future of work in indonesia - ge · 2 future of work in indonesia. ... , and to build stronger...

Future of Work in Indonesia

GE Indonesia

Contents

Executive Summary

Indonesia’s Macroeconomic Outlook

The Future of Work

How Digital-Industrial Can Help Shape Indonesia’s Future

The Road Ahead: Steps to Take

Conclusion

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2 Future of Work in Indonesia

IndonesiaisacornerstoneofSoutheastAsia’seconomyandanimportantplayerintheglobaleconomy.Thanksalsotosoundeconomicpolicies,ithasenjoyedrobustratesofeconomicgrowthoverthepastseveralyears.ButIndonesiamustdomore.Toprovideopportunitiestoitsfast-growingpopulation,andtosucceedinanincreasinglycompetitiveglobaleconomy,Indonesiamustraiseefficiency,accelerateproductivitygrowth,diversifyitseconomyandreduceitsdependenceonfossilfuels.Atthesametime,anewgenerationofdigitaltechnologieshasbeguntoreshapeglobalindustry,frompowergenerationanddistributiontohealthcaretotransportationtomanufacturing.Theseinnovations,thatGEreferstoasTheFutureofWork,includetheIndustrialInternet,AdvancedManufacturing,andtheGlobalBrain.Together,theyleveragethepowerofbigdatatoimprovetheefficiencyofindustrialequipmentandsystems,andtobuildstrongerpartnershipsbetweenhumansandmachines.Indonesiahasatremendousopportunitytoacceleratetheadoptionofthesenewtechnologiesasitbolstersitsinvestmentincriticalinfrastructure,frompowergenerationanddistributiontotransportationtohealthcaretoagriculture,whereimportantnewprojectsareinthepipeline.TheseinnovationsofferIndonesiatheopportunitytoleapfrogintothenewgenerationofdigitalindustrialtechnologies.Thesewouldraisetheefficiencyofinfrastructure,andpowerastronger,morediversifiedanddistributedmanufacturingecosystemthatcouldformthecornerstoneofanevermorebalanced,diversifiedandcompetitiveeconomy.Tounleashthepotentialofthesetechnologies,effortsshouldconcentrateonbolsteringanddigitally-enablinginfrastructure;furtherimprovingthebusinessenvironment;andstrengtheningtheeducationandtrainingsystem.Indonesia’sgovernmentisalreadyactingonallthreefronts;momentumshouldbemaintainedandintensified.Collaborationbetweengovernment,privatesector,educationinstitutionsandotherstakeholderscanbeinstrumentaltothesuccessofthisstrategy.Thisisespeciallytrueintheareaofeducationandtraining,whereIndonesialikemostothercountriesneedstobetteralignthesupplyofskillswiththeevolvingdemandofindustriestransformedbyinnovation.Leveragedthroughsmartandeffectivecollaborationacrossallstakeholders,thisnewwaveofdigital-industrialinnovationscanshapeIndonesia’sFutureofWorkandpavethewayforstrongersustainedgrowthineconomicactivity,employmentandlivingstandards.

Executive SummaryIndonesia Future of Work

Indonesia is a cornerstone of Southeast Asia’s economy and an important player in the global economy. Thanks also to sound economic policies, it has enjoyed robust

rates of economic growth over the past several years.

But Indonesia must do more. To provide opportunities to its fast-growing population, and to succeed in an increasingly competitive global economy, Indonesia must raise efficiency, accelerate productivity growth, diversify its

economy and reduce its dependence on fossil fuels.

At the same time, a new generation of digital technologies has begun to reshape global industry, from power generation and distribution to health care to

transportation to manufacturing. These innovations, that GE refers to as The Future of Work, include the Industrial Internet, Advanced Manufacturing, and the Global

Brain. Together, they leverage the power of big data to improve the efficiency of industrial equipment and systems, and to build stronger partnerships between

humans and machines.

Indonesia has a tremendous opportunity to accelerate the adoption of these new technologies as it bolsters its investment in critical infrastructure, from power

generation and distribution to transportation to health care to agriculture, where important new projects are in the pipeline.

