Factory Asia: Artificial intelligence and robotics



The world is at the forefront of the fourth industrial revolution and disruptive technologies such as artificial intelligence and robotics will increasingly blur the lines between the physical, digital and biological spheres. The World Economic Forum in Davos, Switzerland from 17-20 January brought together 3,000 leaders from politics, finance, business and science to discuss the global issues under the theme of ‘Responsive and Responsible Leadership’. The collateral damage of technological innovation undoubtedly dominated the global agenda. This is especially significant for regions such as Asia, in which countries such as China and its neighbours have dominated as the global manufacturing and supply chain hub of the world.

Since its emergence in the 1960s, Factory Asia now accounts for nearly half of the world’s manufactured goods due largely to its abundance of cheap, low-skilled labour. The imminent fourth industrial revolution will redefine the world economy, a revolutionary change from which Asia is primed to gain immensely. However, it remains uncertain whether governments in the region can implement the necessary frameworks to protect and restructure the future of their labour forces, economies and national prosperity.

As Asia embraces the fourth industrial revolution, artificial intelligence and robotics will increasingly play a part in our everyday life and redefining the humanity’s relationship with the world. According to the International Federation of Robotics, South Korea, Singapore and Japan are among the leaders in robot density, with 531, 398 and 305 industrial robots per 10,000 employees in the manufacturing industry respectively (the world average is 69 per 10,000 employees). Countries such as Japan, for example, have especially fostered the development of artificial intelligence and robotics with the launch of Japan’s Robot Revolution Initiative Council. Launched in May 2015 and supported by 200 companies and universities, this began Japan’s five-year plan to deepen the use of intelligence machines within the Japanese economy. This will see Japan’s robotic sales growth increase from an estimated 600 billion yen ($6.94 million) to 2.4 trillion yen ($27.9 billion) by 2020.

China is also seen as a critical hub for the future of artificial intelligence and robotics, with it projected to account for 40% of global robotic sales by 2019. Chinese venture capitalists have continued to invest heavily into start-ups, particularly within artificial intelligence, despite worldwide venture capital activity declining by 24% in this past year. China’s research and development into artificial intelligence has also surpassed the United States, both in terms of the quantity and quality of academic publications. With this in mind, it’s evident that Asian countries such as Japan and China have embraced the emergence of artificial intelligence and robotics. However, its disruptive implications on Factory Asia’s labour market poses serious questions for the future of the region’s economic prosperity.

The United Nations International Labour Organisation report ‘ASEAN in Transformation’ released in July 2016 found that within five ASEAN countries – Cambodia, Indonesia, Philippines, Thailand and Vietnam – approximately 56% of all employment is at high risk of displacement due to automation over the next two decades. Within these countries, the most vulnerable are employed within the agriculture, garment manufacturing and construction sectors, which account for more than half of the region’s employment. The risk of automation also diversifies between countries such as Philippines (business process outsourcing/call centres), Indonesia (retail), Cambodia and Vietnam (garment manufacturing) and Thailand (motor vehicles). There’s also a direct correlation between education levels and percentage risk of automation where higher education generally results in less probability of being replaced by automation.

With this in mind, as intelligent machines become cheaper and capable, they will increasingly replace human labour. This will be particularly true in low labour cost manufacturing countries, such as those found in Asia. The emergence of artificial intelligence and robotics has resulted in an increased demand for higher-skilled workers and lowered demand for low-skilled workers. And there’s likely to be an increasingly segmented divide between low-skilled and high-skilled workers, which can result in exacerbated social inequality, and potentially threaten domestic instability and national security.

To capitalise on the fourth industrial revolution, the region’s governments, businesses and academic institutions will need to develop a more educated and highly skilled labour force, whilst simultaneously creating new economic opportunities for the next generation. This will be especially difficult, as millions of children in Asia still don’t have basic access to universal primary and secondary education. With this in mind, the true champions of the future will be defined by their ability to innovate new products, services and business models, and responsive and responsible leaders must strategise for the imminent disruptions brought about by artificial intelligence and robotics. So long as Asia continues to struggle to provide basic access to universal primary and secondary education to their future workers, it remains uncertain whether they can truly foster the necessary innovative entrepreneurship to create avenues for safeguarding long-term economic prosperity.

Reginald Ramos is the Indo-Pacific Fellow for Young Australians in International Affairs.

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