and Editorial Team of
MTSO, we thank all members and partners of
MIGHT who have contributed to the success
of this publication.
76

GLOSSARY
AAEC ASEAN Economic Community
AI Artificial Intelligence
DDLT Blockchain, also known as Distributed Ledger Technology
EETF Exchange Traded Fund
ETP Economic Transformation Programme
FFDI Foreign Direct Investments
FOR Fields of Research
FTA Free Trade Agreements
GG2G Government to Government
GC game changers
GCR Global Competitiveness Report
GDP Gross Domestic Product
GERD Gross Expenditure on Research & Development
GSIAC Global Science & Innovation Advisory Council
GTP Government Transformation Programme
IIFR International Federation of Robotics
IMP1 Industrial Master Plan 1 (1986 -1995)
IMP2 Industrial Master Plan 2 (1996-2005)
IMP3 Industrial Master Plan 3 (2005-2020)
IoT Internet of Things
IPR Intellectual Property Rights
MM&A Merger and acquisition
MOSTI Ministry of Science, Technology and Innovation
MTDC Malaysia Malaysian Technology Development Corporation
NNBOS National Blue Ocean Strategy
NEM New Economic Model
NIS National Innovation System
NPSTI National Policy on Science, Technology and Innovation
NSC National Science Council
NUOF Newton-Ungku Omar Fund
OOBM Original Brand Manufacturers
ODM Original Design Manufacturers
OECD Organisation for Economic Co-operation and Development
OEM Original Equipment Manufacturers
RR, D, C & I Research, Development, Commercialisation, and Innovation
REP Returning Experts Programme
SS2A Science to Action Initiative
S4G Science for Governance
S4I Science for Industry
S4WB Science for Well-being
SME Small and Medium Enterprises
ST strategic thrusts
STEM Science, Technology, Engineering and Mathematics
STI Master Plan Science, Technology & Innovation Masterplan
STP Social Transformation Programme
TTPPA Trans-Pacific Partnership Agreement
TVET Technical and Vocational Education and Training
UUAV Unmanned Aerial Vehicles
UGV Unmanned Ground-based Vehicles
WWDI World Development Indicators
WEF World Economic Forum
WIPO World Intellectual Property Organisation
Acronyms Meaning Acronyms MeaningAcronyms Meaning Acronyms Meaning
98

PREFACE EXECUTIVE SUMMARY
The science, technology and innovation
framework has been put in place to foster the growth
of the fourth industrial revolution with elements
imperativetothrustthenationalagendaforward.The
country’s foray into high technology industries was
spurred by the realisation of the disproportionate
distribution of value that multinational corporations
imparted to their local partners in terms of industry
linkages, labour development and technology
transfer. The vision to go big on the heavy
industry development programme has led to the
establishment of the automotive, steel and cement
industries. Worthy of mention is the Industrial
Master Plans implementation that paved the way
for the expansion of the manufacturing sector and
the creation of the digital economy through the
Multimedia Super Corridor (MSC) initiatives. The
Third Industrial Master Plan which will culminate
in 2020 has had the touch of Industry 4.0 in the
areas of artificial intelligence (AI), robotics, cloud
computing and the Internet of Things (IoT) en
route to becoming a high income and advanced
economy.
To encourage the industry’s participation in
technological excellence, the government has
made available a number of incentive packages
in promoted activities and new technologies to
spur research, development, commercialisation
and innovation activities. Financial assistance is
accessible by both local and foreign companies,
providing support through the federal or state
governments and to a certain extent, arranged
based on government-to-government funding
initiatives. Malaysia has entered into Free Trade
Agreements with various economies as a multi-
pronged strategy to explore business activities
with high return potentials in investment, trade
facilitation and intellectual property rights (IPR)
on top of economic cooperation. The contribution
of the small and medium enterprises too must
not be dismissed albeit low on the total export
front, since the labour force needs to make an
impact on the value chain through increased
productivity and improved technology for them to
be able to integrate into ASEAN’s vast network of
multinational corporations.
The government foresees some challenges in
achieving its target to become an advanced nation
by 2020 across the scientific and technology
innovation domain due to the currently soft
investment in R&D, low commercialisation drive
as well as inadequate S&T workforce. These
shortcomings have been quickly addressed by
having in place the mechanism for the players to
thrive from the policymakers to the industries,
universities and research institutes’ perspectives.
The adoption of scientific policies and programs on
governance, well-being and industry is proof of the
Government’s commitment to strengthen, facilitate,
support and communicate science to the target
groups while adhering to the objective of preparing
the nation to become an advanced economy.
Worthy of mention is the
Industrial Master Plans
implementationthatpavedthe
way for the expansion of the
manufacturing sector and the
creationofthedigitaleconomy
through the Multimedia Super
Corridor (MSC) initiatives.
This publication is intended to inform and
promote awareness on the latest development as
well as challenges that are shaping the local and
global high technology landscapes. It also covers
the sharing of experience and expectations of the
local players. Besides key issues affecting the
landscapes, the publication also features the steps
necessary to move forward. As the technologies
keep moving and policy changed, some of the data
may appear outdated at the time of reading.
In this edition, Industry 4.0, its background and
the challenges are presented. Descriptions of the
technologies and platforms involved including
assessments on readiness are provided. The
selected success stories of local or international
companies in adopting these technologies are
highlighted, followed by government initiatives in
meeting the challenges whilst supporting progress.
Readers of this report may benefit from the
overview and in-depth explanation of the respective
topics presented to be able to relate with the
current science and technology environment that
is progressively transforming human lives around
the globe. Some issues discussed could have
sounded familiar but being directly deliberated by
the key industry players have projected them in a
clearer trajectory for the society to comprehend
and embrace the changes open-heartedly.
Like the beacon of a lighthouse guiding ships at
night, the report intends to serve as a guideline from
whence the affected segments of the society can
chart their future to co-exist harmoniously amidst
the ever-changing world brought about by science
and technology. By looking at the advancement
from different angles, the masses will gain insights
into the realm of knowledge that becomes the pillar
of the very report to arrive at any conclusion that
best fits their survival needs, be it in policy, business
or livelihood as a whole. This report will also serve
as part of the input in formulating the National
Industry 4.0 Blueprint while complementing the
efforts made by MITI in preparing the local industry
with the advancement of Industry 4.0.
This publication is presented in four (4) parts
and arranged in the following order:
Part A: Technology Spotlight
Begins with an overview of Industry 4.0 including
the global and local perspectives as well as
success stories. Articles on selected major and
emerging industries will be presented here such
as blockchain, construction as well as robotics.
In short, this section presents the technologies
involved with specific sectoral developments. It
will be concluded with four (4) case studies on
selected companies on how new technologies have
transformed/affected their businesses.
Part B: Malaysia High Technology Eco-system.
Presents Government initiatives to prepare the
country for the digital revolution era. The section
entails the programmes and projects to improve
the current ecosystem to meet the challenges; from
policies to governance, from studies to strategies,
and from talent to patent. Also in this section,
selected organisations share their visions and
efforts in driving progressively towards their goals.
It features their expectations and approaches
at deploying the advantages of the next wave of
industrial revolution to generate the country’s
economy.
Part C: Technologies of the future
This part contains a brief infographic on Industry
4.0. as well as introducing 21 tipping points of
emerging/disruptive technologies. This will be
followed with Infographics on 20 technologies of
the future.
Part D: Views from the Industry
The final section contains twenty (20) special
articles “‘Views from the Industry”’; i.e. insights
and sharing from selected organisations, agencies
and ministries on their visions and efforts in driving
progressively towards their goals; dispersed
throughout this section. The articles feature their
expectations and approaches at addressing the
challenges of the next wave of industrial revolution
to generate the country’s economy.
1110

Under the patronage of YAB
Prime Minister of Malaysia,
MIGHT is governed by a Board
of Directors, helmed through
the joint-chairmanship of
prominent private sector
personality and the Science
Advisor to the Prime Minister.
The initiative aims to intensify
ScienceinbuildingaKnowledge-
based Economy with the
objective of raising the profile of
Science and Technology (S&T) to
support nation building.
The Malaysian Industry-Government Group for
High Technology (MIGHT) was established
as an independent, industry-driven non-profit
organization on 22nd February 1993 and was
formally incorporated as a company limited
by guarantee on 15th October 1994. It is an
organization built on the strength of public-
private partnership with members represent
both local and international, from industry,
government and academia.
Under the patronage of YAB Prime Minister
of Malaysia, MIGHT is governed by a Board
of Directors, helmed through the joint-
chairmanship of prominent private sector
personality and the Science Advisor to the
Prime Minister. MIGHT is a consensus building
platform for industry-government in the drive
to advance high technology competency in
Malaysia. Its core purpose is addressing the
country’s needs in response to the effects of
globalization and trade liberalization on future
economic growth through the accelerated use
of high technology.
MIGHT also acts as a key interlocutor, bringing
together policy and technology nurturing to
advance high technology interests in Malaysia.
Apart from that MIGHT also takes on the role
of nurturing high tech industries via catalytic
interventions program when the need arises.
Programs and activities will include building
strategic partnerships and alliances,
technology acquisition and nurturing capacity
building as well as strengthening the growth of
these sectors through policy interventions and
flagship programs.
Science to Action (S2A) is an extension of the current National Transformation Agenda. The
initiative aims to intensify Science in building a Knowledge-based Economy with the objective of
raising the profile of Science and Technology (S&T) to support nation building.It was launched
by the YAB Prime Minister in November 2013 and comes under the purview of the Science
Advisor to the Prime Minister. MIGHT is the Implementing Agency to coordinate and manage its
programmes.
For more information, please visit http://www.might.org.my/
ABOUT MIGHT ABOUT S2A
1312