These would raise the efficiency of infrastructure, and power a stronger, more diversified and distributed manufacturing ecosystem that could form the

cornerstone of an ever more balanced, diversified and competitive economy .

To provide opportunities to its fast-growing population, and to succeed in an increasingly competitive global economy, Indonesia must raise efficiency, accelerate productivity growth, diversify its economy and reduce its dependence on fossil fuels.

3Future of Work in Indonesia

To unleash the potential of these technologies, efforts should concentrate on bolstering and digitally-

enabling infrastructure; further improving the business environment; and strengthening the education and

training system. Indonesia’s government is already acting on all three fronts; momentum should be maintained and

intensified.

Collaboration between government, private sector, education institutions and other stakeholders can be

instrumental to the success of this strategy. This is especially true in the area of education and training,

where Indonesia like most other countries needs to better align the supply of skills with the evolving demand of

industries transformed by innovation.

Leveraged through smart and effective collaboration across all stakeholders, this new wave of digital-industrial

innovations can shape Indonesia’s Future of Work and pave the way for stronger sustained growth in economic

activity, employment and living standards.


A. Indonesia macroeconomic outlook

Indonesia is a strong economic presence in Southeast Asia, leading the region in GDP and holding a top-20 spot in the global economy. As the fourth most populous country in the world, Indonesia has shown resilience in the face of commodity price weakness in recent years because of many economic advantages, including a favorable demographic profile and large untapped natural resources. President Joko Widodo’s administration has made it an important point to move away from years of protectionist favor of a more open and adaptable economy. Strong investment and private consumption will continue to drive economic growth over the coming years, though a large fiscal deficit and a sluggish external sector could pose significant challenges.

Real GDP growth in Indonesia, which makes up about 36% of total GDP among the Southeast Asian nations, has held steady around 5% throughout the past few years and is expected to maintain this trend at least in the short-term. Five sectors have contributed to nearly two-thirds of total growth in the past two years: manufacturing, construction, finance, information and communication, and wholesale and retail trade and repairs. Services and industry each make up about 43% of total GDP, with agriculture accounting for the remaining 14%. Still, nearly 40% of labor is allocated toward the agriculture sector, allowing for a significant opportunity to attract and train workers to more forward-looking and digital-oriented fields.


Strong private consumption has been an important component of Indonesia’s economy, comprising nearly 60% of total GDP. The country’s sizeable middle class helps support a healthy private sector, with a young and growing working age population fueling consumer spending. The population will continue to increase over the coming decades, though at a slowing pace. At the same time, the savings rate of the average Indonesian remains elevated, helping to mitigate downward pressures on spending during periods of economic malaise. Indonesia also benefits from healthy tourism, especially from China, which adds to the robust rate of consumption.

The government has implemented an economic strategy focused on boosting investment in infrastructure and manufacturing. As such, investment has been a key driver of growth, with Japan being one of the largest sources of inflows. Manufacturing still has room to grow, as capacity has been running approximately 30-35% below potential, and thus investment will remain solid in the sector.

Supporting the government’s investment strategy has been the relatively stable rupiah in the past year, even though the currency had depreciated significantly between 2013 and the end of 2015. A strengthening USD will continue to put downward pressure on the rupiah throughout the year; however, a gradual appreciation is expected to occur in late 2017 and thereafter as the central bank tightens monetary policy. Interest rate increases are likely in 2017 in order to combat currency weakness as well as inflationary pressures stemming not only from a stronger USD but also from rising oil prices, given that Indonesia is a net oil-importing country. The good news is that foreign exchanges reserves are substantial and are more than enough to provide a safeguard in the case of various risk scenarios determined by the IMF.

Indonesia also has encouraging trade prospects, with plans to finalize talks on a free trade agreement with the EU as well as a separate agreement with Australia. Furthermore, the government is working to reduce non-tariff barriers with India. The trade surplus is expected to remain relatively stable as higher commodity prices boost export revenues while robust household

consumption supports\strong demand for imports. Still, the government is trying to target export-led growth with a variety of reforms, including a repeal of the three-year mining ban in January 2017 (fuels and mining comprise about 25% of total exports). Other reforms include lowering night-time electricity tariffs for manufacturers (manufactured products make up nearly 40% of total exports), simplifying arduous permits, and boosting incentives in special economic zones.

