Myanmar and Industry 4.0 are not often used in the same sentence. Myanmar is better known for its infrastructure gaps and one could argue the country is far away from a transition towards Industry 4.0. A recent survey, conducted by AHK Myanmar, Myanmar Survey Research and Roland Berger with small & medium-sized manufacturing companies, reveals that only 8% of survey respondents have heard of Industry 4.0. However, the survey also shows a high level of willingness across Myanmar companies to automate their business activities. Since Myanmar has hardly participated in the industrialization of the past decades, there is vast potential for the country to leapfrog older technologies and shift immediately towards an era of automation and Industry 4.0.

As of today, various examples can be observed in Myanmar, which drive further digitization and automation in different industries. The telecommunication and financial sector have proven that leapfrogging is possible in a country like Myanmar. However, Industry 4.0 is about more than digitizing specific services. It entails the interconnectivity of a supply chain, even across industries, by using technology and data. Industry 4.0 offers vast opportunities on a corporate and on a macro-economic level. Roland Berger estimates that a typical manufacturing company, such as an automotive supplier, which today has an average profitability rate of 6%, can more than double its profitability to 13%, mainly by higher plant utilization. On a macroeconomic level, a positive net effect in job creation can be expected. While an increase in automation leads to a reduction in the employability of low skilled workers, it increases the demand for medium to high skilled staff and attracts more foreign direct investments.

These benefits are also seen by the companies in Myanmar, which are planning to continue to invest in the digitization and automation of their production facilities.

However, in order to reap the benefits of Industry 4.0, Myanmar needs to overcome five main barriers in the upcoming years:

• Lack of education – In Myanmar, the level of technical skills particularly regarding digital manufacturing is still quite low, which is mostly due to the fact that the country's education system and its business sector were largely isolated from global links and new R&D for decades. Compared to industrialized countries, Myanmar is in a particularly unique situation since it has a young, “digital native” population that is eager to learn and apply new skills. This is the ideal ground to promote training in the areas of Industry 4.0 and not only leapfrog factory design but also peoples' skills. Myanmar could be at the forefront of developing and training entirely new professions e.g. robotics mechanic. German companies are already cooperating with Myanmar education institutes in this field: The new School of Industrial Training and Education (SITE) in Yangonhas partnered with Festo Didactic, Siemens and Bosch to bring Industry 4.0 to the classrooms and teach cutting-edge technologies with the latest German machines and software solutions.
• Lack of financing – A key obstacle to leveraging and using Myanmar’s leapfrogging potentials is the lack of funding, as 56% of our survey respondents indicated. While the NLD government has improved the share of tax collection since it took office three years ago, public funding for major investments (such as smart infrastructure) is still scarce. Most public infrastructure investments are funded through ODA loans. For the private sector, access to finance has slowly been increasing over the past years but project finance for machinery purchases is still nascent. Banks have started to offer machine leasing/hire purchase and to accept movable collateral, but this needs to be expanded much further. To adequately support Industry 4.0 through the financial sector, more insurance products and risk-weighted loans, which are more flexible in terms of pricing (interest rates), maturity and collateral, are needed.
• Lack of infrastructure – With an overall electrification rate of ~42% and ~21% in rural areas, Myanmar still lacks basic infrastructure. Manufacturers often rely on large scale generators to keep up their production during power outages. Although significant progress has been made in the infrastructure of broadband and setting up a dense network of 3G and 4G telecommunication towers, Myanmar has not yet pushed the concept of 5G as fast as neighboring countries.
• Lack of industry standards and collaboration – To date, an increase in automation and approaches on how to tackle Industry 4.0 have mainly been discussed in a fragmented manner. There is no central platform where key stakeholders can come together. But to foster interconnectivity within a supply chain, and to promote automating manufacturing companies, it is essential that the private sector, academic sector and public sector work together.
• Lack of knowledge about Industry 4.0 – The survey revealed that only few company owners and executives are familiar with the topic of Industry 4.0. Although there is a high willingness to digitize and further automate production processes, it will take time to apply Industry 4.0 in a broader context. However, an Industry 4.0 Council with representatives from government, private companies and academic institutions can help emphasize the importance of the concept and foster automatization in Myanmar companies

If those barriers can be overcome, Myanmar has a unique opportunity to leapfrog across industries. However, it is important for all stakeholders to act NOW, act TOGETHER and act SELECTIVELY. Other countries in Southeast Asia (e.g., Thailand or Malaysia) have shown how Industry 4.0 can increase efficiency for companies and convenience for end-customers. Malaysia, for instance, has used a multi-layered approach, to foster automatization and digitization in the country. By following a clear roadmap and looking at successful neighboring countries, Myanmar can develop its own national Industry 4.0 strategy to further drive prosperity.