CONTENTS
B. MALAYSIA HIGH TECHNOLOGY ECO-SYSTEM 41
Malaysian High Technology Industries: A Rendition of Its Journey 43
Incentive and Financial Support 45
A Quick Guide to International Initiatives 46
11th
Malaysia Plan (11MP) – Spurring High Technology Development 47
National Blue Ocean Strategy (NBOS) 48
National Policy on Science, Technology and Innovation (NPSTI) 50
Science to Action (S2A) - National STI Transformation Programme 53
Executive Summary of OECD Reviews of Innovation Policy
Malaysia 2016 54
Transforming STI Governance 56
Global Science and Innovation Advisory Council (GSIAC) 57
National Science Council (NSC) 59
Talent Development in Industry 4.0 61
Industry and Innovation Culture - Understanding Patent Trends in
Malaysia 63
C. TECHNOLOGIES OF THE FUTURE 65
Infographics on Industry 4.0 65
21 Tipping Points 66
3D Printing 69
Advanced Material 71
Artificial Intelligence and Decision Making Robotic and Service 73
Big Data for Decision 75
Blockchain and Distributed Ledger 77
Connected Home 79
Digital Presence 82
Driverless Car 84
Implantable Technologies 86
Acknowledgment 1
Messages from Dato’ Sri Mustapa Mohamed 2
Messages from the Joint Chairs MIGHT and
President & Chief Executive Officer, MIGHT 3
Glossary 5
Preface 6
Executive Summary 7
About MIGHT 8
About S2A 9
A. TECHNOLOGY SPOTLIGHT 11
The Fourth Industrial Revolution 12
Exploring Blockchain for Malaysia 15
Construction Industry – Shaping the Future 16
Rail Industry – Rolling Forward Towards Seamless Journey 20
Robotics Industry - Opportunities Abound 25
Case Studies: 28
GRAB 29
iProperty.com 31
InneoNusa 33
Jobstreet.com 35
Vehicle Telematics Online Services (VTOS) 37
Internet of Things (IoT) 90
Neurotechnologies 92
Photonics 94
Pocket Supercomputer 96
Smart Cities 98
Storage for All 101
The Sharing Economy 103
Ubiquitous Computing 105
Vision as the New Interface 107
Wearable Internet 109
D. VIEWS FROM THE INDUSTRY 110
Aerospace Malaysia Innovation Centre (AMIC) 111
Agensi Innovasi Malaysia (AIM) 113
BAE Systems (International) Limited 115
Boustead Heavy Industries Corporation Bhd (BHIC) 117
DreamEDGE Sdn Bhd 120
FAVORIOT Sdn Bhd 121
Indah Water Konsortium Sdn Bhd (IWK) 122
Keretapi Tanah Melayu Bhd (KTMB) 124
Majlis Amanah Rakyat (MARA) 126
Malaysian Investment Development Authority (MIDA) 127
Ministry of Education Malaysia 129
MYBiomass Sdn Bhd 131
Petroliam Nasional Bhd (PETRONAS) 132
Pharmaniaga Bhd 135
Rolls-Royce Malaysia Sdn Bhd 138
Sime Darby Plantation Sdn Bhd 140
System Consultancy Services Sdn Bhd (SCS) 141
Telekom Malaysia Bhd (TM) 143
Tenaga Nasional Bhd (TNB) 145
Bibliography 147
1514

TECHNOLOGYSPOTLIGHT
The Fourth Industrial Revolution
The first Industrial Revolution is a period taking place in the middle of the 18th
century when peoples in Europe and America shifted from rural communities
living on farming to a society that thrived on industries. Even if manufacturing
and production of items were common before the revolution, the labour was
rather manual than mechanised carried out in a household to meet the market
demand.
The new system brought about scientific advances and technological
innovations that would revolutionise transportation, communication and
transaction like they had never been before, changes that catapulted the human
civilisation to one that prospered on the invention of new machines maximising
production on minimum workforce. Iron and steel became the gears that drove
the industry which was fuelled by steam and coal while other aspects of the
human lives went through just as many changes in terms of social, politics and
economics.
Britain, being the springboard of the Industrial Revolution, later expanded its
dominant of the global marketplace through its vast empire while at the same
time, trying to guard the spread of industrialisation in vain. It was not long
before it began to impact other countries in Europe via export of machines and
human capital. The revolution eventually crossed the Atlantic to massively hit
the United States, thrusting the nation forward in the development of industry.
Coined by the German government – “the term Industry 4.0 stands for the fourth
industrial revolution. Best understood as a new level of organisation and control
over the entire value chain of the life cycle of products that is geared towards
increasing individualised customer requirements. This cycle begins at the
product idea, covers the order placement and extends through to development
and manufacturing, all the way to the product delivery for the end customer,
and concludes with recycling, encompassing all resultant services. The basis
for the Industry 4.0 revolution is the availability of all relevant information in
real time by connecting all instances involved in the value chain. The ability
to derive the optimal value-added flow at any time from the data is also vital.
The connection of people, things and systems creates dynamic, self-organising,
real-time optimised value-added connections within and across companies.
These can be optimised according to different criteria such as costs, availability
and consumption of resources.”
The Evolution to Industry 4.0
Industry 1.0 used water and steam power to mechanise production. Industry 2.0
used electric power to create mass production. Industry 3.0 used electronics
and information technology to automate production. Now Industry 4.0 is
building on Industry 3.0, the digital revolution that has been occurring since
the middle of last century. It is characterised by a fusion of technologies that is
blurring the lines between the physical, digital, and biological spheres. Through
every revolution, it is evident that technology will again re-define the industries
and thus, jobs created through it.
Industry 4.0: Opportunities and Challenges
Industry 4.0 is here to stay, which builds on the previous revolution. The pace
is too fast and the impact is too broad to be ignored. As mentioned, Industry
4.0 will disrupt almost all industries, existing value chains in all countries with
the rise of age of intensified digitalisation and convergence of technologies that
are disruptive but impactful in driving the competitiveness and improving the
quality of life.
Placing Malaysia within the global value chain is necessary. Hence, the World
Economic Forum (WEF) has identified 21 disruptive industries which must be
in our equation to promote further competitiveness and productivity. This will
eventually lead to the creation of new industries and hence new definition of
jobs. As repeatedly highlighted by the WEF and other platforms, this revolution
will have various impacts on the businesses, governments and individuals.
Industry 4.0 shall witness the rise of machines that will likely replace the
traditional routine jobs that are currently being performed by humans. Hence,
there is a compelling need for Malaysia to focus on developing high-skilled
talents for these new breeds of industries to come. For Malaysia to be able
to keep up with this revolution and these whole new industries, the political
willingness must be equivalently high. Setting up a conducive environment for
the talents to develop, technology breakthroughs and others, it is imperative to
set supportive policies in place to motivate these organisations in driving their
competitiveness to the next level and hence, elevating the productivity for the
future.
In becoming a high-income nation, Malaysia must continue to endeavour in
increasing its productivity where it aims to increase its productivity growth
at 3% to 4%, double than 2% achieved over the last 10 years. In view of the
rapid global evolution and in ensuring the country’s preparedness for these
uncertainties, we should view productivity at a whole new level, in line with the
Industry 4.0 and other subsequent turns of events.
Where Are We?
So, the next right step to do is to prepare the country for Industry 5.0 while
continuing with the Industry 4.0 activities that would assist to catapult the
country to the next level.
By “leveraging its foundational strengths in innovation, talent, and strong
industrial ecosystem clusters", it could compete against and surpassed the
low-cost rivals. This is achieved by focusing on creativity, innovation and value-
added activities and going strong on advanced technology. The shift to the
higher-value, advanced manufacturing is now shaping the country’s global
competitiveness, going forward. As reported by the Global Federation of
Competitiveness Council (GFCC) in a report prepared by Deloitte, such as the
2016 Global Manufacturing Competitiveness Index (GMCI), “China is actively
pivoting toward a more technologically advanced manufacturing paradigm
to align with other global, innovation-oriented markets. The resulting shift
is creating an opportunity for other nations to strengthen their position as
lower-cost global manufacturing destinations.” Malaysia is identified as one
of the Mighty Five (MITI-V) economies that are going to capitalise on China’s
advancement. Its strength as cited in the report “remains strongly focused on
assembly, testing, design, and development involved in component parts and
systems production, making it well suited to support high-tech sectors.”
According to Ir. Bobby Gafur Umar, CEO of Bakrie & Brothers, Indonesia,
and member of Malaysia’s Global Science and Innovation Advisory Council
(GSIAC), relative to other ASEAN countries, Malaysia is considered to be a step
ahead in terms of innovation and technology development. Malaysia has the
right tools to lead the ASEAN technology-based industries. And, following the
correct approach to the situation and continued progress, Malaysia may find
itself at the forefront of the ‘ASEAN Technology Community’ within the recently
enacted ASEAN Economic Community.
The Fourth Industrial Revolution Opportunities and Challenges
Business
The convergence of technologies that brings
manufacturing and services to a different level.
Increase agility and innovation level of companies.
Increase efficiency of productivity and its value.
Lower logistic & communication costs.
Upskilling of talents to match industries needs
New industries, new jobs.
Replacement of automization/mechanizations -
the rise of the machines.
Pressure of fulfilling customer behaviours &
demands/expactation.
PRODUCTIVITY
Disrupting existing
value chain
Disruptive technologies
Rapid phase
Digitalization
age
Broad impact
Technology-enabled
platforms
1.
2.
3.
4.
5.
6.
7.
8.
Government
Transparency in governance.
New technologies to control domestic crises.
New ways to engage the public and improve
communication and crucial information dissemination.
Efficiency in delivery, policy and decision-making
processes.
Pressure to be agile in adpating to continuous
changes.
Risk of cyber threats & bio-weapons
1.
2.
3.
4.
5.
6.
People
Increased connectivity.
New exciting technologies that calls for now high-end skills.
Ease of performing tasks and errands with the new
technologies and digitalization (booking taxis, paying bills etc).
Exposed to cyber threats.
Opportunity for cross-cultural understanding and cohesion.
Risks of spreading extreme ideas & ideologies, incite
hatred and cause chaotic situation.
1.
2.
3.
4.
5.
6.
Competitiveness
Ability to innovate to increase productivity
The Fourth Industrial Revolution Opportunities and Challenges
1918 Malaysian Technology Strategic Outlook 2017/2018Malaysian Technology Strategic Outlook 2017/2018 A | TECHNOLOGY SPOTLIGHTA | TECHNOLOGY SPOTLIGHT

