Type of contribution:

Editorial
Research Paper Mechanical Engineering
Case Study for Society and Industry
Review Paper Vol. 4, No. 3 (2024) pp 455-489
Scientific Data Special Issue on Technology Update 2024
Report of Tech. Application https://doi.org/10.31603/mesi.12177

Challenges of implementing Industry 4.0 in developed and

developing countries: A comparative review
Mochamad Denny Surindra1, Wahyu Caesarendra2,3*, Grzegorz Królczyk3,
Munish Kumar Gupta3
1 State Polytechnic of Semarang, Jalan Prof. Sudarto, Semarang 50275, Indonesia
2 Department of Mechanical Engineering, Faculty of Engineering and Science, Curtin University Malaysia, Lot
13149, Block 5 Kuala Baram Land District, CDT 250, 98009 Miri, Sarawak, Malaysia
3 Faculty of Mechanical Engineering, Opole University of Technology, 76 Proszkowska St., 45-758 Opole, Poland
w.caesarendra@curtin.edu.my

This article Highlights:

contributes to:  Indonesia is striving to adopt Industry
4.0 despite challenges like high costs
and uncertain returns.
 The study compares Industry 4.0
readiness between developed countries
(Germany, Singapore) and developing
countries (China, Malaysia, Indonesia).
 INDI 4.0 reveals that Indonesia’s
industries are at a moderate level of
readiness in technology and operations.

Abstract
Indonesia could transform the manufacturing industry by making Indonesia 4.0, despite the many
uncertainties of implementing Industry 4.0 due to high investment costs and unclear returns.
Therefore, looking at neighboring countries such as Germany, the country that initiated Industry
4.0, and China, the country taking the lead in implementing Industry 4.0, it is considered essential
for the manufacturing industry in Indonesia to understand how towards the revolution and identify
the development of the Industry 4.0 program. Germany is confident in its capabilities in the field
of manufacturing technology. It makes the main challenge in carrying out Industry 4.0 'Investment
Capital, Employee Qualifications, and Security of Data Transfer and Legislation'. On the other hand,
China faces significant challenges in Manufacturing Capabilities, Research and Development (R&D),
and Human Capital. To adopt the transformation technology and self-assess the internal resources,
Indonesia created a tool, namely the Indonesia Industry 4.0 Readiness Index (INDI 4.0). This article
Article info presents a comparative review of the Industry 4.0 readiness index from the perspective of
Submitted: Germany and Singapore as a developed country compared to developing countries such as China,
2024-08-25 Malaysia, and Indonesia. This study aims to provide awareness related to the readiness index,
Revised: which can be used to inform industries whether they are suitable for applying Industry 4.0 and how
2024-12-26 to measure whether their employees are capable of it. In general, the INDI 4.0 measuring
Accepted: instrument shows the readiness of companies in Indonesia, and according to the recent
2024-12-28 assessment, the industries in Indonesia are at a moderate level, especially in the field of technology
application and operation.
Keywords: Industry 4.0; Intelligent manufacturing; Readiness index

This work is licensed under 1. Introduction

a Creative Commons
Attribution-NonCommercial 4.0 The Industry 4.0 revolution represents an unstoppable global movement with profound
International License implications for businesses, economies, and governmental operations. This transformative
industrial shift has catalyzed a cascade of political upheavals, social movements, cultural shifts, and
Publisher
economic fluctuations projected to unfold throughout the 21st century [1]. The advent of the
Universitas Muhammadiyah
Magelang fourth industrial revolution has particularly impacted the industrial sector, leveraging the full
potential of information and communication technology [2]. These technologies have been

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 Mochamad Denny Surindra et al.

integrated into the production process and across the industrial value chain to enhance efficiency,
productivity, flexibility, and product quality. Consequently, mastering technology, the primary
driver of competitiveness in the Industry 4.0 era, becomes imperative, especially within national
industrial sectors [3].
The aftermath of the third industrial revolution saw the widespread proliferation of digital
technology. In contrast, the fourth industrial revolution is characterized by the convergence of
software, biological, and physical innovations [4]. Key technologies driving this revolution include
cyber-physical systems (CPS), big data, artificial intelligence (AI), cloud computing, digital twin, and
the Internet of Things (IoT) [5]–[12]. This technological advancement has reshaped traditional
industrial engineering strategies, paving the way for smart manufacturing characterized by
intelligent sensing, networking, and identification capabilities [13]. As a result, complex
manufacturing management can be monitored and synchronized in an integrated manner,
enabling real-time visibility and process optimization [14], [15]. Moreover, Industry 4.0, marked by
digitalization and hyper-connectivity, is revolutionizing production processes and manufacturing
management practices, driving significant changes across industries [16], [17].
Currently, the manufacturing industry is profoundly influenced by Industry 4.0 management,
as evidenced by the proliferation of intelligent services, the emergence of simple products based
on smart technology, and the integration of the Internet of Things (IoT) into intelligent production
sites. Lin et al. [18] have categorized published papers on Industry 4.0 into three main sectors. The
first sector focuses on analyzing the impact of the fourth industrial revolution on production
conditions, including investigations into the potential influence of technological innovation
disruptions on social responses [19]. The second sector emphasizes information provision,
architectural configuration, and system reconstruction [20]–[22]. The third sector examines the
communication perspective of Industry 4.0, considering its impact on human resources, such as
competency levels and education [23], [24]. However, recent research highlights a dearth of
empirical studies on technology applications in intelligent manufacturing [25], [26].
While manufacturing operations based on sophisticated systems have been implemented
globally, including in Indonesia, there remains room for improvement to align with Industry 4.0
standards [27]–[29]. The anticipated benefits of Industry 4.0 adoption have spurred extensive
research, encompassing government reports, academic investigations, and practitioner studies
[30]–[32]. Industry experts assert that fourth industrial revolution technologies enhance various
aspects of organizational structure, including business model development, service and product
innovation, and manufacturing management expansion [33]–[37]. This transformation
fundamentally alters how employees work and organize their activities [38], [39]. Despite the
emphasis on knowledge-based approaches in Industry 4.0, the role of human workers in direct
manufacturing production and problem-solving remains essential for enhancing operational
performance [40].
Many researchers have extensively documented the evolution of manufacturing companies
towards Industry 4.0, particularly in developed countries. However, the fourth industrial revolution
has also permeated and impacted local manufacturing firms in developing nations. Crucially, the
success of Industry 4.0 hinges on the rapid adaptation of its technologies, both horizontally and
vertically, within company management structures worldwide. Vertical integration involves
connecting automation components, such as sensors and motors, with systems like Supervisory
Control and Data Acquisition (SCADA) and Enterprise Resource Planning (ERP). Conversely,
horizontal integration links various value chain sectors, including raw material supplies,
procurement, maintenance, operation, and distribution. This comprehensive integration approach
underscores the essence of Industry 4.0 implementation, which aims to connect all elements
involved in the manufacturing process, including individuals, tools, and data (as illustrated in Figure
1).
The pervasive integration of Industry 4.0 and notable digital progressions are set to overhaul
corporate tactics and transform workforce dynamics across multiple industries. To maintain
competitiveness, manufacturing entities must emphasize innovation. Nonetheless, firms face
assorted obstacles, contingent upon the socio-economic landscapes of their operating countries,
when deploying technology and Industry 4.0 endeavors. Hence, conducting a thorough global
assessment of the fourth industrial revolution's deployment, particularly in developing nations, is
crucial.

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 Mochamad Denny Surindra et al.

Figure 1.
Connectivity in Industry
4.0 systems

The focus on implementing Industry 4.0 in developing countries was emphasized at the 2019
World Economic Forum (WEF). Given the concentration of manufacturing industries in these
nations, addressing Industry 4.0 implementation is a collective effort. Originating from the German
Government's concept of a smart factory in 2011, Industry 4.0 signifies the adoption of cutting-
edge technology to enhance productivity, efficiency, and product quality through connectivity and
digitalization.
In 2018, Indonesia, a developing nation, formally embraced Industry 4.0 under the decree of
its President. The Making Indonesia 4.0 roadmap, introduced to commemorate this proclamation,
aims to elevate Indonesia to the top 10 global economies by 2030. Indonesia's active participation
as the official country partner of the Hannover Messe 2011: Digital Edition, Indonesia
demonstrates its commitment to Industry 4.0. The Ministry of Industry meticulously selected seven
sectors, including food and beverage, textile and clothing, automotive, chemical, electronic,
pharmaceutical, and medical devices, to execute Making Indonesia 4.0 [30].
The fourth industrial revolution promises to propel Indonesian manufacturing into the digital
sphere, necessitating a robust ecosystem of infrastructure, innovation, and policy frameworks.
While Industrial Revolution 4.0 has the potential to reshape Indonesian manufacturing [41],
uncertainties persist regarding Industry 4.0 applications, primarily due to high investment costs
and unclear returns [42]. Thus, it's vital for Indonesia's manufacturing sector to examine
neighbouring countries' experiences with Industry 4.0 to navigate this revolution effectively and
enhance readiness across all industry elements. This paper aims to elucidate the strategies adopted
by various countries to confront the challenges posed by the fourth industrial revolution and assess
Indonesia's preparedness. It's structured as follows: Part 2 provides a brief overview of Industry
4.0, Part 3 outlines several countries' activities in addressing Industry 4.0 challenges, and Part 4
delves into the strategies employed by the Indonesian Government in adopting Industry 4.0.
Finally, Part 5 presents conclusions through country comparisons, contributions, and
recommendations for addressing Industry 4.0 challenges.
This paper presents a comparative review of challenges in implementing Industry 4.0 in
developed countries and developing countries. The developed countries are represented by
Germany, China, and Singapore, while the developing countries are represented by Malaysia and
Indonesia. The category of developed and developing countries in this paper is based on the
economic growth profile and the year when the country announced the government regulation
and started implementing Industry 4.0.
This review article follows a structured progression. Section 2 presents research methodology
which adopted in current study. Section 3 provides a brief description of Industry 4.0. Section 4
presents development of Industrial 4.0 in selected developed and developing countries. The
challenges faced in each developed and developing country is also described. In Section 5, focussed
on the development of Industrial 4.0 in Indonesia as a developing country. Section 6 presents
further comparison study, Government regulation and readiness assessment of Industrial 4.0.
Finally, Section 7 presents the conclusions of the review study.

