• Alifia Putri

Doing Business in Era of Industrial Revolution 4.0

Updated: Aug 31

by: Alifia Putri (alifia.putri@launcher.id) and Nanda Julia Azzahra

Technology has been evolving and will fundamentally change the way people lives and works. In this new era, technology will not merely become helper but can also be partner in managing the lives of human being. Klaus Schwab, founder and executive chairman of The World Economic Forum, called this era as “The Fourth Industrial Revolution” or Industry 4.0. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. These technology advancements transform the entire business system to the next level i.e. production, management, and governance of the business. The transformation that happened to the world today is a new thing for humankind that used to manage our lives.

Since 1760, the first industrial revolution changed our lives from agrarian and handicraft economy to one dominated by mechanized industry. In the second industrial revolution, people started to use oil and electricity to create mass production. In the third industrial revolution, information technology was used to automate the production. Now, the fourth industrial revolution is the time of emerging technology breakthrough such as artificial intelligence (“AI”) robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing. The technology revolution having the role to advance the business of each period.

The New Age of Business: Technology Advancements and Businesses’ Efficiencies

Into the future as Industry 4.0 keeps unfolding, the revolution will have a profound effect on how businesses and sectors across the economy work. Tools like AI and machine learning have led to more workflow efficiencies. The technology let computers that connected to one another to ultimately make decisions without human involvement through a combination of cyber-physical systems, the Internet of Things, and the Internet of Systems. It can instruct maintenance, performance, as well as analyse data to identify patterns and insights for business process which is impossible for a human to do in a reasonable timeframe. For example to identify problems and opportunities that need immediate attention which could alert the possibilities of failure and prevent costly catastrophic accidents. Another example is to optimize logistics and supply chains, like what Amazon has implemented. A connected system can proactively adjust to the new information and modify manufacturing priorities. As a result of the support of smart machines that keep getting smarter as they get access to more data, the businesses could make wise, efficient, and productive choices that enhance the quality and the quantity of their products. Ultimately, it’s the network of these machines that are digitally connected with one another and create as well as share information that resulting in the true power of Industry 4.0.

The Role of Indonesian Law in Welcoming The New Age of Business

The entry of the fourth industrial revolution around 2000 could be proven for business efficiencies and optimization in industries’ incomes i.e. contribute to economic growth. Hence, it can help reduce poverty, allow for good standards of living, increase sustainable energy sources, etc - if navigated wisely. Like the industrial revolutions preceding it, the shifts in power brought about by such advanced systems also bring a few major challenges such as security, privacy and community. Proper regulation, adaptability of the law and good governance need to be the crux of the approach to handling Industry 4.0.

The rapid development of technology industry that mostly outpaces the forming of legal norms i.e. the absence of proper regulations could create many loopholes for economic players and/or stakeholders to conduct breaches and offenses during business-related activities. This is what exactly happened to Indonesia when Gojek (a start-up raid hailing company) became trend in 2015. There were no law that regulates the operation of Online Motorcycle Taxi (Ojek) back then until the issuance of Minister of Transportation Regulation No. 12 of 2019 on User Safety Protection for Motorcycles Utilized in the Public Interest. Reflect on the case, responsiveness towards such development is highly-expected from legislators in forming new laws following to the growth of technology.

Other than the operation matter, data is also a core issue in the technology industry. Currently, Indonesia, already have few regulations which specifically regulate electronical and business-related activities which are Law No. 11 of 2008 on Electronic Information and Transactions as amended by Law No. 19 of 2016 ("UU ITE") and Government Regulation No. 82 of 2012 on the Implementation of Electronic Transactions and Systems (“PP PSTE”) that has been revised by Government Regulation No. 71 of 2019. Other than the active regulations, the House of Representative also announced its priority bill list through National Legislation Program (“Prolegnas”) 2020-2024. Apparently, two out of 50 bills are about Cyber Security and Personal Data Protection which hopefully will help the society to overcome the challenges from the advancement of Industry 4.0.

Not only affecting business, the tech revolution also give impact to the law enforcement in Indonesia. Currently, Indonesia introduce a new court mechanism that is called electronic court or e-court. E-court in Indonesia is exist by law through Supreme Court Regulation No. 3 of 2018 on the Administration of Case and Legal Proceedings in Court via Electronic Means and Supreme Court Decree No. 122/KMA/SK/VII/2018 on Technicalities Guidance of Administration of Case and Legal Proceedings in Court via Electronic Means. The existence of e-court is aimed for the efficiency and effectiveness of court proceedings that can be done remotely and any time through its systems: Electronic Filling or E-filling for case registrations, Electronic Payment or e-payment for court fee payment, Electronic Summons or E-Summons for asking the parties’ presence in Court and Electronic Litigation or E-Litigation for court proceedings via electronic. To be noted, the implementation of E-court itself is still in progress. But the existence of e-court could be a good sign that technological advancement could actually affect and help the optimization of various sectors one of which is law sector. Hence, today Indonesia not only facing the challenges of Industry 4.0 in business sectors but also an efficiency bureaucracy of law enforcement with the help of technology.

Lastly, it should not be forgotten about the importance of human actors behind those comprehensive systems. Industry 4.0 requires high-skilled individuals to take on new work responsibilities and fulfil growing demands, the skillset to understand, manage, and embrace changes. The jobs done today might be drastically different in the near future, that’s why human needs to adapt with the massive growth of technology. Just another proof that welcoming Industry 4.0 and overcoming its challenges will require global cooperation and a common view of the role of technology in rearranging economic, social, cultural livelihood.

LID Advisory is a publication prepared by Launcher.id. It is intended to inform in general topics covered only, and should not be treated as a legal advice or relied upon when making business activities or investment decisions. Should you have any inquiries on the matters contained in LID Advisory, or other comments generally, please contact us at contact@launcher.id.