TECHNOLOGYSPOTLIGHT
Exploring Blockchain For Malaysia
Blockchain began to emerge in the public as one of the underlying technologies
for Bitcoin, the first cryptocurrency created as a counter model to centralised
authority.
Technically, ‘Blockchain’ is a form of distributed ledger (DLT) that groups
batches of transactions in blocks and subsequently connects in a chain to
authenticate the values transacted. In this append-only system, the new added
block contains the hash of prior block(s) in the chain in order to maintain the
integrity of the data. While no system is completely immune to outside attacks,
blockchain is built on the concept that increasing the size and distribution of the
network will make it more secure. The ability of blockchain as the intermediary
that allows internet to transact store, move and transact values has earned it
the name the ’internet of value’.
There are many different blockchains, and each can be designed for different
purposes. Access to the platform is determined by the design of the platform,
i.e. whether it is a public or permissioned blockchain, whereby the latter sets a
specific requirement for participants to access. Both public and permissioned
blockchain have useful applications, much like the internet and corporate
intranets.
Blockchain has often been cited for its benefits in providing increased
transparency while reducing cost, but there are many challenges that need to
be overcome for the technology to mainstream. Blockchain itself is a complex
technology that continues to evolve at fast speed and there are many regulatory
implications that are still being inspected worldwide. The various competing
platforms are also contributing to the implementation challenge, whereby
interoperability and standards is one of the subjects being discussed by the
Blockchain and DLT working group under the International Organization for
Standardization (ISO) and formalised in April 2017 as ISO TC 307.
The creation of cryptocurrency is not the only unique proposition of blockchain
technology. Agility and experimental development are to be expected from the
young industry. Community-based technology development is embedded in the
culture of this technology, as evidenced by the early blockchain communities
such as Bitcoin and Ethereum. In May 2016, the Ethereum community created
the unique Decentralised Anonymous Organisation (the DAO) to operate like
a venture capital fund for the crypto space and built as ‘smart contract’ on
Ethereum blockchain.
Consortium involving multiple industries continue to dominate the industry
landscape. What is unique about the blockchain consortium is the ability to
unite competing businesses in developing the technology.
Developing Blockchain Through Consortia
REGION NAME LEADERS SECTOR GOALS
AMERICAS
EUROPE
R4 Overstock Financial Services Blockchain solutions for small businesses.
Digital Asset Holding DAH Financial Services Building distributed, encrypted straight through processing tools to improve efficiency, security, compliance and
settlement speed.
CU Ledger (Credit Union) MWCUA Financial Services Investigating the viability of a private, permissioned distributed ledger that can be used by credit unions.
Hashed Health Hashed Health Healthcare Active projects include supply chain, claims lifecycle, payments, medical records, insurance, and other use cases.
Dutch Logistics Group TKF Dinalog, TU Delft Transportation Logistics Study how the distributed ledger technology can advance operations to bolster efficiency and effectiveness, as
well as reduce supply chain footprints.
B3i Aegon, Alliance, Munich RE, Swiss RE, Zurich Insurance
CLS Blockchain Consortium CLS Financial Services
Developing standards and processes for industry-wide usage and to catalyze efficiency gains in the insurance industry.
Project Jasper Bank of Canada, Payments Canada Financial Services Issuing, transferring and settling central bank-issued assets on a distributed ledger network.
Hyperledger Linux Foundation, IBM, DAH Standards & Platforms Open source collaborative effort created to advance cross-industry blockchain technologies.
Block Rx Project iSolve Pharmaceuticals Verify and enhance the integrity of the drug supply chain and to accelerate new drug development.
FCA Sandbox Project Financial Conduct Authority Financial Services ‘Safe space’ in which businesses can test innovative products, services, business models and delivery
mechanisms in a live environment.
Fundchain Scorechain Financial Services
Swiss Financial Consortium Swisscom, Swiss stock market, Zurich Cantonal
Financial Institution
Financial Services
Explore the potential of blockchain technology to improve efficiency and create new business opportunities
in the asset management industry.
Facilitation of selling shares outside of a stock exchange. Prototyping blockchain based real life trading of
OTC equity clearing, settlement and reporting.
Digital Trade Chain Deutsche Bank, HSBC, KBC, Natixis, Rabobank,
Societe Generale, Unicredit
Financial Services Simplifying trade finance processes by addressing the challenge of managing, tracking and securing
domestic and international trade transactions for SMEs.
Focus on improving security and efficiency to the foreign exchange settlement industries through use of
open-source Hyper Ledger Fabric blockchain to generate new pathways for foreign exchange.
ASIA ChinaLedger Alliance Wangxiang Blockchain Labs, Internet Securities
Commission of the Securities Association of China
Standards & Regulation Adapting technology to Chinese business needs and ensure regulatory compliance in an environment
with positive government interests.
Blockchain Study Group Deloitte Tohmahsu Group Financial Services Collaboratively testing the technology for uses in bank-to-bank payments.
ISO/ TC 307 ISO Australia Standards Standardisation of blockchains and distributed ledger technologies to support interoperability and data
interchange among users, applications and systems.
Financial Blockchain
Shenzhen Consortium
Ping An Financial Services Communication tool for companies and a platform for information sharing concerning blockchain studies.
Performing joint research on the blockchain application and create collective projects for its testing in the
financial sphere.
Ripple Jaanese Bank
Consortium
SBI Ripple Asia Financial Services Enable round-the-clock settlement at a significant cost reduction to its members and their consumers.
The consortium says banks will pay about 90% less in fees.
Global Blockchain Council Dubai International Financial Centre Authority Government Help UAE authorities and corporations better understand this technology and consider its regulatory implications.
AUSTRALIA
Enterprise Ethereum
Alliance
Ethereum Foundation Standards &Technology Coordinate the engineering of an open-source reference standard and private "permissioned" version of the Ethereum
blockchain that can address the common interests of enterprises while working with developers from the Ethereum
ecosystem.
GLOBAL
(tech based)
MIDDLE EAST
Developing Blockchain Through Consortia
21Malaysian Technology Strategic Outlook 2017/2018Malaysian Technology Strategic Outlook 2017/2018 A | TECHNOLOGY SPOTLIGHTA | TECHNOLOGY SPOTLIGHT20