Despite Indonesia’s compelling advantages, the economy is faced with a range of challenges. While macroeconomic stability has helped fortify Indonesia as an attractive spot for foreign investment among emerging markets, many external players continue to face regulatory obstacles in a relatively weak business environment. According to the World Economic Forum’s 2016 Competitiveness Report, corruption, government bureaucracy, infrastructure supply, and access to financing were cited as the most problematic factors for doing business in Indonesia. With a Global Competitiveness Index rank of 41 out of a total 138 countries, Indonesia ranks worse than both China and India on institutions, labor market efficiency, and health and primary education. There is also the lingering risk of social tensions, as both religion and race issues escalated in late 2016. In an otherwise weak business environment, this poses a risk to investor confidence should the situation deteriorate. Improvements in governance at the local level – which comprises about half of all government spending – will help reduce some of these barriers, increase stability, and improve business conditions for outside investors.

Another challenge for the government is reducing its large fiscal deficit, where weak resource revenue and a small tax base may eventually weigh on capital spending. A sluggish external sector, in particular China, puts renewed downward pressure on Indonesia’s commodity exports. Some relief may naturally arise from the modest recovery in global commodity prices, though this will be limited by a gradual slowdown in China. Easing the fiscal situation will also require major reform of the current tax system in order to improve registration, collection, and enforcement. Other reforms that might be more politically challenging, along with adjustments in the labor market, are facing greater resistance.

In order to successfully address its current economic challenges, Indonesia needs to boost productivity growth and potential economic growth. It should do so in a way that is forward-looking, creating the conditions for sustainable success in a rapidly changing economic and technological environment. This could be best achieved by leveraging the new wave of digital innovations that is beginning to transform industry, as we discuss in the following sections.


B. The Future of Work

Digital innovations have already made a profound difference to our personal lives, in ways that have by now become familiar to many of us—and often even taken for granted. What is less appreciated is that similar innovations are now beginning to transform industry, and the economy overall. At GE, we refer to this new wave of innovations as the Future of Work. The Future of Work is composed of three mutually reinforcing trends.

The Industrial Internet merges big data and cloud-based analytics with industrial machinery, resulting in greater efficiency and increased operating performance. The principle is simple: industrial assets like power generation turbines, jet engines and medical devices, are equipped with electronic sensors, which collect enormous amounts of data on the functioning of the machines as well as on the external environment.

The data are then processed with specialized software analytics, yielding new insights on the machines’ performance. These insights allow us not just to operate the machines more efficiently, but also to predict with much greater accuracy when something is likely to go wrong, and how. This enables a shift from schedule-based maintenance, where you service a machine at pre-specified time intervals, to condition-based, predictive maintenance: you service the machine only when needed, and exactly when needed. We can fix machines before they break or malfunction, rather than having to intervene in a corrective way afterwards. Preventive maintenance delivers significant reductions in unplanned downtime, the amount of time when a machine needs to be taken off-line for repairs, disrupting operations and imposing financial costs on the operator and inconvenience to the customer.

The Industrial Internet


A powerful example comes from GE’s Renewables: as the wind shifts, the turbines on a wind farm communicate and adjust the pitch of their blades in a coordinated way, so as to maximize the energy output for the entire wind farm, rather than every single turbine acting in isolation to maximize its own output, and ignoring the impact of its actions on the way that the wind then passes through to other turbines.

The best demonstration of the power of these new technologies is the Digital Twin: this is the software double of an industrial asset—for example a jet engine blade, or an entire jet engine, or an entire power station. The crucial element is that the Digital Twin is not the software representation of a generic machine—say an average, theoretical jet engine. It is the representation of one specific and concrete machine—like the same exact jet engine sitting under the left wing of the airplane I flew on this morning. The Digital Twin includes all data on the characteristics and history of that specific machine, enabling the best possible knowledge and understanding of the machine itself. Moreover, Digital Twins can communicate with each other, gaining access to the accumulated experience of all similar machines. Facing an unexpected condition, the Digital Twin of a gas turbine can consult the Digital Twins of all other similar turbines, to find out if any of them has ever experienced anything similar, and compare notes.

