EXPERTS predict global growth will slow this year and the next. Many blame the tariff conflicts between the two super powers, the United States and China.
The trade war has started hurting both economies. Both are witnessing reduced trade. Job cuts have become common news. The many countries which depend on trade with both China and the United States are also not spared.
But that trade skirmish is not the only factor dragging down world growth. The Britain-EU Brexit stalemate is also another downside to the world’s economy (Brexit refers to the British vote to leave the EU).
Add to that the flare ups in the Straits of Hormuz (when Iran diverted a British-flagged oil tanker to one of its ports) as well as the Japan-South Korea economic spat over export restrictions, and an economic disaster for the world may be just around the corner.
Despite all that, Malaysia is still considered buoyant, with growth predicted to hover at more than 4%. Thanks to our relatively stable business climate, companies in China affected by the trade conflict are looking at Malaysia as a potential place to re-site their operations.
But experts agree this advantage can only be temporary. It may not be sustainable in the longer term. There are also other reasons why we need to be concerned about the future of the nation’s economy.
The two major pillars of our economy, oil and gas, and palm oil, may soon reach their limits. Petroleum is not only a depleting resource but it is also under considerable world pressure because of the growing shift away from fossil fuels. Palm oil has almost reached its limit in terms of production area. The growing environmental pressure on it is also not helping.
We have therefore to look for new opportunities to drive the nation’s economy. We can look to what is driving the new global economy as a guide.
Reading what is discussed widely in the media and the many business forums, green is obviously the colour of new opportunities.
Yes, concerns over global warming and climate change, polluted oceans and depleting key resources has led to a concerted global drive for greener technologies and more environment-friendly products and services.
There is also a growing preference for resource-efficient production systems, especially for energy and water.
The era of digitalisation is now upon us. Technologies such as artificial intelligence, the Internet of Things, bioengineering and the like are set to rule the new economy. Some refer to these technologies as the 4th industrial revolution, or Industry 4.0, as some like to call it.
There are already widespread predictions that Industry 4.0 will influence not only manufacturing but literally all aspects of the world economy.
Industry 4.0 technologies will transform agriculture and food production. It will also revolutionise education. Some have even gone to the extent of saying that schools and universities will witness drastic changes in teaching, learning and research methods.
The financial service sector will also not escape the influence of Industry 4.0 technologies. There is now serious talk about new finance technologies taking over some of the functions of banks – the rising interest in cryptocurrencies worries banks the most.
Countries the world over are already formulating plans to gain the most benefit from the Industry 4.0 economic era.
Malaysia is no exception. A national blueprint on Industry 4.0 is already out. The International Trade and Industry Ministry has been charged with coordinating the plan. At the same time, the nation’s 12th Malaysia Plan is being hatched to chart our next phase of growth. There is no doubt that Industry 4.0 will be a key feature of this plan.
But if we are to derive the maximum socioeconomic benefits from Industry 4.0, we should not confine ourselves to merely importing and using the technologies associated with it. We must also look at potential business opportunities that it will bring. A key opportunity is in the manufacture of components that make up robotics, artificial intelligence products and the like.
As a country we need to strategise to attract investments, both local and foreign, in the sector. A careful study of the emerging businesses is necessary if we are to strategise to tap Industry 4.0 for the 12th Malaysia Plan.
PROF DATUK DR AHMAD IBRAHIM
Fellow, Academy of Sciences Malaysia University UCSI