EXAMPLES OF SERVICES USING BLOCKCHAIN
Finance
Storage
Asset Management
Payments
(Veem, Ripple)
International Trade
Sharing Services
Digital Trade Chain
(KBC, Cegeka Belgium)
RideSharing Service
(LaZooz)
Remittance for
Developing Country
(Bitpesa)
Remittance for
Muslim
(Abra, Blossoms)
Social Banking
(ROSCA)
Stock Exchange
(Overstock, Symbiont)
Crowdfunding
(Weifund, AtaPlus)
Data Storage
(Storj, BigchainDB)
Asset Management
(Melonport, Alphapoint)
Digital Asset Mgmt.
& Trading (Colu)
Land Management
(Landstead, Chromaway)
Distributed Drone
Registry
(Applied Blockchain)
Contents
Media Streaming
(Streamium)
Public Sector
Public Sector
Transition into
Blockchain-supported
Economy
Dubai Blockchain
Strategy
Authentication
Digital ID
(OneName, Shocard/
Netki)
Verification of
Medicine
(Block Verify)
Certification of
Authenticity
(Ascribe/Verisart)
Land Title
Govt of Georgia +
Bitfury
UK Digital Strategy
2017
Digital Catapult
Centre
Basic Income
(GroupCurrency)
Notories
(Digital-Antwerp &
Ghent)
Micro Insurance
Consuelo
Insurance - Engineering
Blockchain Consortium
Communication
SNS
(Synereo, Reveal)
Future Prediction
Future / Market
Prediction
(Augur)
Point / Reward
Gift Card Exchange
(GyftBlock)
Reward for Artist
(PopChest)
Prepaid Card
(BuyAnyCoin)
Reward Token
(Loyyal)
Messenger
(Getgems, Sendchat)
Games
(Xhai Studios)
(Voxelnaut)
Research
Swarm Robotic
MIT, EC Horizon 2020
IoT
(Adept, Filament)
Energy
Energy
(Chaintope)
(Powerledger)
(Grid Singularity)
Medical
Medical Information
(BitHealth)
Tokenisation
Tokenisation
(Ethereum)
(Waves Platform)
Distribution
Management
Supply Chain Mgmt
(Skuchain)
Tracking Mgmt
(Provenance, Luxtag.io)
P2P Market Place
(OpenBazaar)
Gold storage
(OpenBazaar, Hellogold-
Sharia Compliant)
Diamond Ownership
(Everledger)
IoT
A recent development arising from the crypto
community has been the meteoric rise of the
‘Initial Coin Offering’ (ICO) which is also known
as ‘token sales’. Intervention from China and other
governments have brought the regulatory factor to
the forefront of this matter.
Use Cases for Blockchain
From cryptocurrencies, blockchain expanded
its foothold first into the financial sector offering
new values under financial technology (fintech)
solutions. Blockchain has continued to be explored
beyond the fintech areas, as new potential cases
for the technology expand with the growth of
the technology itself. Many Proof of Concept
(POC) initiatives such as provenance and supply
chain management crossing many sectors, e.g.
automotive, energy and healthcare have been
implemented.
While some may see the blockchain technology
as a disruptor to current businesses, others from
governments and industries and even societies
are managing it as a game-changing technology
to provide a positive outcome for the beneficiaries.
Below are some of the examples:
1. China - Central Bank Digital Currency
Rather than a piecemeal approach, China has
incorporated Blockchain as part of its 13th
five-year-plan technology platforms targeted
to provide the country with a game-changing
advantage. As one of its early blockchain
effort, the People’s Bank of China (PBOC) has
created a special team since 2014 to look into
the issuance of the national digital currency as
a part of its efforts to improve the effectiveness
of control measures by the bank itself in terms
of money supply, tax evasion and money
laundering.
2. Japan - Decentralise Renewable Energy
Trading
Kyushu, Japan has joined global efforts to
innovate on improving the distribution and
trading of renewable energy in a pilot project
involving the Kyushu University and community
grid line.
Blockchain has the potential to improve
centralised energy legacy systems through the
creation of distributed hybrid system involving
both large power plants and microgrids
powered by distributed energy resources such
as solar power.
3. USA – Protection of National Security
Industrial Base (NSIB) Procurement
A paper published the Foundation for Defence
of Democracies has proposed a new type of
cyber forensics utilising blockchain to improvise
legacy systems for acquiring international
goods in the identification of the origin of goods
used for what it calls NSIB as a defence against
sabotage.
4. Dubai – Dubai Blockchain Strategy
2017 - The Dubai Blockchain Strategy targets
to make Dubai the first blockchain-powered
government by 2020. The Dubai government
estimates that its blockchain strategy has
the potential to generate 25.1 million hours of
economic productivity each year in savings,
while reducing CO2 (in full) emissions.
5. Malaysia-HelloGold -SimplifyingPurchase
of Gold
Founded in 2015 and headquartered in Kuala
Lumpur, HelloGold built the world’s first Shariah
compliant gold digital application that changes
the way gold is transacted. HelloGold uses the
PoC: BLOCKCHAIN for ELECTORIC POWER SYSTEM
Community Grid Line
High School
A campus of
Kyushu Univeristy
Park Police City Hall Child Care
Centre
Heat
Civic Centre
Renewable Energy
& Battery Sharing
Cogeneration
Power Company
Inter-grid
Power
Generation
Power Grid
Router
Power exchange in community grid line
(Kyushu University and neighbouring municipalities)
Blockchain based electric power trading
Power Grid Router operates by trading on Blockchain
Examples of Services Using Blockchain PoC: Blockchain for Electoric Power System

blockchain technology in a state-of-the art
online security system which is supported by
fully audited processes to guarantee proper
ownership of the physical gold and help owners
determine the true value of their assets. As gold
trading, including the pawn system is widely
used in Malaysia, the blockchain technology
could be very useful in the identification and
authentication of ownership of the gold asset.
6. Afghanistan – Financial Inclusion
Ms Fereshteh Forough established the first
coding school for girls in Afghanistan with the
intention to help them strive for financial and
social independence. As an advocate for Bitcoin,
she promoted the use of this technology among
her students for them to learn about financial
independence and inclusion.
Opportunities for Malaysia
While fintech and the financial services industry
continue to innovate by capitalising on the
blockchain technology, Malaysia is also looking at
use cases in other industrial applications that can
elevate the competitiveness of the country. This is
summarised by Datuk Dr. Mohd Yusoff Sulaiman,
President & CEO of MIGHT when he says, “Malaysia
is looking at the digital technologies and how they
interact with each other to create synergy.”
There is an increasing interest in Malaysia to
develop blockchain as a new enabler for the country
in private and public setting, and below are some
of the current local stakeholders in the blockchain
sphere:
There are many challenges that Malaysia can
potentially benefit from blockchain technology
to provide the country with a new competitive
advantage:
1. Healthcare
Malaysia’s medical tourism is one of the 12 key
economic areas forecasted expected to grow
at compounding annual growth rate (CAGR)
of 30.05 per cent over the next eight years,
reaching some US$3.5 billion before the end
of 2024, according to Transparency Market
Research (TMR). Malaysia can benefit greatly
by deploying the blockchain technology to keep
the medical data transfer safe from theft and
exploitation. A similar effort is being undertaken
by The Food and Drug Administration (FDA)
USA through a collaboration with IBM.
2. Plants and Plantation Authentication
Authentication of plant records can benefit
plantation crops such as palm oil that
undergoes the process of Sustainable Palm Oil
certification (CSPO) as well as the monitoring
of protected plant species such as orchids and
medicinal plants in managing biodiversity.
3. Monitoring of export items via transhipment
Frequently, Malaysian products are rebranded
as the produce of the transhipment country
before being shipped to a third country. A
system to identify the source of product can
provide a valuable audit trail for trade data
collection.
4. Food Authentication
‘Halal’ authenticity remains one of the biggest
unexplored areas that can benefit from the
blockchain features. Durian, and other high
value food and beverage exports can become
a proactive method in responding to audit
requirements imposed by other countries on
Malaysian products.
THE MALAYSIAN BLOCKCHAIN STAKEHOLDERS
SECTOR ORGANISATIONS
ACRONYM ORGANISATIONS ACRONYM ORGANISATIONS
CURRENT INPUTS
Technology Talent Market Funding Policy Awareness
ASSOCIATION OF BANKS MALAYSIAINDUSTRY
GOVERNMENT
FINTECH ASSOCIATION OF MALAYSIA
BANK NEGARA MALAYSIA
PRIME MINISTER’S DEPT -EPU
PRIME MINISTER’S DEPT – AIM
MITI
MOSTI - STANDARDS/ SIRIM
BLOCKCHAIN ACCESS MALAYSIA
ECONOMIC PLANNING UNITEPU MALAYSIA INDUSTRY-GOVERNMENT GROUP
FOR HIGHTECHNOLOGY
MIGHT
MINISTRY OF INTERNATIONAL TRADE AND INDUSTRYMITI MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATIONMOSTI
MIMOS BERHADMIMOS MINISTRY OF COMMUNICATIONS AND MULTIMEDIAMCMM
SIRIM BERHADSIRIM DEPARTMENT OF STANDARDS MALAYSIASTANDARDS
MALAYSIA DIGITAL ECONOMY CORPORATIONMDEC JABATAN PERLINDUNGAN DATA PERIBADIJPDP
AGENSI INOVASI MALAYSIAAIM THE MALAYSIAN ADMINISTRATIVE MODERNISATION AND
MANAGEMENT PLANNING UNIT
MAMPU
SECURITIES COMMISSION
PRIME MINISTER’S DEPT –MIGHT
PRIME MINISTER’S DEPT – MAMPU
MOSTI
MOSTI- CYBERSECURITY
MCMM - MDEC
MOSTI - MIMOS
MCMM
UNIVERSITI TEKNOLOGI MALAYSIA
MCMM - JPDP
UNIVERSITI UTARA MALAYSIA
COMMUNITY BASED ORGANISATION –
(inc. ETHEREUM, Blockchain Start-Up KL, NEM )
ACADEMIC
UNIVERSITI TENAGA MALAYSIA
UNIV SAINS ISLAM MALAYSIA
UNIVERSITI SAINS PAHANG
UNIVERSITI KEBANGSAAN MALAYSIA
UNIVERSITI ISLAM ANTARABANGSA
5. Energy Distribution
In anticipation of the rise in domestic use of
renewable energy and the culture of active
electricity consumer, often called ‘prosumer’
because they both consiume and produce
electricity, a framework such as the one
deployed by Japan and other countries can
become a benchmark in developing a workable
business model for Malaysia that will benefit all
the stakeholders, including energy providers tin
developing capabilities in managing energy.
6. Mobility and Transportation
Engine data is a goldmine that can help the
Government in managing the safety and
security of users. It can also be deployed to
manage cargo and others.
Many have commented that blockchain doesn’t
solve everything. It is true. What the blockchain
technology has demonstrated is that the problem it
solves is not necessarily the obvious, and that it can
work with other technologies as an enabler to help
users achieve their objectives. As it matures, more
of this will become apparent.
The Malaysian Blockchain Stakeholders