The insights are not limited to individual machines, but extent to entire systems: for example, industrial internet solutions allows a hospital to have full visibility on the utilization of health care devices, operating rooms and beds, so that admissions and procedures can be scheduled more efficiently. This amounts to better utilization of existing capacity, and results in significant reductions in patient waiting times – and in a hospital, a longer wait can have serious health consequences.

With industrial internet technologies, machines become intelligent, interactive and even social, able to react to the environment and to communicate and collaborate with each other and with humans.

1 Sources: EIU, BMI, Macrobond, Oxford Economics


i. It accelerates the cycle of design – prototyping – production.Once a prototype is printed and tested, the design can be changed and a new product printed simply by changing the digital blueprint, without the need for any modification of the actual production machine. This shortness production times, allows to try and fail faster and at lower costs, and enables greater speed in responding to changes in customers’ needs.

Advanced ManufacturingAdvanced manufacturing is a combination of new production technologies and materials, as well as a digitally-enabled reorganization of the entire production process. Additive manufacturing, or “3D-printing” is probably the most well-known aspect, and it represents a major revolution in it self.

Additive manufacturing brings two key advantages:

The Digital Twin can also have access to market information, for example on current demand and supply conditions and market pricing. Based on all this information, the Digital Twin will be able to propose to the human operator different strategies: for example, running a gas turbine at greater intensity to take advantage of a window of high demand and prices, given the cost in terms of additional wear and tear and therefore additional repair and maintenance. Progress in user interface technology is making it increasingly easy and intuitive for humans to collaborate with Digital Twin – including through the use of Virtual Reality and Augmented reality.

An additional important feature of industrial internet solutions is the ability to optimally allocate computations and decision-making. For example, deciding which data on the performance of a machine should be analyzed at the “edge”, meaning in the machine itself or very close to it , and which ones should be processed in the cloud; or what decisions should be taken independently by a Digital Twin and which ones should instead be referred to a human operator. Speed, safety, and complexity of the decision are some of the elements that come into play.


ii. It allows for the production of entirely new products, with different physical properties. This is because the process of layering material is fundamentally different from that of carving material and putting together separate parts. With 3D printing we can use different industrial designs and different materials, creating completely different parts. The benefits are substantial. GE Aviation has been an early adopter of the technology and is spearheading the additive effort within GE. Thanks to 3D printing, GE Aviation is able to reduce the weight of certain components—by a stunning [84%] in the case of jet engine brackets, that we will mention again below; and to reduce the number of parts that need to be assembled to manufacture some components.

Advanced manufacturing is more than additive manufacturing. It includes the deployment of a “Digital Thread”, a system of electronic sensors and software analytics that connect every element of the factory floor, including workers and machinery, and connects the factory floor to supply chains and distribution network.

This Digital Thread, already deployed in GE’s Brilliant Factories, helps achieve a safer and more efficient organization of the workflow; it also allows the factory to react faster and more effectively to changes in market conditions or to unexpected disruptions. For example, if changes in market demand suggest the introduction of a different product, the Digital Thread allows management to simulate how the workflow would need to be reorganized, and to estimate the cost consequences; or if an element of the supply chain is suddenly cut off by a natural disaster or by a protectionist measure, the Digital Thread allows to quickly identify different sources and any other adjustments to the production process that might be needed.


Global BrainThe Global Brain connects the collective intelligence of human beings across the globe through digital communication, resulting in crowdsourcing, open collaboration and a much faster pace of innovation. It encompasses new forms of collaboration, but also a new way of working. It can allow individual workers greater flexibility and the opportunity to capitalize on their skills in a more entrepreneurial way.

One powerful example of the global brain at work ties together GE Aviation and Indonesia: in 2013, GE launched a competition on the engineering platform GrabCAD. GE Aviation disclosed the current design of its jet engine bracket, and challenged the engineering community to come up with a “better” design, namely one that could be produced with 3D printing and would be lighter and at least as robust as the existing one. The winner of the competition was a young engineer from Indonesia with no prior experience in the aviation industry—his design was 84% lighter than the existing one.