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2. Research Methodology
All academic research endeavours, regardless of field, begin with constructing a foundation
on and making connections to prior knowledge. For this reason, educators must prioritise getting
this right. But the complexity of this endeavour is growing. The business research community is
producing new knowledge at a dizzying rate, yet that knowledge is scattered and doesn't adhere
to any one discipline. Because of this, it is challenging to stay abreast of cutting-edge research,
remain at the vanguard of a field, and evaluate the body of evidence in a certain field. That's why
it's more important than ever to conduct a literature review as part of your research. Collecting
and summarising past research in an organised fashion is what a literature review is all about [43].
The advancement of information and the facilitation of theory building are both bolstered by a
review that is both successful and well-conducted as a research procedure. The effectiveness of a
literature review lies in its ability to answer research questions in a way that no single study can.
Providing an overview of regions where research is scattered and cross-disciplinary is another
useful application. A comprehensive literature review is also an important part of developing
theoretical frameworks and conceptual models since it allows researchers to synthesise study
findings at a meta-level to demonstrate evidence and identify gaps in knowledge. However,
conventional approaches to literature description and representation frequently lack rigour and
are not systematic in nature. As a result, it's hard to tell what the accumulated research is trying
to prove or suggest. This creates a substantial possibility that researchers construct their work on
faulty premises. Research issues arise when scientists cherry-pick the evidence they use, neglecting
findings that go counter to their hypotheses. Moreover, there are often concerns about what
makes a good contribution even when the process of the reviews is valid [43].
Several rules for writing literature reviews already exist, as was previously indicated. Each
review style has its place and can be useful in certain situations, but it all depends on the approach
required to accomplish the review's objective. The phase of the review determines whether a
qualitative, quantitative, or mixed-method approach is appropriate. Previous research has been
critically examined here using a comprehensive literature review method. A systematic review can
be defined as a strategy for locating and evaluating studies that are relevant to a topic, as well as
a procedure for gathering and analyzing data from these studies [43]. In order to answer a specific
research question or test a specific hypothesis, a systematic review seeks to locate all available
empirical data that meet the inclusion criteria. Using explicit and systematic processes to examine
articles and all relevant evidence can help reduce bias and produce more trustworthy findings on
which to base choices. Simple procedures include:
 To what extent are analyses feasible? Statistics, such as meta-analysis, are frequently used
to combine the findings of the included research, however, this is not always the case.
 A meta-analysis is a statistical technique for comparing and contrasting the findings of
several research on the same issue in order to weigh and compare them and to detect
patterns, disagreements, or relationships.
 In a meta-analysis, results from individual studies are summarized and standardized so that
a single metric can be used to determine aggregate effect size. However, in order to
conduct a meta-analysis, the studies included must use the same statistical metrics (effect
size) to make comparisons.
Therefore, it is difficult to conduct a meta-analysis on studies that use varying research
methods. However, simple ways are straightforward to consider, and that is the approach taken
here. This includes the number of publications in journals, conferences, book chapters, etc. Apart
of introduction in Section 1 and research methodology adopted in current study presented in
Section 2, other content of this review study is illustrated in Figure 2 that include a brief description
of Industry 4.0 in Section 3, a review of Industry 4.0 in developed and developing countries
presented in Section 4, and at last is a discussion of Industry 4.0 in Indonesia that presented in
Section 5.

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Figure 2.
Flowchart of the main
content of the proposed
review study

3. Brief Description of Industry 4.0

James Watt who invented the steam engine changed the face of industry in England in the
1770s and spread all over Europe and America in the 19th-century world [44], later known as the
first industrial revolution. Previously, products were produced in family-scale workshops by a
workforce of craftsmen and their assistants. The invention of the steam engine in the first industrial
revolution as illustrated in Figure 3 required human resources to mechanize the process of mass
production in factories, which required the workers of millions of people who migrated from rural
agriculture to urban life.
The application of the Second Industrial Revolution concentrates on the mass production of
goods and manufacture. Revolution is defined as the implementation of a mass production system
using conveyors and electric power as illustrated in Figure 3. The driving factor begins in the
automotive sector, especially the car manufacturer, Ford. When the market demand for Ford's
Model T soared sharply, the company faced difficulties in fulfilling orders. With the use of this mass
production system, very large production cost efficiencies are obtained. However, the price of the
car has fallen drastically. This makes the purchasing power of the middle class increase because
many people can afford to buy their cars. This in itself will cause the mobility of goods and people
to become wider. The implementation of the mass production concept with conveyor belts was
then imitated by many other industries. Hendry Ford (the founder of the Ford car factory)
implemented the conveyor belt concept which was inspired by the production system at a
slaughterhouse in Cincinnati, where after the process of slaughter, the pig is hung on a walking
rack which makes the slaughtering process more efficient. Furthermore, breakthrough production
process innovations with mobile assembly lines were discovered by utilizing continuous electrical
energy to build a large number of standard products by organizing specific work areas and skills
while reducing unit costs. Manufacturing jobs are available in large numbers in this second
revolution, where workers get good pay and increase the welfare of economically weak people
[45].
The digital revolution often called the third industrial revolution, is strongly influenced by
computer technology, information technology, and widespread digitization [46]. Knowledge of
digital engineering has enabled the automation of production and services. The manufacturing
industry has transformed from large-scale production to mass custom modifications, a machine-
aided product manufacturing strategy that can be programmed to produce standard products with
a certain degree of flexibility in supporting assembly or finished goods.
The 3rd Industrial Revolution was marked by the integration of computer technology with
production machines as illustrated in Figure 3. This integration led to the realization of an
automation system, namely the existence of machines controlled using computers. For example,
the invention of computer numerical control (CNC) machines, industrial robots, and programmable
logic controller (PLC) systems. Broadly, the implementation of Industry 3.0 has been proven to
make the production system at the factory more efficient and increase productivity which will
affect the product quality to be more consistent/precise.

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Figure 3.
The development of the
Industrial Revolution 4.0.
Adapted from [47]

The term “Industry 4.0” was first discussed in an article written by the German authorities in
late 2011 resulting from efforts on modern technology strategies for 2020 [48]. Industry 4.0 was
first introduced by the German government in April 2013 with a focus on cyber-physical systems
(CPS) and smart factories integrated with high technologies such as data exchange in
manufacturing technology, automation systems, advanced cloud computing, Internet of Things
(IoT), 3D in printing technology, smart products, and competent human resources, as illustrated in
Figure 4 [49]. This manner of the integrated industry includes various forms currently consisting of
decentralized automated organizing capabilities, cyber-physical systems, smart factories,
advanced systems in procurement and distribution, systems of products and services to be
personalized, and obligations to the community in the form of corporate social responsibility (CSR).
Germany Trade and Investment [50], the economic development agency of the Federal Republic
of Germany, expressed the core idea of "Industry 4.0", an integrated system where the German
government provides a platform with regulations supporting becoming a smart industry. Herman
et al. [51] divide them into integrators for physical systems and essential software, integrators for
supporting branches and sectors of the economy, and integrators for supporting industry and other
industry types. This way, the downstream and upstream sector industries are monitored for
supporting data to produce final products for consumers. Ganzarain et al. [52] define "Industry
4.0" as the ability of companies to control the entire production process from raw materials to final
products with a more accurate and precise atomic system using computers and the internet.
Meanwhile, Schröder [53] defines it as a leap in digital technology in industrial processes with
modern networks that are reliable and computer-integrated.
In addition, with the implementation of Industry 4.0, it is hoped that there will be an
enhancement in the quality of the current manufacturing process that can be seen from the
economic, environmental, and social aspects. The interconnection of horizontal integration
networks in Industry 4.0 offers
new opportunities for more
efficient processes that enable
coordination between products,
materials, energy, and water flows
throughout the product life cycle.
This enables cooperation between
factories to achieve a competitive
advantage by exchanging energy,
materials, and products. For
instance, Siemens, based in
Munich, Germany, is Europe's
Figure 4. largest industrial manufacturing
The main technology company, with many branch
supporting Industry 4.0. offices worldwide. The German
Adapted from [54] tech giant is known for its best-in-

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class AI, IIoT, and edge computing solutions for the manufacturing, healthcare, transportation,
logistics, and energy and power industries. Siemens specializes in smart infrastructure (smart
factory solutions and smart buildings and networks), the Internet of Things, cybersecurity, and
digital twins. The Siemens Digital Industrial Software Platform is based on a fully digital business
model that enables 3D and 2D product lifecycle management and offers advanced robotics, cloud
connectivity, and additive manufacturing solutions.
Another opportunity from the implementation of Industry 4.0 is the reduction in the number
of product defects. This is because the implementation of Industry 4.0 based on artificial
intelligence makes each process able to optimize its ongoing processes to produce flawless
products. In addition, Industry 4.0 is also beneficial for reducing machine breakdown, reducing
machine set-up time, and reducing redundant logistics, which in the end increases company
productivity. Krolczyk et al. [55] have investigated the flow of logistics materials by optimizing the
distribution of raw materials for the manufacturing production process using the Bloch-Schmigalla
method. The investigation has resulted in potential production cost savings and improved company
performance effectiveness. In the Industry 4.0 era, it is required to carry out intelligent
optimization applied in the production process including the flow of raw materials as the main
factor in intelligent manufacturing [56].
In China, Industry 4.0 is named “Made-in-China 2025” which is comprised of three phases.
The first phase is in the period from 2015 to 2025, in this period, China targets to become a country
that has world-class manufacturing capabilities. Then in the second phase with a period of 2026 to
2035, China wants to make sure its manufacturing strength lies in an intermediate position at the
global level. Furthermore, in the third phase the period from 2036 to 2049, China aspires to have
the leading manufacturing capability which was announced when the People's Republic of China
celebrated its 100th independence [57].