TECHNOLOGYSPOTLIGHT
CONSTRUCTION INDUSTRY –
Shaping the Future
Introduction
The introduction of new technologies in the 4th industrial revolution is changing
the landscape of the construction industry. Even though these technologies are
still at their infancy stage, they are going to impact the construction industry as
whole, including the planning, design, construction, operation and management
of future cities and communities. The technological transformation to be
observed in the construction industry will not only involve the component
manufacturing and building construction processes, but also in the areas of
architectural and engineering design and building demolition. The introduction
of digital tools and robotics in designing the buildings structures physically and
theoretically (prototype) and its management via business intelligence tools
such as virtual simulation, data mining and decision support system are some
examples of these new technological applications.
Various expertise with multi-disciplinary approaches is a must for construction
companies to adopt the emergence of technologies derived from the 4th
industrial revolution. In order to move forward, the construction companies
need to be partners with start-ups that have the specific technology know-how
and are responsive to market trends. The construction companies also need to
work with architectural firms, building material providers and energy providers
to create innovative products. As a result, the construction companies will
benefit from the holistic networking to close the capabilities gaps in adopting
the emerging technologies.
The significant of construction industry to Malaysia’s Economy
▶▶ By 2030, the volume of construction output will grow to $15.5 trillion
worldwide; leading by three countries, China, US and India, which account
for 57% of all global growth. – PwC, Global Construction 2030.
▶▶ By 2020, the construction industry is expected to contribute 5.5 per cent to
the Malaysian Gross Domestic Product (GDP), from 4.4 per cent to the GDP
in 2015. – RMK 11 & CIDB, CIDB Annual report 2015.
▶▶ The construction industry creates significant opportunities for Malaysia
workforce. In 2013, 9.5 per cent of Malaysia’s total workforce are registered
under the construction industry, where 75 per cent of the workforce are
Malaysian. Employees in the industry include professionals such as
engineers, architects, planners, and surveyors, in addition to skilled and non-
skilled construction workers. - CIDB, Construction Industry Transformation
Programme 2016-2020.
Automation as a Key Technology Indicator that Change the Construction
Industry
The application of automation technology in support by artificial intelligence is
being seen available in the construction industry. Many technologies, especially
in artificial intelligence are advancing; to evolve machine or robots towards
automation which are being applied to reduce human workers’ involvement.
However, at the moment, the intelligent machine control is still lacks of flexibility
and accuracy to handle tasks in a complex environment. With the introduction
of artificial intelligence and current innovation on machine learning and
algorithms, the learning curve of machines can be shortened.
One good example of automation in the construction is the use of drones in
site inspection. Before a single piece of foundation is built, the construction
site requires a series of inspection to understand various data points, such as
soil, drainage, vegetation and surface space conditions. Once the construction
process starts, further inspections are necessary to ensure the safety of workers,
compliance, quality, progress and other critical data points. Traditionally, all
these inspections are perform manually which is will contribute delay in results
and even worse, the risk taken by human worker could be fatal. Using drones,
wider areas of construction can be covered in a shorter time. In addition to
the coverage, drones have innovative lenses that can capture detailed, close
up images and send the data in real time to computer systems and intelligent
machines which can provide prompt results through data mining. Once this has
been completed, builders can use the information to perform pre-construction
simulations, allowing them to test various hypothesis and designs, and most
importantly lower the risk of error before breaking ground for the first time.
It is undeniable that the advancement of automation is approaching the
construction industry much faster than expected. The basic hardware and
communication tools in automation has been applied in current practices in
the construction industry. The emergence of artificial intelligence that has the
ability to understand more complex algorithms and also complex computing,
will transformed automation towards autonomous system.
Design CommissioningComponent
Manufacture
Virtual reality
Parametric design
rendering
Drones for in site
inspection
Demolition/
Deco
On-sites
Construction
Engineering Use
Automated
dimensioning
Digital Information
Modeling (BIM)
Virtual reality
Autonomous soil
preparation
3D printing and
robots on-site
Building automation
Predictive
maintenance
Prefabrication
and modular
construction
Robots and
automated
production
systems
BIM
Continuos
monitoring
and control
Automated
sorting
Deconstruction
robots
Adopted from Lux Research 2015
Technologies in the Construction Value Chain

The Changes are along the Value Chain of the
Construction Industry
The emergence of new technology brought upon
by the 4th industrial revolution will bring a major
impact along the construction industry’s value
chain. Most of the emerging technologies are
believed to become the norm in the future as an
inevitable trend. For example, the used of digital
tools with advanced applications such as virtual
reality and advance modelling software will offer
architect a whole new way of designing. The
architectural design process will be simplified
where architect is allowed to integrate properties,
quantities and spatial relationships of the building
components; visualise their design; simulate
building performance; and even estimate
compliance of buildings towards specific standards
such as green building standards.
The introduction of 3D printing will give an impact,
especially in Industrial fabrication of building
components. By combining the architectural
design, modelling with 3D printing, builders can
print prefabricated building components (panels
or modules) and assemble the components on
the construction site. Moreover, on-site work
process will be simplified with the prefabricated
components and the integration of technology
such as digital tools and robotics. Digital tools and
robotics help in facilitating the process by providing
data to the construction workers. The advancement
of software platforms with these technologies helps
contractorstomanageprojectsbyutilisingdronesto
provide 3D maps that detail construction progress
in real time. They also enable the application of
augmented reality to guide workers for installation
and inspection. All the available technologies have
blurred the boundaries of architectural design and
construction.
The introduction of technologies also impacts the
tailendofthevaluechainwhichisthedemolitionand
recycling. Improvement on building sustainability
requires both a more efficient demolition process
and better sorting systems. Due to the tedious, dirty
and dangerous nature of the tasks, robotics is a
reasonable choice for the future demolition process
and waste-sorting jobs. Advancement in demolition
robotics such as an integrated system that is
capable of disassembling concrete structures and
separate concrete from rebar and debris is believed
to be available in the market and will see more
adoption of the technology in the future.
Conclusion
The influence of the 4th industrial revolution through
its disruptive technologies in the construction
industry is an on-going activity. The impact of
technology adoption has changed the process
and blurred the boundaries in the construction
industry’s value chain. The way of the working
environment will shift and people who are involved
in this industry need to adopt towards the changes.
Finally, even though revolution in technology
massively evolved, the contribution of human
workers cannot be ignored especially for complex
judgement and flexibility.
RAIL INDUSTRY –
Rolling Forward Towards
Seamless Journey
A modern, fast, reliable and clean public transportation system is a catalyst
for growth in a modern city such as Kuala Lumpur. The transformation and
upgrading of the public transport sector is one of the main criteria outlined
during the 2015 Budget by the YAB Prime Minister Malaysia, Dato Sri Najib Tun
Razak.
It is mentioned frequently in Malaysia’s Government Transformation Program
and embedded in a Greater Kuala Lumpur vision, to establish a ‘Seamless
Journey’ that can reduce congestion and time, while increasing productivity
and higher economic growth.
In Malaysia, the public transport transformation program had commenced
since end 90’s when the Government eliminated the mini bus service in Kuala
Lumpur. The government had introduced a number of modern and efficient
express bus service schemes. Comfortable and cleaner intercity and intra-city
bus services were also created ensuring better frequency of services.
In the early 1990’s, the era of electric train has finally reach our shores. We had
constructed a modern double tracks electrified lines in stages. It became the
first intercity lines which has now developed and almost completed its northern
to southern connectivity beginning Padang Besar towards the southern
Peninsula.
At the end of 1990’s, we build our first urban metro line that is LRT; that connects
districts within the Klang Valley. It did not stop there as we have also invested
in monorails, airport express and most recent, Mass Rapid Transportation or
MRT. The announcement of East Coast Rail Link (ECRL) and Kuala Lumpur –
Singapore High Speed Rail project have also brought all global attentions to
Malaysia.
On 10th October 2014, Najib stressed his commitment to strengthen the public
transportation sector offering higher quality public bus and train service. This
will support the economic growth and softens the impact from inflation and
higher fuel costs.
A 130 years’ development
Rail projects and developments are now spearheading the nation’s future
towards 2020. From the humble beginning 130 years ago, when the first railway
line was built by British in Kuala Sepetang, Perak to Taiping, connecting the
biggest tin mining industry in the world to the international market. The rail line
slowly began to connects town to town, state to state, coast to coast and carry
not only goods but also passengers.
From steam to diesel powered locomotives, the railway line in Tanah Melayu
at that time created many new townships and had sparked the beginning of
TECHNOLOGYSPOTLIGHT