The GE jet bracket examples illustrates the basic power of the global brain: it allows a much wider pool of talent to help address specific challenges, greatly improving the chances of a better solution.

The global brain is set to become even more powerful as economic growth extends to tens of millions more people across the globe access to the internet and the time to take advantage of it , since better access to food, clean water, power and healthcare will free up

precious hours. Millions more people will thus join the ranks of those who can both tap and contribute to the global stock of knowledge.

The global brain can also interact with advanced manufacturing technologies to create new, more flexible forms of employment. For example, additive manufacturing will redefine economies of scale and enable micro-factories and a new generation of entrepreneurial artisans and services activities; which will be greatly facilitated by the ability of entrepreneurial workers to leverage the knowledge and collaboration of other individuals across the globe.


These new technologies can be especially helpful to emerging markets like Indonesia:

C. How Digital-Industrialcan help shape Indonesia’s future

i. The relatively lower installed base of investment means that Indonesia can more quickly embody the new technologies into its capital stock by stepping up the pace of investment;

ii. This in turn implies that Indonesia can, in a number of areas, leapfrog to more competitive innovations rather than adopting technologies already diffused in other countries;

iii. Digital-industrial technologies have a degree of openness and flexibility that can help countries like Indonesia bypass existing gaps in infrastructure, and to tackle some of the challenges posed by the country’s geographic configuration;

iv. Digital-industrial technologiesare especially powerful in sectors that are crucial for Indonesia’s economic growth: energy, transportation, health care, and manufacturing.

PoweringIndonesia’s power sector can be a primary beneficiary of the Future of Work technologies. A reliable and affordable power supply is essential for faster economic development. The data show a strong positive correlation between a country’s “Quality of electricity supply” index calculated by the World Economic Forum and its per capita income level

Digital technologies are set to transform the entire energy value chain, from generation to distribution to consumption. This transformation will involve gradually connecting all the elements of the energy value chains to the industrial internet. This will allow energy operators and policymakers to have much better visibility on demand, generation capabilities, and all relevant environmental conditions.


New digital technologies can help from the very beginning, starting with the design and siting of centralized power plants. These decisions can be informed by projections on the distribution of power consumption and on load demand. In the case of renewable power generation, digital models will help optimize the location based on environmental conditions in ways that are much more efficient: for example, in a Digital Wind Farm we can customize each individual wind turbine based on its unique location in the farm. This can be done by integrating advances in digital infrastructure (cloud computing, weather simulation algorithms, satellite topology images) with hardware technologies (modular turbines that allow different configurations such as hub height, blade length and generator rating). The location decision for a centralized power generation station will also take into account plans for the optimization of the transmission and distribution network.

Once the power plant is in operation, digital tools can enhance its performance and profitability. They allow to track and maintain historical performance data and baselines for all the individual pieces of equipment as well as for the entire plant. This will help identify deviations from the norm and schedule preventive maintenance operations so as to avoid outages. Digital Twins will be able to adjust the operating parameters of each machine in real time, based on performance and environmental conditions, so as to maximize efficiency and minimize cost. Digital tools can also help improve fuel procurement and storage, which can account for up to 90% of a plant’s operating cost.

Industrial internet solutions can also transform the traditional distribution infrastructure into a Digital Grid, where software solutions help enhance grid reliability, reduce losses, and improve outage response. Digital tools can also accelerate and facilitate the integration of distributed power generation resources into the grid.

These digital solutions can provide tremendous value to Indonesia. They can help the power sector optimize fuel consumption, thereby making it less exposed to the fluctuations in global fuel prices. They can improve the reliability of the electricity grid, which in turn would facilitate the development of a stronger manufacturing sector. And they will help lower electricity prices for both companies and consumers, helping to improve Indonesia’s

competitiveness and unburden the budget from the weight of fuel subsidies.

Indonesia has launched an important program designed to provide an additional 35 GW of power capacity by 2019 to reduce the incidence of electricity shortages, and to reduce the country’s dependence on fossil fuels.

