Fourth Industrial Revolution

and trade Policy

Country perspective: Indonesia

Professor: Fan Ying
International Trade
Group 3
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 GROUP MEMBERS

Gulrukhsor Christin Vricilya

Abdul Raheel Rizwanul Karim
Mirsolieva Munthe
GDW2019201 FW201956021
GDW2019211 FW201956005

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 OUTLINE

 The Fourth Industrial Revolution (4IR): what it means?

 4IR: Link between technology and International Trade

 National policies in Indonesia to achieve 4IR

 Challenges for Indonesia to overcome to achieve 4IR

 Opportunities for Indonesia if it achieves 4IR

 Suggestions

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 The Fourth Industrial Revolution (4IR)

 The term Industry 4.0 was firstly introduced by German

scientist and business advisors in 2011.
 It refers to an advanced cyber-physical
manufacturing process. It includes five key technology,
– namely Artificial intelligence,
– internet of things,
– advanced robotics,
– wearable or augmented reality or virtual reality,
– 3D printing.

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Stages of Industrial Revolution

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 4IR: Link with International Trade
Increase global trade:
 A 10-percent increase in internet use in the exporting
country is found to increase the number of products
traded between two countries by 0.4 percent.
 Increases the average bilateral trade value per product
by 0.6 percent. (Papachashvili, 2018)
More inclusive trade :
 The internet enables many small firms to participate in
global trade, it enables more products to be exported to
–newer and younger firms.
new goods and services are designed. 6
 4IR: Link with International Trade
Increase trade-to-GDP ratios:
Due to growth in broadband use
 Trade-to-GDP ratio will increase an additional 6.88
percentage points on average in the high income countries
and
 An additional 8.55 percentage points on average in the
developing countries over the next five years. (Riker,
2014).
Reduces costs in trade :
 Reduce the matching and information costs.
 Reduce Communication cost ( through the use of emails,
websites)
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 4IR: Increase Trade Facilitation
 Digitalization improve trade facilitation (making trade easy)
 Implementation of trade facilitation as a step-by step (Five) process.

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4IR Implementation Position for Countries

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Source: A.T. Kerney press research
Country Readiness for 4IR

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Source: A.T. Kerney, World economic forum
Preparedness for production

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Source: A.T. Kerney, World economic forum
Economy of Indonesia: Challenges

Source: The World Bank; A.T.Kerney 12

Economy of Indonesia: Challenges

Source: The total economy database, Economist intelligence unit

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Economy of Indonesia: Challenges

Source: Gartner, The conference board : A.T. Kerney

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 Focus Sectors for 4IR: Indonesia

• Food and beverage (2016, contributed 29% of manufacturing GDP, 24% of manufacturing
exports, and absorbed 33% of the manufacturing sector workforce)
• Textile and apparel (2016, contributed 7% of manufacturing GDP, 15% of manufacturing
exports, and 20% of manufacturing labor)
• Automotive (Indonesia is now the second largest automotive exporter)
• Electronics (developing and relying on imported components and local production from
global players)
• Chemical (widely used by other manufacturing sectors, such as electronics, pharmaceuticals
and automotive) 15
Focus Sectors for 4IR: Indonesia

Source: A.T. Kerney, World Bank

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National Priorities for 4IR Implications

Source: Ministry of Industry, A.T. Kerney

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 Problems in the Implementation
the Industrial Revolution 4.0
 Issues of cyber security, privacy and data protection.
 Use of the Internet is relatively limited.
 e-trading is not yet well understood and used.
 Natural disasters.
Disasters trends in Indonesia in the last 5 years (2014-2015)

Flood
Incident

Landslide
Tornado

Total 2008 = 2.853 ; 2009 =2.572

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Sources :National Disaster Management Authority of Indonesia
Impact of 4IR on Economy

Source: World Bank, A.T. Kerney press research

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Impact of 4IR on Economy

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Source: A.T. Kerney press research
Impact of 4IR on Economy

Source: A.T. Kerney press research

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 Suggestions

Implement general trade facilitation measures :

 It will improving transparency
 Expediting and streamlining formalities
 Developing adequate institutional frameworks

Legal provisions on :
 Cyber security
 Data protection
 Data localization
 Consumer protection
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 Suggestions

Attention toward Digital Potential

Triple Helix Concept for Innovation
Three major players in this concept
 Academia: Researchers and students at universities
produce innovations
 Private Sector: Creates business uses for those innovations
 Government: Government supports innovation by creating a
policy
environment for innovators to thrive

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Thank You

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