modern urbanization in the country. People began to move closer to the railway
lines, and leaving behind the riverside trails which was originally the connecting
‘highways’ linking old rural villages and remote establishments.
Developed countries has long been prioritising on development of systematic,
efficient, clean and safe public transport for the people. For example, in large
cities such as London, Paris and New York; the population are at ease using
public transport. Even in large Asian cities like Singapore, Hong Kong, Shanghai
and Beijing, the trend is the same.
This trend will contribute to lesser carbon release and minimize energy waste.
This will ensure a better environment with less pollution.
An integrated land public transportation system
The government is committed to offer low cost and affordable public transport
system to public needs based on: -
▶▶ Ensure timely arrivals and departures increasing the public trustworthy;
▶▶ Increase the quality of the public transport;
▶▶ Easy access to public transport;
▶▶ Ensure sufficient capacity to meet current and future passenger demand.
The cities of today should be free of traffic congestion. The cities should be
environmental friendly with many alternative options for public transport as well
as sheltered pedestrians’ infrastructures. Every bus, taxi or train stations should
be interconnected to reduce costs and public access. This will also ensure free
flow and safe access for public.
A number of bus consortium were introduced to replace the previously out-
dated bus services. The infrastructure for train services were being modernised
with modern intercity train service offering higher speed, safety features and
different comfort options. A new intra-city service was also introduced utilising
electrified train and double tracking system known as the Komuter service.
The Komuter train service now connects the Klang Valley connects to the
main satellite towns such as Klang, Seremban and Rawang. This enhances the
economic value and increases the commercial growth rate in these areas.
The other land transport infrastructures include bus, taxi, train, light rapid
transit (LRT), KTM Komuter, KL Monorail, Express Rail Link (KLIA Express,
KLIA Transit) and the MRT, that will be the latest addition. Even Uber system
also is now well received by public and the traditional taxi operators.
Colourless Public Transport
Public transportation should not have any social barrier. This means a Company
Managing Director or a Chief Executive Officer Can together share a bus ride
with a labourer, sharing the same facilities. London, Hong Kong and Singapore
are very much advance in educating their citizens to appreciate the public
service. We should see public transport hubs as a common centre, where
we can meet people, socialise and make use of all the facility surrounds the
location.
Common Ticketing System
With the increase in integrated public transportation terminals and stations,
such as the Tasik Selatan integrated terminal; with integrated bus, taxi and train
services; the government should take the initiative to create a one-ticketing
system for all services. The 1Ticket system will offer better value and cost
savings in the long term. This will create a seamless connectivity of a daily
individual journey from home to work or schools to recreational locations.
For example, in Hong Kong, public can use an Octopus cards for any public
land and water transport, as well as for shopping.
Transit Oriented Development
TOD has sensationalise the urbanisation and also channel up the property
industry into a new dimension. Previously in Malaysia, all new townships and
housing development will come in line with any highway projects. We can see
in Peninsular Malaysia, all major new township are all locates alongside the
North South Expressway. With the introduction of TODA concept, developers
and local government has together ventured into developing residential
neighbourhood based on the location of the train stops.
It usually starts as a big multi story complexes which has residential unit on
the upper floor and shop lots on the ground. The best benchmark for this is
Hong Kong, where in every station serves as neighbourhood centre which
has accessibility to residential, workplace, recreation, restaurants, groceries,
market and even banks and post office.
This TOD concept works well with the Generation Y which has completely
unique set of mind. They appreciate accessibility and would like to use public
transport to commute to work and socialise. They may live in Station 1 and
works in Station 13. They will frequently visit their favourite hangouts at Station
5 after works. In the weekend, they will bring their expensive bicycles and went
to Station 8 which is near a bicycle trails. The Gen Y completes the end of
urbanisation and migration in Kuala Lumpur. In future, lesser people will travel
long way to their home town for Festivals and celebrations as most of the
Grandpa and Grandma are all residing in Klang Valley.
TOD concept works well with township developers in Klang Valley. TOD also
can be implemented in less density area especially in the area which has
tourism value and recreational facilities. Taman Negara stops along the East
Coast line (Tumpat Line) is a god example where hoteliers should work together
with KTMB to jointly develop a tourist centre complete with hotel, groceries,
supplies and restaurants.
The Made in Malaysia Rail systems capability
The rail industry has altogether RM150 billion worth of projects in the pipeline
towards the year 2030. It consisted of KVMRT2, KVMRT3, LRT3, GEJBDT, ECL,
HSR and countless medium-size projects such as Skypark, Johor Port, and Port
Dickson etc. Local companies has the experiences needed, plus the strength,
capabilities and competencies in all six major spheres in the system works
engineering for rail industry, namely;
i. Signalling,
ii. Rolling Stocks,
iii. Telecommunications,
iv. Power & Electrification,
v. Track-Works and
vi. Automated Fare Collection (AFC)
All these 6 spheres are dynamic and has developed over the years in all major
operators’ line. They have migrated from manual to automated, from traditional
to digital, from conventional to driverless. The latest migration was in the LRT
Line 1 and 2, which are now running on Communication Based Train Control
(CBTC). The locals played important part being the partner, the sole distributor,
the installer and system integrators and also as recipients for the technology
transfer.
Locals have proved the excellent delivery with total accountability, by
strengthening the horizontal line of all System Integration Works (consists
of installation, integration and interface). Some local companies have move
further to become Engineering, Procurement, Construction and Commissioning
company (EPCC) and have developed capability in delivering projects in turnkey
basis. It means to have a total vertical project management from the stage of
design, procurement, installing and integration, interface and finally, test and
commissioning. These EPCC companies were previously the active recipient
for the horizontal system integration scopes.

Becoming Rail Player with a Towering Personality
To become relevant and significant in the industry globally, rail industry in
Malaysia must stand united and focus to achieve all these capabilities:
i. A combined depot consists of assembly line, work plant, foundry, together
with support from local heavy machinery and plants such as steel,
electronics, mechanical and research based infrastructure. (A concept of
Airbus construction)
ii. A combined integration centres and awesome local System Integrator
(SI) workforce that easily mobilize that can engineered the whole
telecommunication spheres.
iii. A formula to have a powerful financial connectivity that can manage
procurement, risk, testing at site and factory, exchange rate, credit,
commercial and legal as one synergy force.
iv. An establishment of Integrated Project Management Team for the locals
that can manage all engineering and projects work in the EPCC format and
also as a turn-key basis. This enables cost efficiency and reduce wastage
in resources. It promises to respect the equal distribution of portions to the
selected and qualified locals.
It is time for the Malaysian rail industry players to play a bigger role as
integrated solution providers and a genuine manufacturer. This initiative should
be supported by sufficient participation in projects and rail developments that
can guarantee positive economic scale. Moving forward, the unity between rail
operators and rail players can spearhead all combining all efforts and equally
distribute the scopes and components to the members, while championing the
reliability and trust from the client and public.
Efforts in localisation
We should simplify the interaction and discussions with the Government to
discuss on the localisation while create more job opportunities for Malaysians.
Concentrate with the major and critical issue with the aspiration to increase
localization by consolidating capacity and capabilities of local rail industry.
This will provide the local companies more opportunities and better chance to
capitalize Government contract.
We can work together to achieve a common objectives and goals. We can
also plan for strategic initiative such as Vendor Development Program and
strengthen the Rail Value and Supply Chains Network.
Clustering will distribute companies equally depending on their respective
genuine capabilities and competencies. They may be EPCC, SI, Trader, Vendor,
Distributor, Local Partner etc. This enables more planning and a successful
active involvement in Maintenance, Repair & Overhaul (MRO) scopes that are
usually controlled by OEM manufactures.
The future in Multiple Rail Operators
Generally, we know that the two biggest rail operators in Malaysia that is
Prasarana and KTMB are operating in a very tight budget. There are many
complications that can contradict their vision to move forward. To simplify,
in order to net a handsome profit, an annual increment of ticketing price is a
compulsory. But, rail has always been a nation back bone that move the people,
economy and the country as one. Rail is always about the public and nation.
Therefore, a strategic formula that can guarantee efficiency is needed, and the
best idea is to have multiple rail operators.
Currently, KTMB handles operation of Komuter, Intra-city and freight. Altogether,
it demands a huge investment in operation and development cost. KTMB also
needs to serve the less density sectors such as East Coast Line and manage
the expensive freight operations. Along the ETS route from KL to Ipoh, there are
also a huge demand of local feeder train that stops at selected stations. Sectors
such as Tanjung Malim – KL, Taiping – Ipoh, Bukit Mertajam – Sungai Petani
and Seremban – KL has a steady flow of commuters.
Rationalisation of these services will separate the key operation into individual
entity. Freight and passenger must be independently operated. Inter-city and
local feeder daily rides and frequency can be increased if managed separately.
It will then connect with the other land modes such as bus services in Tasik
Selatan or the LRT Lines in KL Sentral.
Establishment of Rail Assets Owners
Rail Assets Owner (RAO) such as Prasarana Berhad and Rail Assets
Corporation played an important role in spearheading the rail industry forward.
They are responsible to plan ahead, managing the stations, tracks and fleet
and also to handle non-ticketing revenues. They are the biggest land owners
under the TOD concept. The stations, tracks, bridges and even empty reserve
land can generate lucrative income from advertising, telecommunication and
rental facility.
KTMB alone has thousands of freight and cargo wagons that easily transport
products from Bangkok to Singapore and from Port of Penang to Port of
Tanjung Pelepas worth millions of ringgit. Key responsibility of RAC is to ensure
that the asset is fully mobilise and all non-ticketing revenue aspects reaches
the optimisation.
Prasarana on the other hand owns hundreds of electric trains that serves as
the rail backboned in Klang Valley. Prasarana carries an ultimate exposure in
advertising and infotainment segment that can be the way forward in E-news
and E-applications.
Rail Asset owners can assist the telecommunication and ICT industry forward
towards fully enabling the concept of Internet of thing (IOT) – a full concept
where every day object have internet connectivity. Public can plan their journey,
notification can be sent to their mobile phones with special dedicated apps
and the common ticketing system may support cashless travel. This also will
create a platform for a digital content, currently the Malaysian way forward in
the creative and ICT initiative.