The program is supported by tailor-made regulations and includes the development of around 210 power plant projects across the country: 10 GW of project will be directly managed by the State-owned power company PT PLN (35 projects), while private companies are invited to participate in 25 GW of projects (74 projects). 59 projects will take place in Sumatra state, 34 in Java, 49 in Sulawesi, 34 in Kalimantan and 34 in eastern Indonesia.

Out of the 35 GW planned, coal-fired power plants will represent 20 GW, gas-fired project 13 GW and renewable energy sources 3.7 GW, split in 2.4 GW of hydropower, 1.2 GW of geothermal energy and 120 MW of wind electricity capacity. The Government plans that the construction of the 20 GW of coal-fired power capacity should increase the need of 80-90 Mt/year of coal, of which 40% are expected to be supplied internally. The projects are estimated to cost about IRup1,120bn (US$88bn).

New digital technologies have the potential to greatly enhance the efficiency of the new power generation to be installed, as well as how the additional electricity is distributed and utilized. Indonesia’s power sector will have to cope with sustained increases in electricity demand as the economy continues to expand—electricity demand growth in 2015-2019 is predicted to reach 8.7%/year, on average. New digital-industrial technologies can therefore play a key role in ensuring that new investments in the sectors can achieve the twin objectives of ensuring sufficient and sustainable power supply and reducing Indonesia’s dependence on fossil fuels.


MovingThe rail transportation sector can also benefit from digital solutions at both the asset and network level.

Industrial internet tools can help reduce downtime, improve efficiency and lengthen the life of rolling stock. New digital solutions have the ability to monitor and detect in real-time broken rails, flat wheels, hot wheel bearings using sensors and video analytics and provide immediate notification to the monitoring centers. They can constantly monitor the health and efficiency of individual locomotives, which allows network managers to make better and faster decisions on how to allocate different locomotives to specific trips, thereby reducing delays. Data insights also enable operators to optimize speed along the journey so as to reduce fuel consumption.

Source: Wood Mackinsey


ManufacturingDigital industrial solutions can also help Indonesia accelerate the development of a stronger and more diversified manufacturing sector. New production technologies such as additive manufacturing, combined with the Digital Thread connecting all elements of a factory floor, are set to redefine economies of scale; this should enable to produce in an economically efficient way at lower scales, resulting also in greater flexibility on the location of production plants. Moreover, new labor-augmenting technologies will help increase the productivity of workers at different levels of the skills distribution, also by giving them better access to information, knowledge and collaboration with colleagues.

For example, wearable Augmented-Reality devices can already provide instant training, guiding workers through complex procedures of assembly, maintenance and repair.Digital industrial tools can also help record maintenance and repair procedures as they are carried out, creating a searchable repository of hands-on experience that workers can then easily and rapidly access.

These efficiency improvements are made possible by a new generation of digital systems such as GoLINC, s a network communication and application management platform that turns any locomotive into a Mobile Data Center. It’s been referred to as the “brain of the train” and has been installed on more than 7,000 locomotives to date. It has the ability to link systems both on the trains and off the trains, and is compatible with different OEM equipment.

CuringDigital industrial solutions have also started to transform the world of health care. They can improve the management of hospitals, through real-time tracking of the location and conditions of individual pieces of medical equipment and hospital beds. Even just such a simple but seamless monitoring and tracking of physical assets yields significant improvements in the scheduling of admissions and patient procedures, resulting in reduced waiting times.

Digital solutions allow several specialists to collaborate on the diagnosis and treatment of a patient through secure cloud-based communications, enabling a more efficient teamwork and resulting in better quality care.

Digital solutions also enable a more effective distributed delivery of health care, something that could be especially beneficial given Indonesia’s geographic characteristics. Industrial internet technologies allow specialists in a centralized location to monitor the health and performance of medical equipment in several remote locations;

the specialists can then remotely guide local personnel on how to operate and—when necessary—address malfunctions of the equipment.


Digital tools can also help workers to immediately tap the expertise of colleagues in remote locations: the remote colleagues would be able to see and assess the situation, and help address and resolve the issue.

To reap the benefits of this new wave of digital industrial innovations, Indonesia will need to put in place some key enabling conditions.