4. Towards Industry 4.0 in Developed and Developing

Countries
Not surprisingly, although the concept of Industry 4.0 is still a new thing, both developed and
developing countries are ready to welcome it, of course for different reasons. For developed
countries, Industry 4.0, a term that was first coined in Germany, could be a way to restore
infrastructure competitiveness, especially for Western European countries [58]. For developing
countries, Industry 4.0 can help simplify the production supply chain, which in this case is urgently
needed to control the increasing labour costs. For example, China's 10-year plan announced in May
2015 entitled "Made in China 2025", targeted core sectors such as robotics, information
technology, and energy, to turn what is now known as a "manufacturing giant" into a
"manufacturing powerhouse world”, for this reason, China will beat the value of R & D investment
to 2.938% of the total manufacturing revenue in 2025 [59]. China refuses to be labeled as a
developed country according to the wishes of the United States, which wants it. This Bamboo
Curtain country insists on maintaining its status as a developing country recognized by the World
Trade Organization (WTO) and other international agreements. Many research reports state that
China is a developing country, such as research in the fields of digital finance [60], monetary policy
[61], industrial innovation [62], energy transition [63], and emissions trading [64].

4.1. Germany in Industry 4.0

One of the world's leading industrial countries, Germany launched a strategic plan "Industry
4.0" in 2013 [65], [66]. Several important industries in Germany with high brand prestige, such as
Volkswagen, BMW, and SAP, have implemented innovative strategies that have led them to find
the dignity of the company's identity. The fourth Industrial Revolution is an example of the efforts
of German manufacturers to be able to compete in the new era of the manufacturing industry
whose core activities are integrity [50], [67], digitization-based manufacturing [68], CPS [69],
artificial intelligence (AI) and internet of things (IoT) [70]–[72].
Renowned worldwide, German products are lauded for their design and quality. Seven
companies constitute a significant portion of Germany's GDP and are major profit generators.
Notably, three prominent automakers, including Volkswagen, Germany's largest car company,
Daimler, the second-largest, and BMW, the third-largest, dominate the global market. Notably,
General Motors Co. oversees Volkswagen's operations in China, the world's largest auto sales
market. German brands like BMW and Mercedes are esteemed luxury car manufacturers globally

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[64], [69]. In the field of electronics and industrial automation, Germany is very strong and
dominates the world market through the Siemens brand. Siemens is a German corporation with
main businesses in the energy, manufacturing, infrastructure, and healthcare industries. Another
world-class company, BASF is a chemical company in Germany that has an annual sales profit of
more than $80 billion. The main areas of BASF's corporate enterprise are chemistry, agriculture,
and other industrial fields [68], [73]. Germany is also dominant in the financial sector, with the
establishment of Deutsche Bank, a large bank spread across Europe. Another financial sector in the
insurance sector, Germany has the Allianz financial group, even though the company does business
in the world market with a business focus on financial services [56].
There are twelve facts about Germany’s Industrie 4.0 policy initiative as presented by Digital
Transformation Monitor [69]. Among all facts, the most interesting thing is the policy lever(s)
which stated that the policy made by the government related to industrial 4.0 is a publicly backed
and steered initiative that is implemented by the stakeholders. Figure 5 shows selected facts for
Germany’s Industrie 4.0 policy initiative that could be useful information for developing countries.

The policy is supported and steered by the public

and is implemented by the stakeholders.

The funding source is mixed. It is from private

financial and in-kind contributors or public
investors.
The targets are the manufacturers, small and
medium enterprises as well as the policy-makers.
Figure 5.
Selected items of fact The idea was proposed and developed by
box for Germany’s
researchers based on their experience in
Industrial 4.0. Adapted
production and pro-active unions.
from [74]

4.1.1. German Government Strategy for INDUSTRY 4.0 Transformation

Advanced information and communication technologies have developed rapidly and initiated
real innovations, in fields such as industrial control engineering, cloud computing, big data, and
high mobility internet. These technologies drive major changes in production processes and grow
the manufacturing industry. Although Germany is blessed with great manufacturing industrial
machinery and equipment used throughout the world, especially the embedded equipment to
control systems, the manufacturing industry faces some threatening challenges [71]. Müller, et al
[75] have investigated and analysed the influence of the Industrial Revolution 4.0 which drives
changes in the style of MSMEs (small and medium enterprises) in the manufacturing business and
the importance of the role of MSMEs because they play a major role in maintaining and developing
significant industrial values in Germany. In addition, the development of supporting equipment
and machinery is very competitive, not only America is aggressively revitalizing the manufacturing
industry, but also Asia is producing equipment and machinery that strictly follows global progress
and undermines German brand manufacturing plants. In the area of internet technology and
software, this could be a weak point for the German manufacturing industry. The German
government and entrepreneurs are aware of these relative weaknesses, so Germany
conceptualizes its own INDUSTRIE 4.0 revolution strategy to remain in a position of excellence as
a global manufacturing equipment company, taking advantage of the position of the leading
embedded system supplier and always ready to meet the challenges of the new industrial
revolution era and study the influence of Industry 4.0 on changes in the behaviour of SMEs in
running their business. Kiel et al. [76] show that for the manufacturing industry to continue to
develop sustainably, the Internet of Things (IoT) requires the support of the Triple Bottom Line
(TBL) which is already firmly rooted in three sectors consisting of big data and broad information,
well known to the public and technically integrated. Furthermore, based on the TBL concept, they
conclude that the main point is related to the creation of a sustainable manufacturing industry
spirit, where IoT has a strong influence on social, ecological, and especially economic behaviour.
Encouraged by the German Academy of Engineering and other academics, the Fraunhofer
Association, one of the major "Siemens" companies and other manufacturing industries, the
German Federal Ministry of Education and Research, and the German Federal Ministry of Economy

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and Technology decided on INDUSTRIE 4.0 to be one of the 10 projects Leading Futures Education
and Leading Research in 2020 [3]. The agenda of important projects with projections into the future
is a concentrated part of the policy of leading research and breakthrough innovations and crucial
goals will be achieved within a period of 10-15 years. The German government with the House of
Representatives has budgeted funds of up to EUR 200 million to identify 10 flagship projects and
strategic steps to realize INDUSTRIE 4.0 in the 2020 High Technology Strategic Action Plan [77].
The strategic steps to achieve the goals of important future-looking projects have been
synchronized between relevant German ministries and departments of the German federal
government. Project design planning involves stakeholders from academia and manufacturing
industry players to determine tactical steps. Crucial factors such as complementary cooperation
and intensive consultation from both stakeholders will determine the success of strategic high-
tech businesses. Furthermore, Verband Deutscher Maschinen-und Anlagenbau, VDMA or German
Mechanical Engineering Industry Association launched the INDUSTRIE 4.0 platform. One of the
largest technical-scientific societies in Europe, TRIE or e.V.Verband der Elektrotechnik, Elektronik
und Informationstechnik has published online the first German standardization roadmap for
Industry 4.0. Based on the conclusion of the INDUSTRIE 4.0 preparatory group in 2013 which was
tasked with implementing the INDUSTRIE 4.0 revolution plan to ensure Germany's superiority in
the manufacturing industry competition, the German government has the following strategy:
expanding the network, focusing only on two main themes, achieving integration of three fields
and eight the main sector of development throughout Germany [3].
The INDUSTRIE 4.0 Architectural Model reference, RAMI 4.0 [78], provides an overview of the
three-dimensional coordinate system that represents the influential elements to support
INDUSTRIE 4.0. With this method, complex and interrelated problems can be clustered into small
and simple cases. German government appoints leaders in the executive sector for INDUSTRIE 4.0,
the German Ministry of Economic Affairs, and research institutes with the main task of developing
the standardization of INDUSTRIE 4.0. The first strategic step in November 2015, Germany
announced the second version of RAMI4.0 as the reference standard for achieving INDUSTRIE 4.0
for all institutes in Germany all these developments became important reports for the
International Electronics Committee, and Germany aggressively promoted digital products as a
standard and encourage coordinated execution. The second step was the development of the
German roadmap 'standardization of INDUSTRIE 4.0 version 2', in addition, at the same time, an
illustration map demonstrating the implementation of INDUSTRIE 4.0 was announced and
succeeded in capturing 202 projects implementing INDUSTRIE 4.0 [79].
Changing geopolitical conditions, climate change and the global crisis in Europe pose
significant challenges for companies in Germany. For example, industry must be able to react to
disruptions to supply chains or energy supplies due to Russia's war with Ukraine. In addition, the
trading system in Europe is tightening emission reduction regulations to increase economic
sustainability. Germany initiated the Manufacturing-X initiative, which aims to carry out digital and
ecological transformation towards a sustainable data network in the industry for multilateral data
exchange. However, individual companies or trade associations cannot implement Manufacturing-
X alone. Manufacturing-X is more than the sum of many individual projects. This initiative creates
a broad alliance between companies, associations, academia, and politics. They actively shape
digital data ecosystems across industries as a public-private innovation partnership [80].