Operators such as KTMB and Rapid Rail, or any other independent organisation
and companies can rent the rolling stocks from the rail asset owners. They will
fully concentrate on the operations side and focuses into ticket collection while
rail asset owners regularly maintain the rolling stocks and stations and invest
into new development.
This practise creates efficiency – enables every individual party to perform
within their boundary. Rail assets owner can invite private funding to jointly
develop TOD. And even to jointly build new stations that will increase the
market value of the local township. This is shown in the construction of Kajang
2 Stations in KTMB line.
To ensure local growth together with the rail developments
Limitations such as system intellectual property and industrial standard have
guaranteed an international monopoly in rail industry; particularly in the system
works engineering. We, as Malaysian, have always been too dependent on the
international system design, hardware, software and the whole engineering
competencies provided by the international brands.
On the other hand, Malaysian companies have successfully only to become
the local entity which received technology transfer and providing system
integration scopes. Little was delivered to us. Much has been taken away
without a balanced program and planning that will enhanced our Malaysian rail
operators and contractors’ capabilities.
Therefore, a clear policy such as Industrial Collaboration Program (ICP) has
been successfully strengthen and protect the industry from globalisation.
Malaysian industry manages to turn this phenomenon around by actively
participate in the international scene. We have already exported our expertise in
rail operations such as in Saudi Arabia, and supporting rail telecommunications
project in Middle East and South East Asia. Our SCADA solutions are accepted
in neighbouring countries such as in Singapore and Indonesia. We have
footprints of Malaysian rail system integrations all over Asia, and we aim higher
– to finally one day, produces our very own electric rolling stocks.
Conclusion
Until the year 2020, Malaysia will become centre of attractions from global rail
players with the largest rail projects in South East Asia namely; High Speed Rail
(HSR) and East Coast Rail Line (ECRL). The estimated value of development
is RM100 billions. HSR charts the expansion of One Belt, One Road (OBOR)
development strategy and framework, proposed by China government that
focuses on connectivity and cooperation among countries primarily between
the People's Republic of China and the rest of Eurasia.
HSR will travel from Singapore to Bangkok, where it will then travel to Ho Chi
Minh and Hanoi and finally completes the land-based "Silk Road Economic
Belt" (SREB) in Kunming provinces. ECRL on the other hand will completes
the oceangoing "Maritime Silk Road" (MSR) connecting the east and west
bypassing Singapore. China will then play a vital role in South China seas.
Both rail projects will establish Malaysia in the world map, linking Malaysia as a
catalyst of transportation growth in South East Asia region.
We must ready to embrace the impact. Rail transportation brings greater
connectivity. At the same time, it will bring us closer to development and
challenges in maintaining our core values and characteristic as a great nation
with pride and sovereignty.
TECHNOLOGYSPOTLIGHT
ROBOTICS INDUSTRY -
Opportunities Abound
INTRODUCTION
Advanced robotics has been recognised as an emerging technology by
industry observes around the world. According to McKinsey, advanced
robotics is ranked fifth among the “twelve potentially economically disruptive
technologies”, with a potential economic impact of between USD1.7 to USD4.5
trillion by 2025. The current macro trend in driving the proliferation of robotics
is Industry 4.0. Industry 4.0 is defined as the “digitization of the manufacturing
sector, with embedded sensors in virtually all product components and
manufacturing equipment, ubiquitous cyberphysical systems, and analysis of
all relevant data. Among the various enabling technologies for Industry 4.0
is advanced robotics. Industry 4.0 has already gained industrial acceptance
in developed economies, where 20% of companies surveyed in Germany
responded that implementation of Industry 4.0 measures in their operations
have already begun, while the U.S. is registering about 16% in the same survey.
Other developed and developing economies, such as Korea and China are also
forging ahead with their respective implementations. Malaysia, being among
the top 25 leading exporters of merchandise trade in the world, will have to be
prepared to face the challenges of Industry 4.0, so as to compete effectively
against economies equipped with the advantages of advanced robotics and
automation.
The global market for robotics is worth USD17.9 billion in 2015, and the forecast
for industrial robots during the period 2017 through to 2019 is estimated at
13% average growth per year. Forecasts for professional service robots is also
encouraging, with a projected USD23.0 billion worth of cumulated market size
from 2016 to 2019, and USD22.3 billion for personal robots in the same period.
Under the context of a favourable market condition, this article attempts to
examine some encouraging signs of opportunities for robotics, from a local
perspective. The intent of this article is to prompt local companies to explore
further on the potential of robotics in their businesses, both as a provider, as
well as an adopter of robotics related products and services.
The global market for robotics is
worthUSD16.7billionin2014,andthe
forecast for industrial robots during
the period 2016 through to 2018 is
estimated at 15% average growth
per year.

OVERVIEW OF THE GLOBAL ROBOTICS MARKET
According to the International Federation of Robotics (IFR), the robotics
market is made up of three categories of robots, namely industrial robots,
professional service robots, and personal (domestic) service robots. Industrial
robots are generally referring to robot manipulators used in industries, such
as welding robots used in the manufacturing of automotive. Both professional
and personal service robots are classified as service robots that performs
useful tasks for humans, which excludes applications for industrial automation.
Professional service robots are intended for commercial use, while personal
service robots are for non-commercial or domestic use. Examples of service
robot applications are unmanned aerial vehicle for plantation surveillance and
automated pool cleaning robots.
In 2015, the world-wide market for robots was worth approximately USD17.90
billion, of which industrial robots contributed 62% (USD 11.13 billion),
professional services robots 26% (USD 4.60 billion), and personal service
robots 12% (USD 2.21 billion). In the case of industrial robots, the reported
USD11.13 billion reflects only the sales of robotic manipulators (robot arms),
whereas the complete robotic systems (including the manipulator, software
and engineering services) is generally valued at about three times the value
of the manipulators. Thus, the world-wide market value for industrial robotic
systems could potentially be as high as USD33.39 billion.
Industrial robots have traditionally been, and still are the dominant force behind
the robotics industry. However, the year on year (Y-on-Y) growth in the sales
of industrial robots have slowed down in 2012 to 2.6%, from its height of 45.8%
in 2011. Nevertheless, sales have since begun to pick up in 2014 and 2015,
registering 12.9% and 3.7% growth, respectively.
The market for professional service robots is dominated by three main
segments, these being the medical, field robotics, and defence segments,
registering USD1.46 billion, USD1,09 billion, and USD1.03 billion of sales in
2015, respectively. Medical service robotics are mostly contributed by surgical
and rehabilitation robots. Field robots are mostly centred on agricultural
applications, such as milking robots. Military service robots are primarily
autonomous robots, such as Unmanned Aerial Vehicles (UAVs) and Unmanned
Ground based Vehicles (UGVs). Nonetheless, the segments with the highest
growth are robotics for logistics and underwater systems, with Y-on-Y growth
of 52% and 48% in 2015, respectively.
Personal service robots are primarily for domestic use, accounting for USD2.21
billion sales in 2015. 52.9% of personal service robots were sold to perform
domestic tasks, such as floor cleaning/vacuuming and lawn moving, amounting
to USD1.17 billion. Entertainment and education robots contributed USD1.02
billion and elderly/handicap assistance robots contributed USD16.8 million.
In 2015, the global robotics industry has achieved a remarkable milestone with
sales value reaching a record high of USD17.90 billion. The overall robotics
market grew 7.5% (Y-on-Y). Professional service robot category registered the
highest growth with 21.7%, followed by industrial robots at 3.7% and personal
service robots at 1.4%. Moving forward, the global robotics market is looking
evermore favourable, supplemented by the continuing expansions of robotic
applications and the pursuit of Industry 4.0.
The investment environment for robotics related businesses is much more
favourable now than decades ago. Investor’s attitudes toward investing in
robotics have shifted drastically from hesitant to confident, with funding tripling
from USD395 million in 2014 to over USD1.25 billion in 2015, according to Lux
Research. Gauging from the flurry of M&A activities in recent years, and the
entrance of new and financially strong players from the technology space (such
as Google and Amazon), the growing interest in robotics related investments is
likely to continue for some years to come.
Estimated World-wide Robot Market by
Sales Value in 2015 (USD million)
Industrial Robots
11,133.0
62% Professional Service Robots
2,216.0
26%
Personal Service Robots
4,600.2
World-wide Sales Value: USD17.9 billion
12%
Source: Internatinal Federation of Robotics, MIGHT
SIGNS OF POSITIVE OPPORTUNITIES
Ample Room for Industrial Robots in Malaysia
Robot density is still relatively low in Malaysia. Robot density is the measure
of the intensity of robotic applications in a given sector. It is widely used in the
Manufacturing sector to gauge the available opportunities for the adoption of
robots related products and services. Robot density is measured by the number
of robots (applied) per 10,000 employees. According to IFR, Malaysia’s robot
density in the Manufacturing sector is about 33 industrial robots per 10,000
employees in 2015. Compared to the world-wide average of 69, there are still a
lot of room for the application of industrial robots in Malaysia’s manufacturing
sector.
Incidentally, the industrial subsectors that consumes the most industrial robots
are also among the highest value adding manufacturing subsectors in Malaysia,
Robotic Density in the Manufacturing Sector
Source: IFR, MPC, MIGHT
Leading Industries that Consumes the Most
Industrial Robots World-wide (2014)
Automotive
Electrical & electronics
Leading GDP Contributing Manufacturing
Sub-Sectors in Malaysia (2014)
0.0% 20.0% 40.0% 60.0% 30.0% 20.0% 10.0% 0.0%40.0%
Metal & machinery
Plastic & chemical products
Food, beverages & tobacco
Others
Electrical & electronics
Refined Petroleum
Chemicals & Chemical Products
Rubber & Plastic Products
Transport equipment
Others
42.4% 25.7%
28.0% 12.7%
12.8% 10.9%
8.8% 7.6%
3.0% 7.0%
5.0% 36.1%
as reflected in Figure 3. These corresponding manufacturing sub-sectors are
electrical & electronics, motor vehicle and transport equipment, chemicals &
chemical products, and food related products. Collectively, they contributed
50.8% of the total value added in the manufacturing sector in 2015. This could
indicate that a large proportion of Malaysia’s manufacturing sector (in terms of
value added) is highly suitable for the application of industrial robots.
Therefore, a low robot density in a manufacturing sector dominated by
industries that are highly suitable for the application of industrial robots, could
potentially be a sign of pent-up demand for robotics and automation products
and services in time to come.
Robotic Density in the Manufacturing Sector 2006 - 2015
No. of Robotics per 10k Workers
60
50
40
30
20
10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
INDIA PHILIPINESINDONESIACHINA THAILANDMALAYSIA
2
4
6
52
36
49
Source: International Federation of Robotics, MIGHT
Robotic Density in the Manufacturing Sector 2006 - 2015 Comparisons between top value added manufacturing
sub-sectors and leading robotics consuming industries.
Estimated World-wide Robot Market by Sales
Value in 2015 (USD million)