The first priority should be to bolster investment in infrastructure. This should focus on key critical infrastructure areas such transportation, energy, health care and communications. It should aim at strengthening traditional infrastructure while at the same time putting in place the conditions for new generation digital solutions.

The second priority should be to invest in skills building, to create the right talent pipeline for the future. This should start by considering a reform of the education system to raise the bar on STEM education (Science, Technology, Engineering and Mathematics). While not all future workers need to be engineers or data scientists, it is important for workers of all skill levels to acquire greater familiarity with technology and digital innovations. In other words, we should treat basic scientific literacy the same way we have treated basic literacy in the past—something that every individual should ideally acquire. It would be equally important to develop a system of vocational education, to

These improvements in workers abilities will go hand in hand with improvements in machine performance, thanks to the Digital Twin advances we discussed earlier in this paper.

Taken together, these advances could help Indonesia accelerate the development of a stronger and more diversified manufacturing sector. This could start with the creation of ecosystems of suppliers and partners built around Indonesia’s established industries, such as Oil and Gas. This would over time facilitate the creation of a pipeline of skills. The flexibility of digital technologies could, in particular, help mitigate or bypass residual infrastructure gaps.

D. The road ahead:steps to take build a stronger supply of traditional work-floor

skills.

Finally, changes in the education system should be complemented by a stronger investment in training and retraining programs by private companies to (i) help build a bridge between formal education and work; and (ii) provide opportunities for continuous on-the-job learning as technologies change. Legislative measures to facilitate the broad adoption of apprenticeship programs could also help.

In this regard, it is encouraging that Indonesia’s government NAWACITA’s program includes as one of its priority a renewed focus on education and training, which envisions that 40% of teaching in higher education should focus on science and 60% on applied knowledge, and provides for greater support to state universities and stronger financing for research and technology development. These steps would help Indonesia develop the pipeline of talent needed to support the unfolding and deployment of new technologies. Building closer ties between the education system and industry would further help Indonesia to build the workforce of the future.


Third, Indonesia should take steps to further improve the business environment. Indonesia ranked 91st out of 190 countries in the 2016 World Bank’s Ease of Doing Business report; it ranked a poor 151st for the ease of starting a new business. If Indonesia is to leverage the potential of digital industrial innovations to give rise to a stronger and more diversified manufacturing sector consisting of smaller, agile and technologically advanced firms, it needs to drastically improve the conditions for new firms to get started.

Collaboration of public and private sector will be crucial to the success of this strategy. Private sector companies, including MNCs, have better visibility over the rapid changes in technology, the demand for new skills, and the conditions needed to guarantee competitiveness and success. The government is in the best position to put in place some of the key conditions for success, from education to infrastructure. Both have a common interest in Indonesia’s continued economic success.

A number of new projects about to be launched could help bootstrap Indonesia’s adoption of new digital-industrial technologies:

HARA a smart farming platform from Dattabot, leverage digital technologies to ensure consistent crop productivity in a partnership between smallholder farmers and agricultural companies. Combining big data technology, digital sensors, data analytics and predictive agriculture inputs, HARA provides value-added insights related to farming field potential, management of farm inputs and anticipation of pest and disease. Such digital solution will play a big part in Indonesia’s agricultural sector by increasing the predictability of crop farming, allowing win-win situations between the smallholder farmers and agricultural companies, which in turn increases farmers’ standard of living.

PT Kereta Api Indonesia (PT KAI), Indonesia state owned railway company and GE are exploring and assessing opportunities to deploy GE’s Digital solutions for Railway sector , which include: Rail Integrity Monitor (RIM), Power Advisor, Trip Optimizer (TO), and Movement Planner (MP).


Conclusion

New digital technologies are beginning to reshape industry just as Indonesia is renewing investments to bolster critical infrastructure, from power to transportation to agriculture. Adoption of this new generation of technologies can greatly enhance the efficiency of new investments as well as raise the productivity of the already installed base. Together with a renewed focus on education and training to build the workforce of the future, rapid adoption of new digital industrial technologies holds the potential to shape Indonesia’s Future of Work, paving the way for stronger sustained economic growth in the decades ahead.


future of work in indonesia - ge · 2 future of work in indonesia. ... , and to build stronger...

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