4.1.2. Challenges Facing Germany Toward Industry 4.0

Industry 4.0 creates a manufacturing industry with a strong foundation to reach digital
platforms and strengthen the intelligence of its entire supply network. Manufacturing digitization
seeks to integrate digital technology with existing manufacturing processes, which emphasizes
planning, analysis, and reorganizing processes and products with the help of advanced and
integrated information technology to meet customer requirements. The commitment to maintain
strong cooperative relationships between suppliers, producers, and customers is the main capital,
to achieve the goal of the industrial revolution [81].
Research conducted by Geissbauer et al [82] reveals that investment is a serious challenge to
implement the revitalization of Industry 4.0. While experts can measure the required investment
costs, in contrast, they have difficulty projecting profits from the investment results. Both of these
reasons were reported as formidable challenges faced by the surveyed companies, as reflected in
the report by Geissbauer et al [82] where 46 percent said the size of the investment and the
difficulty of predicting earnings. Most of the companies that took part in the survey did not carry
out a plan that was specifically applied to deal with Industry 4.0, so they did not expand their

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investment. Company management is aware of the declaration of the industrial transformation

movement in Germany, but they seem to be taking a wait-and-see attitude from other companies
that have adopted Industry 4.0 before deciding to invest their capital.
The second challenge faced by companies to apply Industry 4.0 is the ability of human
resources due to changes in worker qualifications which are labor requirements in the industrial
revolution era. Meanwhile, in terms of regulatory standards, there are no globally or regionally
accepted standards to implement these regulations. The third challenge is related to data transfer
security and legal regulations that do not support the security of data owners and data users,
especially for external purposes, so the development of technology and regulations is very
ambiguous. In addition, there are many questions related to Internet technology that make
companies and workers feel safe and comfortable, including data security. Frère et al. [83] analyzed
the development of Industry 4.0 in Germany and found that many companies lack support from
management and are not a top priority for running Industry 4.0.
a. Challenge in investment capital
The fourth Industrial Revolution involved huge investment capital with the risk of capital loss
not being returned [84] because the rapid transformation of technological evolution invested high
risk [3], [85]. Birkel et al. [86] have presented a large and unclear investment cost in terms of the
payback period to adopt Industry 4.0, on the other hand, a manager must have the courage to
invest, especially in SMEs. In addition, financial problems are a big challenge in implementing the
fourth industrial revolution, especially for financing advanced infrastructure development and
sustainable innovation breakthroughs [87]. Some researchers such as Kagermann et al. [3],
Calabrese et al. [88], Müller et al. [89], Schneider [85], and Birkel et al. [86] found and highlighted
the lack of internal capacity for financial capital resources causing companies to face problems with
external investment capital which further exacerbated the situation.
The reorganization of all business capabilities [90] and the application of potential resources
[91] to adopt the Industrial 4.0 technological revolution offer benefits, at least a low cost of capital
when compared to significantly increased revenues. Many companies are reluctant to improve by
introducing Industry 4.0 technology and do not plan to conduct research, feasibility studies, and
dig up information because they have not received concrete evidence regarding their advantages
or disadvantages [43], [75], [92], may argue that the company's operations are running smoothly
without the front transformation of the industrial revolution and do not require investment
towards Industry 4.0 [86], [93]–[95].
According to the survey carried out by Statista Research Department [96] in Germany in 2023
among 364 respondents, the high investment cost is the major challenge in the application of
Industri 4.0 in their company. The second and third challenges are the demands of data protection
regulations and the lack of specialists. A detail of the survey results is presented in Figure 6.

Figure 6.
Challenges encountered
regarding the Industry
4.0 application in
Germanies companies.
Adapted from [96]

b. Challenge in employee qualification

Human resources are the main obstacle in efforts to carry out the fourth industrial revolution
because they are constrained by the ability to deal with cultural and technical changes [86], [93].
Therefore, all members of the organization must maintain a culture of learning and adapt quickly

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to improve the technology so that the team is ready to face the industrial revolution. However,
many employees from manager level to permanent workers do not want to change their habits of
work strategies and main production tasks [90], and usually for many reasons resist changes to
new systems and technologies [97]. Several reasons revealed that advances in technology,
especially information technology, have disrupted their privacy, including confidential personal
data about expenses, financial arrangements, household secrets, and information on health
problems and employees are worried that Industry 4.0 technology may always monitor their
movements and make them uncomfortable in their working [98]. The Industry 4.0 era will provide
opportunities for creative and dedicated employees to become pillars of the company [99] because
the effects arising from the application of this technology require the ability of personnel to
innovate continuously [100]. Certainly, creative innovation breakthroughs make it possible to
answer customer needs [101]. Companies do not provide knowledge and skills [86] while
implementing the fourth industrial revolution requires new knowledge [102], [103] and employees
with the skills to manage the entry of information with production processes, and the ability to
work together to find solutions [99], [104]. Therefore, the lack of employee skills is the main
challenge facing the Industrial Revolution 4.0 [105]–[107]. Furthermore, the collaboration of all
employees from various divisions through a guided interconnection network is the most important
requirement for adopting Industry 4.0 [87], [92]. Several researchers have also proven that
employees with various skills and different levels of ability can support improving company
performance [108].
c. Challenge in data transfer security and legal regulation
Innovative breakthrough legal issues to realize the fourth industrial revolution need to face
legal regulations. New manufacturing production technologies and processes are examined by
legal analysis based on applicable regulations and investigated for their legal basis. Technology has
developed and is widely used in society, while the law protecting it came too late. As a result,
adjustments to legal aspects are really difficult to apply, especially for the implementation of
Industry 4.0 because the Cyber-Physical System (CPS) transmits data between companies and
supply chains globally, which can cause various technical and legal problems that interfere with
each other between companies, employees and customers. For example, handling data transfers
where the use and ownership of corporate or personal data for internal, and external purposes do
not have an integrated and holistic legal basis. Supposedly, legal regulations should not limit a
person's human rights and freedoms, for example, an employee employment contract with a long
duration and detrimental to one of the parties, therefore, a clear and comprehensive legal contract
design is needed [83].
Manufacturing production plants undergo a complex and long process of becoming smart
factories based on Industry 4.0 and are complicated by the problem of the unclear legal basis for
ownership and responsibility, personal data, and intellectual property protection [86]. In addition,
on an international scope, regulations and laws apply in different countries causing the fourth
industrial revolution to experience possible vulnerabilities [109]. Therefore, regulatory laws are
still urgently needed to regulate various matters such as regulations to cover bilateral and
multilateral company cooperation and trade, employee health, work area safety, and length of
working hours [3], [97]. Furthermore, security certainty in using and sharing personal or company
information data against violations of the law is a special challenge in the legal area of Information
and Transaction Electronic, ITE [92].
In addition, Table 1 contains a list of papers that express the opinions or empirical conclusions
of several researchers regarding the challenges of Investment Capital, Employee Qualification, and
Data Transfer Security and Legal Regulations.

Table 1. Challenge field Supporting literature

List of literature challenges Investment capital Max et al, 2021 [110]; Stentoft et al, 2020 [95]; Raj et al, 2020 [90]; Galati et al,
Industry 4.0 in German (last 2019 [111]; Müller et al, 2018 [89]
five years)
Employee qualification Glitz et al, 2021 [112]; Eisebith et al, 2021 [113]; Guzmán et al, 2020 [114];
Alcácer et al, 2019 [115]; Küsters et al, 2017 [116]
Data transfer security Mirtsch et al, 2021 [117]; Nakagawa et al, 2021 [118]; Breda at al, 2020 [119];
and legal regulation Horváth et al, 2019 [93]; Hentschel et al, 2018 [120]

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4.2. Made in China 2025: Industry 4.0 in China

China's economic reforms aimed to lift the Chinese population out of poverty began in 1978.
The results of these reforms were successful in changing the welfare of the Chinese people. China's
manufacturing development entered a new era after the development of the economic sector
lasted for 30 years. Like the sides of a coin, challenges and opportunities arise with various
environmental and resource constraints, increasing material and labour costs, and increasing
demands for environmental responsibility. On the other hand, foreign investors poured direct
investment into local companies while export growth slowed. Thus, group discussions to plan
manufacturing strategies are inevitable. The industrial revolution “Industrie 4.0” in China is
illustrated in Figure 7.
Countries around the
world have passed legislation
to promote smart
manufacturing to attract
investors, and are making
every effort to transform and
improve their manufacturing
industries. Chinese is no
exception, a country with big
ambitions to become the
number one manufacturing
country. The Chinese
government has announced
the strategic plan "Made-in-
China 2025” as a reaction to
Figure 7. the global industrialization
Industry 4.0 in China movement and Germany's
[121]
modern technology strategy
with 'Industry 4.0'. “Made-in-China 2025” is China's version of Industry 4.0 which was released in
May 2015. This plan sets the main points for economic development for 10 years from 2016 to
2025. The details of the plan are printed in a blueprint developed by China's Ministry of Science &
Technology (MOST), National Development and Reform Commission (NDRC) with additional advice
from the Ministry of Industry and Information Technology (MIIT), and other related institutions
[122].
Made-in-China 2025 targeted several sectors such as electrical equipment technology,
farming machines, development of new materials, energy-saving methods, and new energy
vehicles technology, numerical control tools and robotics, information technology, aerospace
engineering equipment, railway equipment, ocean engineering equipment, high-end vessels, and
medical and clinical devices as presented in Figure 8. Among all targets, robotics, information
technology, and clean energy are centralized targets [123].

