Tobacco industry and ‘Making Indonesia 4.0’ (The Jakarta Post)

Facing the phenomenon of the fourth industrial revolution or more popularly known as Industry 4.0, Indonesia has come up with a roadmap to stay competitive globally. The roadmap “Making Indonesia 4.0”, launched last year, proposes 10 national strategies in revitalizing the manufacturing sector and five priority industries which are perceived to have the capacity and significant impact in the adoption of the fourth industrial revolution. These five industries are food and beverage industry, textile and apparel industry, automotive industry, electronics industry and chemical industry.

In this regard, the current roadmap seems to focus more on adopting frontier skills and technologies, yet less on how to mitigate adverse impact on industries and workers whose skills may become obsolete due to the technological changes that the Industry 4.0 entails. However, a country’s readiness in winning the race in the industrial revolution does not rely only on the former but also the latter.

In this article, I propose to add tobacco industry as a strategic industry to be the champion in starting Making Indonesia 4.0. As both producer and consumer of tobacco products, Indonesia has a unique position to pilot the adoption of the Industry 4.0 on the tobacco industry. I offer four reasons on why this industry is critical in providing learning ground to achieve both aspects of Indonesia’s readiness in embracing the technological transformation of the fourth industrial revolution, ie.the adoption of frontier skills and technology as well as assisting workers who will be adversely impacted by the revolution.

First, tobacco industry has become a sunset industry. As the demand for products of tobacco industry from developed economies slows down, the industry has been targeting more into the market of developing economies including Indonesia. Indonesia itself has been a country of smokers. Expenditure on cigarettes come up as the top expenditure, just below rice, for poor households.

There are various studies showing the cost of smoking exposure including the opportunity costs from loss in productivity due to all smoking-related diseases as well as the intergenerational cost of having higher probability of stunting children for households with smokers as studied by Dartanto et al. ( 2018 ). Despite unfortunately the current “business as usual” standpoint, sooner or later the society will find justification to regulate smoking more stringently. Hence, downsizing of the industry is an imminent reality. In this regard, providing assistance to the workers who will be adversely affected necessary. Rather than waiting for the downsizing to take effect unanticipatedly, the government can start assistance in skills transformation from these workers.

Second, tobacco industry in Indonesia has a unique characteristic which makes it suitable to be a pilot in implementing Making Indonesia 4.0: the industry is highly spatially concentrated. A study by the World Bank ( 2017 ) shows that 94 percent of workers in tobacco industry live in Central Java, East Java and West Nusa Tenggara. Employment by the tobacco industry in some districts in these province even accounts for almost one third of total workforce.

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The Jakarta Post

9 April 2019

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