Applications of Professional Service Robots in 2015
(Sales Values, Sales Growth)
USD millions Year-on-Year Growth (%)
1,200
1,000
800
600
400
200
Defence
Applications
Medical
Robotics
Logistic
System
Field
Robotics
Others
0
1,400
45%
30%
15%
60%
0%
1,600
31.8%
1,463
22.6%
1,038
23.8%
1,097
16.9%
779
4.9%
22410.1%
52.3%
19.6%
SALES GROWTH (%)
SALES VALUES
(USD Millions)
1.5%
10.8%
Applications of Professional Service Robots in 2015
(Sales Values, Sales Growth)
USD millions Year-on-Year Growth (%)
1,200
1,000
800
600
400
200
Entertainment
Robots
Robots for
Domestic Tasks
Elderly & Handicap
Assistance
0
1,400
30%
25%
20%
15%
10%
5%
35%
40%
0%
1,173
1,027
170.9%
34.4%
SALES GROWTH (%)
SALES VALUES
(USD Millions)
7%
52.9%
46.3%
0.8%
POLICIES PROMOTES
Industrial Master Plan 3 – 2006 to 2020 (IMP3)
Production and
Adoption
11th
Malaysia Plan (11MP)
Strategy Paper 19 – Energising Manufacturing Sector
Adoption
New Economic Model (NEM) Adoption
Economic Transformation Programme (ETP) E&E NKEA
EPP 13: Growing Automation Equipment Manufacturing
Production
National Automotive Policy 2014 (NAP) Adoption
3rd National Agricultural Policy (1998-2010) Adoption
Encouraging Government Policies
The need to automate local industries to increase productivity has been echoed
in many policies since the early days of the Industrial Master Plan 2 (1996-2005)
– IMP2. Currently, there are several Government policies that promotes the
development of automation related products and services, such as the Industrial
Masterplan 3 (2006-2020) and the Economic Transformation Programme
(E&E-EPP13). Other sectoral plans, such as the National Automotive Policy
2014 and the 3rd National Agricultural Policy (1998-2010) also touched on the
need to adopt robotics and automation to improve productivities and reduce
foreign labour dependencies.
Table below is a summary of selected national policies, which are related to
robotics and automation. The promotion of robotics and automation can
be viewed from two distinct perspectives, (i) the adoption or utilization of
robotics and automation to improve productivity, and (ii) the manufacturing
of robotics and automation related products and services, where one would
complement the other. Majority of the national policies analysed emphasises
on the adoption of automation for two main purposes, improve productivity
and reduce dependency on foreign labours. IMP3 and ETP E&E-EPP13, on
the other hand, focuses mostly on promoting the production of locally made
automation products and services.
Expending Robotic Applications
Industry observers have identified the extension of use-cases of service robots
as a key signal that underlies the robotic trends going forward. The industry is
beginning to embrace the potential of service robots, which are intended for
applications outside of the traditional industrial or manufacturing environment.
Theadventofnewtechnologiesisnowenablingnewserviceroboticapplications
to expand rapidly into non-traditional areas, such as agriculture and logistics.
This expansion in application is apparent in the remarkable growth of service
robots in recent years, as indicated in Figure 4 and Figure 5.
Professional service robots have made steady in-roads into medical robotics,
defence applications, logistic systems, and field robotics (agriculture and
mining). Collectively, the sales values of these application areas have reached
USD 4.37 billion, and constitutes 95.1% of total sales for professional service
robots in 2015. Among the various sub-categories, logistic system registered
the strongest growth of 52.3% (Y-on-Y) in the same year. Examples of
professional service robots includes, medical robots to assist in performing
surgery, automated guided vehicles for logistic handling, and milking robots for
livestock farming.
Personal or domestic service robots experienced the slowest growth in
2015, despite it being the best performing category in 2014. Among the sub-
categories, applications for domestic cleaning robots (vacuuming robots),
robots for toys and hobbyists, and robots for educations are the largest sales
contributor to this robot category. Collectively these three applications have
achieved 5.29 million unit sales in 2015, and constitutes 97.5% of total unit sales
to the personal service robot category.
For industrial robots, the new trend is “collaborative”. The industry is breaking
down barriers through advanced technologies and the newly minted ISO/
TS-15066:2016 safety standards. In the past, industrial robot manipulators
are considered dangerous, as the force exerted by them can cause significant
injuries to operators working within the same vicinity. As such, safety standards
(such as ISO-10218-1/2:2006) were enforced to segregate and isolate robot
manipulators from human interactions, usually through physical barriers like
fences and enclosures. This safety requirement has been limiting the type
of applications for industrial robot manipulators to repetitive, hazardous and
heavy lifting jobs that are normally unsuitable for manual handling by human
operators.
That said, with the advent of new technologies and new safety standards, robot
manipulators are now safer and more aware of the environment in which they
operate in. Through advanced intelligence, safety mechanisms (such as torque
sensing actuators) and friendly human-machine interfaces, small payload
industrial robots can now work side-by-side with their human counterparts
in production lines, without physical barriers or safety concerns. This new
generation of industrial robot, termed collaborative robots, is likely to expand
the application of industrial robots into more areas within the production shop
floor, and perhaps beyond the factory and into our everyday lives.
Overall, Malaysia’s national policies do promote the adoption and production
of robotics and automation. However, further planning at the sectoral level
with tangible targets will be required in order to guide all stakeholders in the
implementation and realisation of the aspirations set forth in these policies.
The Malaysian Government appears to be adamant in pursuing the path of
increasing productivity and reducing foreign labour dependencies through
automation. Moving forward, as these plans and policies begin to transpire
into programmes and projects for implementation across the 11th Malaysia
Plan period, local demands for robotics and automation related products and
services is likely to improve, creating greater opportunities for local companies
to participate in the provision of robotics and automation products and services.
Source:
International
Federation of
Robotics, MIGHT
Source:
International
Federation of
Robotics, MIGHT
Applications of Personal or Domestic Service Robots in 2015
Summary of selected national plans and policies, which are
related to robotics and automation
Applications of Professional Servic Robots in 2015

Robots Are More Affordable Now
Robots are more affordable now
Traditional industrial robots were mostly procured by large corporations, due
mainly to the high cost of investment and long return on investment (ROI) period.
Instead, the new generation of small payload collaborative robots are more cost
effective, and have much shorter ROI period. As observed by the Financial
Times, “The prospect of being able to pay off the cost of a robot in slightly
more than a year …….. has brought industrial automation to within the reach
of China’s (and Malaysia’s) millions of small and medium-sized manufacturers,
creating the conditions for a productivity surge.”. Studies have also shown that
the return on investment for industrial robots with a 10-year life-cycle is now
down to as short as 1.7 years. With a short payback period and the opportunity
to create a surge in productivity and quality, the investment proposition for the
adoption of robotics and automation is now increasingly attractive and more
attainable by small and medium-size enterprises (SMEs).
About 97.3% of all businesses in Malaysia are made up of SMEs, and there are
about 37,861 SMEs in the manufacturing sector. As industrial robots become
more affordable and their ROI more attractive, a surge in adoption by SMEs
will create ample market opportunities for local system integrators and robot
manufacturers.
IN SUMMARY
The global robotics market is growing, with double-digit growth experienced in
the last five years, and a total market size reaching USD17.9 billion in 2015. New
robotic technologies are also expending robot applications at a phenomenal
rate, further enlarging the market envelope with professional and personal
service robots.
Four encouraging signs of opportunities were presented, which could be
the prelude for more possibilities ahead. These signs are, a) ample room for
industrial robots in Malaysia, b) encouraging Government policies, c) expending
robotic applications, and d) robots being more affordable now.
Market opportunities for Malaysian robotic companies is abound, both
domestically and internationally. As Malaysia strives to automate her industries
to improve productivities and reduce foreign labour dependency, more market
opportunities will be created. However, a comprehensive robotics sectoral
plan is required, if Malaysia is to pursue robotics and automation as a strategic
industry to stay competitive.
The future impact of robotics and automation is likely to be far-reaching, from
addressing national challenges to the possibility of creating a new and strategic
industry.AstheworldstrivestowintheraceforIndustry4.0,Malaysianindustries
must rise up to the challenge, and embrace this new era of industrialisation.
INNEONUSA
CASE
STUDIES
TECHNOLOGYSPOTLIGHT
40 Malaysian Technology Strategic Outlook 2017/2018A | TECHNOLOGY SPOTLIGHT

Embracing Industry 4.0 - A Malaysian Strategic Technology Outlook

Embracing Industry 4.0 - A Malaysian Strategic Technology Outlook

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