Figure 8.
Target sectors of Made-
in-China 2025. Adapted
from [123]

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4.2.1. China Government Strategy for Transformation Industry 4.0

The strategic plan “Made-in-China 2025” is a reference roadmap for the development of
China's revitalisation of Industry 4.0 over 10 years. China intends to realize the industrial revolution
from an employee-intensive to a technology-intensive manufacturing industry and produce
breakthroughs at high speed. The “Made-in-China 2025” strategic plan is the first section of the
“three-phase” master plan, to guide China's goal of becoming the world's manufacturing
parameter center from garage-class workshops to large-scale production in today's world-class
enterprises. The focus areas in China's plan consist of improving the quality of Chinese products,
producing global Chinese brands, developing state-of-the-art modern technology based on solid
manufacturing capabilities, discovering new materials, and being able to manufacture parts and
key components from own machine production. With the Industry 4.0 revolution, the Chinese
government prioritizes ten industries including high-tech machinery and automation, advanced
information technology, maritime support equipment and high-tech shipbuilding, aerospace, and
aviation equipment, unprecedented new materials, spare parts and rail support, energy-efficient
vehicles, electrical equipment and parts, agricultural machinery and equipment, and bio-medical
equipment [56].
The Chinese version of Industry 4.0 under the name Made-in-China 2025 contains three
revitalization phase periods toward the leading manufacturing industry. The first phase period is
to shift China from a large manufacturing country to a strong country by 2025. The challenge of
this first step is related to the review in 2020, where the consolidation of the potential strength of
the manufacturing industry as a basic reality of industrialization and the development of
information technology substances should always be monitored. On the other hand, in-depth
mastery of important technological fields should be carried out because it could increase the value
of competition and the quality of manufacturing industrial products. Another improvement, in the
field of digitizing the manufacturing industry process, is becoming more networked and higher in
artificial intelligence. Major industrial values will increase their units, significantly reduce material
and energy consumption, and degrade exhaust emissions. The targeted achievements in 2025
consist of improving quality in all areas of manufacturing, escalating innovation breakthroughs,
increasing labor productivity and efficiency, and achieving a more modern integration of
information technology with industrialization. The values of the main industries, consumption of
energy and materials, and exhaust emissions are expected to reach the level of developed
countries. Further achievements in 2025, the creation of multinational companies and industrial
city clusters with international competitiveness are targeted to improve China's level in the
manufacturing industry sector and supply chain globally. The second phase period is the ability of
China's manufacturing industry to compete with developed country powers in 2035. The empirical
challenge in this phase is China’s industry must be able to make breakthrough innovations in the
main fields to answer global demand and world-class leading capacity, increase competitiveness in
all fields because it will be more stringent, and realize industrialization comprehensively. The third
phase period is to target China's position as a leading manufacturing industry by 2045. The
empirical challenge in this third phase period is that the manufacturing industry must have a real
competitive and innovative value, after advancing the technology of the internationally leading
manufacturing industry [124].
China is experienced a lot in carrying out strategically important plans for the national
interest. China's economic reform measures in 1978 by building a Special Economic Zone (SEZ) city
in Shenzhen as a model pilot area. The economic zone in the form of a special city became an
experiment to implement free market business activities by making special policy regulations for
the state and it turned out to provide extraordinary tax benefits that were able to attract foreign
entrepreneurs to invest in China [125]. The port city of Ningbo was chosen as the first model city
to implement the Chinese government's version of Industry 4.0 by accelerating industrial
capabilities and mobilizing the city's manufacturing production, integrating with regional
government innovation and flexible policy systems, the education system for its human resources,
ability to support a healthy environmental ecosystem and diversity synergies in all fields.
Furthermore, the Chinese government will determine a second group of cities consisting of 20 to
30 cities to join the Made-in-China 2025 grand plan [56].

4.2.2. Challenges facing China toward Industry 4.0

China has built a massively complex and complete manufacturing industrial system, which
has pushed the progress of manufactured products toward modern industrialization since the late
20th century. However, when compared to the manufacturing industry of developed countries at

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the global level, the number of manufacturing industrial products owned by China is very large but
does not have strong brands. So the first challenge that affects China's economic progress in the
era of digital transformation is manufacturing capabilities. The second challenge indicator is the
problem of Research and Development, R&D. The task is at the starting point of a new history of
the Industrial Revolution 4.0 with advanced technology [57], [58].
China reacts quickly to boost economic development and progressively replaces scheduled
work patterns for international manufacturing industries. China's strategic actions to overcome
fundamental changes in the manufacturing industry with four comprehensive implementation
efforts consisting of the realization of the manufacturing blueprint, maturation of all integrated
planning, deployment to the future, and full effort through three periods of strategic planning,
furthermore, the target in 2045, China appears to become a strong player in the global
manufacturing Industry [126]. Of course, the plan requires human capital, the readiness of
employees who are ready to work and skilled, so this becomes the third challenge Digitalization
capabilities for manufacturing processes, continuous work on R&D, and large amounts of human
capital have a major impact on the implementation of the “Made-in-China 2025” strategic plan
[57].
a. Critical challenge in manufacturing capabilities
China is an active country leading in the Industrial Revolution 4.0 and actively promoting
technology. Currently, China is targeted from the largest manufacturing country in the world to a
country based on sturdy manufacturing. The manufacturing industry plays a major role in the
foundational structure of the Chinese economy. According to official data from the National
Bureau of Statistics of China, NBSC, value added with advanced manufacturing processes
accounted for 29.4 percent of the Chinese government's GDP in 2018 [127]. Liu [128] revealed in
his research that the Chinese manufacturing industry was only able to win the competition on low
product prices and fast production. Chinese manufacturers tend to do manufacturing with a
smaller value than developed countries [129]. For example, in global sales of Apple's iPad and
iPhone, data reported by [130] shows the US-China trade deficit where the selling price of 1 unit
in the US went from $229 to $275 and there was a $10 shortage of employee wages went to
Chinese employees. Moreover, the production plants of the manufacturing industry generally
produce exhaust gas pollution [131], [132].
b. Critical challenge in research and development
Breakthrough innovations by applying new technologies such as the Internet of things, cyber-
physical systems, and process virtualization contained in Germany's "Industry 4.0" and China's
version of "Made-in-China 2025" have proven to change the socioeconomic order in developing
countries. Collaborative cooperation, patent law protection, and continuous research and
development (R&D) in developed and developing countries have shown the right direction with
applicable R&D results because of the varied knowledge and complementary capabilities of various
countries to produce collaborative discoveries, it may not work if only one country. Furthermore,
Research that is collaborative between countries allows the commercialization of research results
to the downstream stage and ease of entry into global trade. Research projects in East Asian
countries have made R&D collaborations across universities and countries to improve competence
with reliable researchers and more advanced foreign science. In his research focus on the "legal
value of international R&D", Su [133] investigates the value of international law on research
collaboration and formal legal protection, between Japan-China, Korea-China, Taiwan-Japan,
Korea-Japan, and Korea-Taiwan, for the results of the study that based on international law, R&D
collaboration leads to violations of cross-border patent rules.
The application of science and technology through innovative breakthroughs is the driving
wheel of a country's economy and the benchmark for measuring people's comprehensive
capabilities. The innovative breakthrough capacity possessed by the community requires research
and development with a large capital investment. China is still far behind the average of other
countries when considering the percentage of R&D investment to GDP. Recently, market
developments and economic capabilities tend to compete between digital technology and
innovation breakthrough capabilities [134].
c. Critical challenge in human capital
Improving the quality of human resources is an important key to achieving the “Made-in-
China 2025” target. Competent human resources with high discipline help the culture work
together with the environment to create creativity and innovation breakthroughs. Competent
human capital is the main capital to create mutually beneficial exploration practices [135]. A

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structured and healthy education produces quality human capital to utilize their talents and
interests toward innovation based on quality research. Operators running “Made-in-China 2025”
with Internet-Plus manufacturing systems and “Industry 4.0” with Cyber-physical systems must go
through training and assessment to run the system. The transformation of Industry 4.0 by
improving the quality of education to produce graduates who are ready to work is a very important
step for the crew for further processes.
The description containing the Challenges facing China towards Industry 4.0 has presented
several researchers who agree that China has the following main challenges: Manufacturing,
Research and Development, R&D, and Human Capital capabilities, furthermore, Table 2 lists the
other researchers who support these main challenges.

Table 2. Challenge field Supporting literature

List of literature challenges Manufacturing Li et al, 2021 [136]; Yuan et al, 2020 [137]; Li et al, 2020 [138]; Guo et al, 2019
made-in-China 4.0 (in the capabilities [139]; Wang et al, 2020 [140]
last five years)
Research and Chin et al, 2021 [141]; Dai et al, 2021 [142]; Lin, et al, 2019 [127]; Kuo et al, 2019
development (R&D) [58]; Feng et al, 2018 [134]; Yi et al, 2017 [143]
Human capital Chen et al, 2021 [144]; Scholz et al, 2020 [145]; Li et al, 2020 [146]; Müller et al,
2018 [147]; Li, 2018 [56]

4.3. Industry Transformation Map (ITM): Industry 4.0 in Singapore

Industry 4.0 in Singapore encompasses a holistic approach to manufacturing, blending
advanced technologies like IoT, big data analytics, and artificial intelligence to enhance
productivity, efficiency, and innovation across sectors. Singapore, a global hub for innovation and
technology, has seamlessly embraced Industry 4.0 manufacturing initiatives. With a robust
manufacturing sector contributing significantly to the nation’s gross domestic product (GDP),
Singapore actively integrates cutting-edge technologies. The government's strategic roadmap for
Industry 4.0, known as the Industry Transformation Map (ITM), plays a pivotal role in guiding and
coordinating Singapore's efforts towards digital transformation in key industries. Through the ITM,
Singapore aims to drive innovation, enhance competitiveness, and ensure sustainable growth in
the digital economy, positioning itself as a leading player in the global Industry 4.0 landscape [148].

4.3.1. Singapore Government Strategy for Industry 4.0 Transformation

As early as 2014, the Singaporean government recognized the immense potential of Industry
4.0 in driving economic growth and enhancing competitiveness. In 2016, they launched
the Industry Transformation Maps (ITMs), which serve as clear roadmaps for companies to adopt
Industry 4.0 technologies and best practices [149]. These ITMs focus on several key strategies
[150]:
a) Advanced Manufacturing and Trade Clusters: Refreshed ITMs for five advanced manufacturing
and trade clusters aim to uplift companies in Singapore and create at least 13,400 new
jobs. These clusters cover sectors such as electronics, precision engineering, energy and
chemicals, aerospace, and logistics, which together contribute about 80% of Singapore’s
annual manufacturing output.
b) Research and Development (R&D): The government emphasizes R&D, deep tech innovation,
extensive digitalization, and environmental sustainability within these sectors. By fostering
partnerships with larger international firms and institutes of higher learning, the ITMs help
small and medium-sized enterprises (SMEs) adopt new technologies and capture global
business opportunities.
c) Skills Development: The ITMs ensure that workers acquire relevant skills for emerging areas.
These include additive manufacturing, robotics, artificial intelligence, digitalization, and
sustainable product engineering. With Industry 4.0 adoption, Singapore’s manufacturing
workforce has evolved, with more professionals, managers, executives, and technicians
(PMETs) in white-collar roles.

4.3.2. Challenges Facing Singapore Toward Industry 4.0

As Singapore embraces the transformative potential of Industry 4.0, characterized by the
convergence of digital technologies and manufacturing processes, it encounters a myriad of
challenges on its journey towards digitalization and automation. These challenges, ranging from

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workforce readiness to cyber security concerns, pose significant hurdles that must be addressed
to ensure a smooth and successful transition. In this context, understanding and navigating these
challenges is paramount for Singapore to capitalize on the opportunities presented by Industry 4.0
while mitigating potential risks and fostering sustainable growth in the digital age [151]. Singapore
faces several challenges as it transitions towards Industry 4.0:
a) Workforce skills gap: There's a need to equip the workforce with the necessary skills for
digitalization, automation, and data analytics. Upskilling and reskilling programs are crucial to
ensure that workers can adapt to new technologies and roles.
b) Cyber security concerns: With increased connectivity and reliance on digital systems,
Singapore must address cyber security risks. Safeguarding critical infrastructure and sensitive
data against cyber threats is essential for maintaining trust and reliability in Industry 4.0.
c) Adoption by SMEs: Small and Medium Enterprises (SMEs) may struggle with the cost and
complexity of implementing Industry 4.0 technologies. Support mechanisms, including funding
and technical assistance, are necessary to facilitate SMEs' adoption and integration into the
digital ecosystem.
d) Regulatory frameworks: As Industry 4.0 technologies evolve rapidly, there's a need for flexible
and adaptive regulatory frameworks. Regulations must balance innovation with concerns such
as data privacy, intellectual property rights, and ethical implications of emerging technologies
like AI and automation.
e) Infrastructure and connectivity: Reliable infrastructure, including high-speed internet
connectivity and robust digital infrastructure, is essential for the seamless operation of
Industry 4.0 technologies. Ensuring nationwide access to such infrastructure is critical for
equitable participation in the digital economy [152].
Addressing these challenges requires a multi-stakeholder approach involving government,
industry, academia, and civil society to foster an ecosystem conducive to the successful adoption
and implementation of Industry 4.0 initiatives in Singapore.

4.4. Fourth Industrial Revolution (IR 4.0): Industry 4.0 in Malaysia

Malaysia stands at the cusp of the Fourth Industrial Revolution (IR 4.0), poised to embrace
the transformative potential of advanced digital technologies in its industries. With the advent of
Industry 4.0, characterized by the convergence of cyber-physical systems, automation, and data
analytics, Malaysia's economic landscape is undergoing profound shifts. This era promises
unprecedented opportunities for innovation, efficiency, and competitiveness, while also
presenting significant challenges in terms of workforce readiness, digital infrastructure, and
regulatory frameworks. Understanding Malaysia's journey towards Industry 4.0 and its
implications for economic development and societal advancement is essential for charting a path
towards sustainable growth and prosperity in the digital age. Embracing Fourth Industrial
Revolution (IR 4.0) initiatives, Malaysia is strategically positioning itself to leverage cutting-edge
technologies and drive economic transformation across sectors [153].

4.4.1. Malaysia Government Strategy for INDUSTRY 4.0 Transformation

Malaysia's Strategies and Action Plans for Industry 4.0 encompass a multifaceted approach
to address key areas crucial for digital transformation. This includes encouraging the deployment
of converged networks, assessing and digitalizing government processes, strengthening workforce
skills, fostering innovation through R&D initiatives, ensuring robust cyber security measures, and
promoting smart manufacturing adoption to drive sustainable economic growth and
competitiveness Top of Form [154]. Detailed strategies and action plans for Malaysia’s Industry 4.0
transformation are as follows:
a) Converged networks: Encouraging the deployment of converged networks essential for
Industry 4.0 technologies is a key objective. Converged networks, which integrate data, voice,
and video services, play a pivotal role in facilitating seamless connectivity between machines,
sensors, and devices within the Industry 4.0 framework. This integration involves
implementing 5G networks to enable ultra-fast data transfer, low latency, and reliable
communication, alongside edge computing, which distributes computing power closer to data
sources such as the factory floor for real-time processing. Furthermore, ensuring compatibility
with Internet of Things (IoT) devices is crucial. The impact of converged networks is substantial,
enhancing data exchange capabilities, enabling predictive maintenance practices, and
supporting real-time decision-making processes [155].
b) Digitalization and integration of government processes: Assessing priority government-related

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processes impacting manufacturing and supply chains is the objective, recognizing the
significance of streamlining administrative processes for efficient manufacturing. This entails
several actions, including process mapping to identify bottlenecks, paperwork, and manual
steps in government procedures, as well as automation to digitize approvals, permits, and
compliance checks. Additionally, ensuring interoperability to facilitate seamless data exchange
between government agencies and businesses is crucial. The impact of these efforts is
substantial, leading to reduced administrative burden, faster approvals, and smoother cross-
agency interactions, ultimately enhancing the overall efficiency of manufacturing and supply
chain operations [156].
c) Human capital development: Strengthening the workforce's skills to adapt to technological
advancements is the objective of human capital development, recognizing the pivotal role of
investing in human capital to ensure a skilled workforce ready for Industry 4.0. This entails
various actions, including the development of training modules focusing on digital literacy,
data analytics, and automation, as well as upskilling and reskilling initiatives aimed at
equipping existing workers with relevant Industry 4.0 competencies. Moreover, fostering
partnerships with educational institutions to align curricula with industry needs is essential.
The impact of these efforts is profound, as a skilled workforce drives innovation, productivity,
and competitiveness, thereby contributing to the overall success of manufacturing and
industrial sectors in the digital age [157].
d) Research and development: Fostering innovation through Research and Development (R&D)
initiatives is the objective, emphasizing the importance of encouraging collaboration between
industry, academia, and research institutions. This involves establishing R&D hubs focused on
emerging technologies such as AI and robotics, known as technology clusters, to facilitate
interdisciplinary collaboration and knowledge exchange. Additionally, providing incentives for
private sector R&D, including tax breaks, grants, and funding for innovative projects,
incentivizes investment in research and technology development. Collaborative projects, such
as joint ventures between industry and academia, play a crucial role in developing cutting-edge
solutions and accelerating technology adoption. The impact of these efforts is significant,
leading to accelerated technology adoption and the emergence of homegrown innovations
that drive economic growth and competitiveness [155].
e) Cyber security readiness: Ensuring robust cyber security measures to protect digital
infrastructure is the objective of cyber security readiness, recognizing the critical importance
of addressing cyber threats in the context of Industry 4.0. This entails several actions, including
conducting risk assessments to identify vulnerabilities and assess potential risks, as well as
implementing industry-specific cyber security protocols to safeguard against various threats.
Moreover, training staff on safe practices and threat detection enhances employee awareness
and resilience against cyber attacks. The impact of these efforts is significant, as they
contribute to safeguarding critical data, preventing disruptions to operations, and maintaining
trust in digital systems and processes [158].
f) Promote smart manufacturing adoption: The objective is to promote the adoption of smart
manufacturing practices among companies, recognizing the significance of data-driven
decision-making and automation in enhancing operational efficiency and competitiveness.
This involves several strategies, including conducting awareness campaigns to educate
businesses about the benefits of smart technologies and the potential for increased efficiency
and reduced waste. Financial incentives, such as tax breaks, are provided to incentivize the
adoption of smart solutions. Additionally, collaboration platforms are established to facilitate
knowledge sharing among industry players, fostering innovation and best practices in smart
manufacturing. The impact of these initiatives is substantial, leading to increased efficiency,
reduced waste, and enhanced competitiveness for businesses embracing smart manufacturing
practices [155].

4.4.2. Challenges Facing Malaysia Toward Industry 4.0

Malaysia faces challenges in its transition towards Industry 4.0, including workforce skills gap,
cyber security risks, and ensuring equitable access to digital infrastructure. Overcoming these
hurdles requires concerted efforts in upskilling, cyber security preparedness, and infrastructure
development to fully harness the benefits of Industry 4.0. Here is the comprehensive overview of
the challenges facing Malaysia in its transition towards Industry 4.0 [159]:
a) Workforce skills gap: One of the primary challenges is the existing gap in the skills of the
Malaysian workforce compared to the demands of Industry 4.0. There's a need to equip

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workers with digital literacy, data analytics, programming, and problem-solving skills to thrive
in an increasingly automated and technology-driven environment.
b) Cyber security risks: With the increased adoption of digital technologies and interconnected
systems in Industry 4.0, Malaysia faces heightened cyber security risks. Protecting critical
infrastructure, sensitive data, and intellectual property from cyber threats such as hacking,
data breaches, and ransomware attacks is paramount to ensure the integrity and security of
digital ecosystems.
c) Infrastructure development: Ensuring widespread access to robust digital infrastructure,
including high-speed internet connectivity and reliable communication networks, remains a
challenge, particularly in rural and remote areas. Addressing infrastructure gaps is crucial to
enable seamless connectivity and support the deployment of advanced technologies essential
for Industry 4.0.
d) Regulatory frameworks: Malaysia needs to develop agile and adaptive regulatory frameworks
to keep pace with the rapid advancements in technology and innovation associated with
Industry 4.0. Balancing the need for innovation with concerns related to data privacy, cyber
security, intellectual property rights, and ethical considerations presents a significant
regulatory challenge.
e) Digital divide: Bridging the digital divide between urban and rural areas, as well as among
different socioeconomic groups, is essential to ensure inclusive growth and participation in the
digital economy. Efforts to improve digital literacy, provide affordable access to digital
technologies, and promote digital inclusion programs are crucial to address this challenge.
f) Adoption by small and medium enterprises (SMEs): SMEs, which form the backbone of
Malaysia's economy, may face barriers to adopting Industry 4.0 technologies due to factors
such as limited financial resources, technical expertise, and awareness. Providing support
mechanisms such as funding, training, and technical assistance tailored to the needs of SMEs
is essential to facilitate their integration into the digital ecosystem.
g) Cultural and organizational change: Embracing Industry 4.0 requires significant cultural and
organizational change within Malaysian businesses and institutions. Encouraging a culture of
innovation, risk-taking, and lifelong learning, as well as fostering collaboration and knowledge
sharing, is essential to drive successful digital transformation initiatives.
Addressing these challenges requires a coordinated and multi-stakeholder approach involving
the government, industry players, academia, and civil society to develop comprehensive strategies
and initiatives aimed at overcoming barriers and leveraging the opportunities presented by
Industry 4.0 for Malaysia's sustainable economic growth and development.

5. Indonesia toward Industrial 4.0

To be involved in the Industrial 4.0 era, the President of the Republic of Indonesia launched a
national initiative called "Making Indonesia 4.0" on April 4, 2018. This initiative aims to support the
industrial transformation in Indonesia towards Industry 4.0. The long-term goal is to bring
Indonesia up to become the 10th largest economy by 2030. The strategy presented by the Ministry
of Industry of the Republic of Indonesia consists of returning the industry's net export level to 10
percent (the same level as in 2000), doubling the level of labor productivity above labor costs
similar to India's pace of improvement where output is increased while managing costs, and
allocates 2% of GDP to R&D with building local innovation capacity that contributes significantly to
the progress of national industry (similar level to China) [160]. To achieve this, the Indonesian
government has made a policy regarding ten national priority strategies consisting of improving
material flows, structuring industrial estates, improving the capability of human resources,
supporting Micro, Small, and Medium Enterprises (MSMEs), implementing technology investment
incentives, establishing an innovation ecosystem, attracting foreign investment, harmonization of
policies and regulations, building a national digital technology infrastructure, and accommodating
sustainability standards.
One of Indonesia's strategies for entering the Industrial 4.0 era is to prepare five
manufacturing sectors to serve as pilot projects for strengthening and empowering the
fundamental structure of the national industry. The five sectors are the Food and Beverage
Industry, Automotive Industry, Electronic Industry, Chemical Industry, and Textile Industry.
Accordingly, this strategy will encourage the Indonesian Investment Coordinating Board or Badan
Koordinasi Penanaman Modal (BKPM) to carry out its role in encouraging foreign and domestic
investment, especially in the five industrial sectors mentioned above. Previously, BKPM data stated

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that the realization of investment in 2011 - 2017 was dominated by the secondary sector. The Food
Industry accounts for the largest portion with a total realized investment (both domestic and
foreign) of IDR 302.8 trillion. Followed by Basic Metals, Metals, Machinery, and Electronics in
second place (IDR 299.0 trillion); Basic Chemicals, Chemicals, and Pharmaceuticals in third place
(IDR 285.5 trillion); and other Transportation Industries in fourth place (IDR 160.3 trillion). The
Textile Industry as the last component of the main sector of Industry 4.0 is in eighth place with a
realized investment value of IDR 58.3 trillion. According to these records, Indonesia is already on
the right track to welcome the Industry 4.0 era [160].
Currently, the implementation of the “Making Indonesia 4.0” initiative has been carried out
consistently by the Ministry of Industry, Republic of Indonesia. The programs that have been
successfully implemented are:
a) Awareness related to Industry 4.0 in around 2000 industries in Indonesia.
b) Certification and training of Industry 4.0 transformation managers in companies in Indonesia.
By the end of 2019, around 300 people had received this training. More than 50% of the
trainees have started the transformation in their respective companies.
c) The invention of INDI 4.0 (Indonesia Industry 4.0 Readiness Index), is an index to measure the
readiness of industries in Indonesia to transform towards Industry 4.0. Currently, 600
companies have conducted assessments with INDI 4.0. From the results obtained, in general,
the industry in Indonesia is quite ready to transform towards Industry 4.0.
d) The establishment of the Industrial Ecosystem 4.0 (SINDI 4.0), to accelerate the digital
transformation that exists in each company.
e) The establishment of the Indonesian Digital Innovation Center (PIDI) 4.0, an innovation
institution that functions as a research/innovation center, showcase center, capability center,
ecosystem center, and delivery center.
With the “Making Indonesia 4.0 initiation, many industries in Indonesia are now aware of the
transformation of Industry 4.0. Around 500 companies have started transformation projects
toward Industry 4.0. Currently, there are already 2 companies in Indonesia that have become
Lighthouse Industry 4.0 of the World Economy Forum (WEF) vision, which is PT. Schneider-Electric
Manufacturing Batam and PT. Petrosea in East Kalimantan is presented in Figure 9. According to
Figure 9, Indonesia is the only one that has Lighthouse Industry 4.0 in ASEAN until 2019. This reveals
that Indonesia is ready to implement Industry 4.0. After implementing Industry 4.0, PT. Schneider
Batam was able to increase labor productivity by 13%, reduce scrap costs by 40%, and increase
operational efficiency by 12%. While PT. Petrosea East Kalimantan with the implementation of
Industry 4.0 was able to reduce total costs by 12% and increase productivity by 32% [161].
From the initial results seen at the end of 2019, the implementation of the Making Indonesia
4.0 initiation showed positive results. However, to make the impact even bigger, a massive
industrial transformation is needed. Therefore, a guidebook has been compiled as a reference in
the transformation process in the company, so that it can be used as a reference for companies to
transform their factories to Industry 4.0.

Figure 9.
Lighthouse Industry 4.0
version WEF [161]

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5.1. Challenges Facing Indonesia Toward Industry 4.0

Currently, Indonesia faces tough competition from other developing countries such as China,
Vietnam, and Thailand. Many other challenges remain but the Indonesian government has adopted
many positive strategies to meet these goals. There are four major challenges faced by Industry
4.0 in Indonesia, including capability issues, funding problems, lack of suppliers of digital
technology systems and infrastructure for Industry 4.0, and overlapping regulations and policies
that require further synchronization.
a. Developing local skills and talents
Technological developments will disrupt all business lines, including the requirement for
manpower that leads to competent human resources in responding to the challenges of
technological change and future needs. The government pays special attention to early childhood
education considering that this period is a golden age for the development of the human brain as
a prerequisite for being able to attend further education. The government has prepared an
allocation of funds for education amounting to 20% of the state budget, mainly for increasing
human resources that are economically competitive. The value for 2022 is around Rp. 541.7 trillion.
Our problem is how to prepare a workforce that has the capacity [160].
In addition, the problem of distribution and quality of teachers, the process of teaching and
learning through technology, as well as the content of education itself. The ratio of the number of
teachers to students, around 18, is comparable to that of developed countries. However, teacher
distribution and teacher quality are challenges. In terms of content, learning from Vietnam,
Indonesia needs to create a simpler curriculum that focuses on reading, mathematics, and natural
sciences so that children are less burdened but focus on what is important for them to be able to
face a very fast world. Furthermore, the Indonesian government's policies are specifically carried
out through several fiscal policies. Examples include, among others, the allocation of funds for the
Family Hope Program, the Bidik Misi scholarship to provide opportunities for school-age children,
especially from poor families, deduction tax for research, and double deduction tax for companies
that provide HR training.
b. Funding advances Industry 4.0 manufacturing capabilities
The requirement of industrial financing cannot be met from policies that are only directed at
providing industrial incentives, but a competitive industrial financing system is needed in
particular. Several things need to be considered in order to increase the role of banking, such as:
providing ease of application procedure; providing competitive loan interest rates or providing
debt subsidy assistance mechanisms; and providing convenience in debt restructuring. Meanwhile,
the problems of disbursement of funds in the manufacturing industry consist of Maturity
mismatch, where banks only tend to provide short- and medium-term financing, because many
sources of bank funding are dominated by short-term sources of funds; Limited human resources
of banks who have expertise in the industrial sector; Limitations of financing schemes that can be
financed by banks, especially in the form of project bases (banks tend to ask for collateral) and for
businesses that are just starting (start-up business) as well as industries that are still in the early
stages of development (infant industry) which require incentives for banks to dare to finance. In
terms of the industrial sector, the limited use of bank credit is partly due to the relatively high-
interest rates of banks because they are financed by short-term public funds, so it is necessary to
establish a financial institution that can guarantee the availability of investment financing with
competitive interest rates [162].
c. Lack of suppliers of digital technology systems and infrastructure
Most business people have not been able to fully implement Industry 4.0 practices due to the
limitations of available technology, both for hardware and software. The lack of reliable technology
providers in Indonesia means companies have to wait longer to get the technology they need, and
this can result in significant missed opportunities. Opening access to technology providers from
other countries such as Singapore, New Zealand, Taiwan, Japan, etc., and it will be very beneficial
in accelerating the practice of Industry 4.0. Other countries have developed advanced technologies
that combine physical, digital, and cyber-physical aspects to implement Industry 4.0. Some of the
services offered include manufacturing research and development (R&D), lean manufacturing
training, 3D printing, and the use of industrial robots. The application of Industry 4.0 allows a
country to maximize its limited resources to meet optimal production volumes, efficiency, and safe
practices.

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Industrial Technology 4.0 generally prioritizes automation and integration of information

technology that enables a better decision-making process, mitigates risks, and achieves targeted
results such as efficiency, security, and consistency. One of the pillars of Industry 4.0 is factory
operations, which can directly support the entire system. For example, Industry 4.0 allows factories
to carry out preventive maintenance to reduce the risk of downtime. Data connectivity will help
identify the condition of each part so that it can be repaired or replaced before a breakdown or
damage occurs. In addition, with various new practices that have emerged as a result of the COVID-
19 pandemic, safer operations are becoming increasingly important and are expected to continue
in the future.
d. Overlapping regulations and policies that require further synchronization
Indonesia is a country based on the law as stated in the 1945 Constitution of the Republic of
Indonesia, so any action must not violate the law. Meanwhile, related to Industry 4.0, Indonesia
does not yet have a national law that regulates this problem. The existence of a law related to
Industry 4.0 is important to regulate the standards used for companies, especially when the current
conditions are increasingly progressive in using robots to replace or assist human work. If a robot
commits an act that violates state laws, such as causing murder, then who will be held responsible
for that action? It seems impossible to put the responsibility on the robots. Are robot makers,
governments, or companies responsible for the actions of robots? These things are only a piece of
doubt to face the new Industrial Revolution. Therefore, harmonization is needed for the rules and
policies that have not been finalized by the Indonesian government.

5.2. Indonesia Industry 4.0 Readiness Index

To find out the work steps of industrial readiness level in Indonesia to transform to Industry
4.0, the author with the Industrial Research and Development Agency (IRDA) in Indonesia called
Badan Penelitian dan Pengembangan Industri (BPPI), Indonesian Ministry of Industry in 2018
compiled an index called INDI 4.0. INDI 4.0 stands for Indonesia Industry 4.0 Readiness Index; a
national index used to measure the readiness of industries in Indonesia to implement Industry 4.0.
INDI 4.0 was compiled jointly by industry, Government, academics, experts, and consultants. With
various considerations, it was decided that INDI 4.0 was compiled by the BPPI team in collaboration
with related academics and experts. After the workshop in Batam, a core team of INDI 4.0
formulators was drawn up whose task was to compile the INDI 4.0 draft. The team then developed
and drafted INDI 4.0. After that, discussions regarding the INDI 4.0 concept continued to be
finalized after hearing input from experts, industry, and academics. In general, the work steps for
the preparation of INDI 4.0 can be seen in Figure 10.

Figure 10.
Work steps for the
preparation of INDI 4.0.
Adapted from [163]

After the INDI 4.0 draft was formed, socialization of INDI 4.0 was carried out to industry and
related stakeholders. Furthermore, responses and input from the socialization event were used as
input to improve the INDI 4.0 draft, especially related to survey methods and verification methods.
There are five pillars that need to be measured in INDI 4.0, i.e., (1) management and organization
structure, (2) people and culture in the industrial sector, (3) products and services improvement,
(4) technology related to the research and development, and (5) factory operation and
sustainability. The five pillars then were further divided into 17 fields. These 17 fields are used as
a reference to measure the readiness of industries in Indonesia to be transformed into Industry
4.0. The front page of the INDI 4.0 book and the classification of its constituent criteria can be seen
in Figure 11.

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The assessment method uses an

online survey filled out by the industry
followed by field verification
conducted by experts. In INDI 4.0, the
score ranges from 0 to 4 level. Level 0
indicates the industry is "not ready" to
transform into Industry 4.0. The
company assessed in level 1 means it
is still at the "early readiness" stage.
For level 2 result means the industry is
at the "moderate readiness" stage.
The assessed company with level 3
means a "ripe readiness" stage to
transform into Industry 4.0. At last,
Figure 11. level 4 means that the industry has
Classification of INDI 4.0 "implemented" most of the concepts
criteria. Adapted from of Industry 4.0 in its production
[163] system as presented in Figure 12.

Figure 12.
INDI 4.0 – Pillars and
readiness index to
transform to Industry
4.0. Adapted from [163]

5.3. Readiness of the Manufacturing Industry in Indonesia Toward

Industry 4.0
There are five pillars in self-assessment to obtain an INDI 4.0 score i.e. (1) Management and
Organization, (2) People and Culture, (3) Products and Services, (4) Technology, and (5) Factory
Operation. From the self-assessment results conducted by a number of manufacturing companies
in Indonesia in 2019 based on INDI 4.0 self-assessment pillars and tools, it is known that the
average readiness index for Industry 4.0 transformation is at a moderate level i.e. 2.14 as presented
in Figure 13. According to the spider chart of the five pillars presented in Figure 13, Technology pillar
is the lowest self-assessment value with 1.95. In contrast, Products and Services pillar is revealed
as the highest self-assessment value with 2.41.
As of April 2019, at least 326 companies have carried out self-assessments using INDI 4.0.
From the data collected, at least it can get an overview of the readiness of the manufacturing
industry in Indonesia to move towards Industry 4.0. Of the eight industrial sector categories, food
and beverage, textile, chemicals, and EPC sectors are the industries that are almost ready to
transform towards Industry 4.0 becuase it is above the INDI 4.0 average value. In addition, there
are already 11 companies that have carried out self-assessment in the various sectors with an INDI
4.0 score at the level of 1.97 which slightly lower than the national average. For the highest
participation is in the automotive sector with 196 industries, however, the INDI 4.0 score is lower
that the average with 1.72 score.

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Figure 13.
INDI 4.0 – Self-
assessment results in
2019. Adapted from
[164]

From the results of INDI 4.0, it is known that the Technology and Factory Operations pillars
has a relatively low value compared to other pillars. This shows that the industry's readiness in
Indonesia for the application of advanced technology is still lacking. In general, connectivity and
digitization in various industries are still lacking. Connectivity means conditions between machines,
between systems, as well as machines/systems with humans/employees. The basic philosophy of
implementing Industry 4.0 is to connect all machines/systems/humans both in vertical integration
and horizontal integration.

6. Further Comparison Discussion Between Developed and

Developing Countries
6.1. Challenges Differ According to Country’s Level of IR4.0
Development
The Indonesian government has decided to embrace the Industry 4.0 trend, naming it
"Making Indonesia 4.0," to prevent lagging behind in the global economy. However, adopting a
follower mindset risks detrimental blunders to Indonesia's economic growth, given each country's
unique conditions, such as culture, environment, and behavioral characteristics. Based on the
literature review, the challenges faced by Germany, China, Singapore, Malaysia, and Indonesia can
be categorized in Figure 14.
Germany, China, Singapore, Malaysia, and Indonesia, the focus of this discussion, have all
identified human resources as a challenge in embracing the Fourth Industrial Revolution. The
synergy among employees with various competencies has been shown to enhance a company's
competitiveness. Structured formal and informal training is necessary for employees to become
more disciplined, creative, and dedicated to continuous innovation. Meanwhile, the Indonesian
government has undertaken concrete steps to enhance education quality, including increasing
fund allocation, ensuring equitable distribution and quality of teachers, adopting a more practical
curriculum, and offering tax incentives to companies contributing to public education
improvement.

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In Germany, many companies are hesitant to transition to Industry 4.0 due to significant
capital costs, particularly when operations and cash flow remain stable and profitable. In
Indonesia, banks play a crucial role in providing capital loans to SME-scale companies, necessitating
competitive policy breakthroughs. While challenges in capital investment are paramount, German
SMEs argue against change when their companies are performing well. Conversely, Indonesia
struggles with banking institutions' readiness to finance SMEs transitioning to Industry 4.0.
Each country prioritizes different challenges, reflecting varying needs and circumstances.
Germany emphasizes resolving data transfer security and legal regulation to address global supply
chain vulnerabilities. China focuses on enhancing research and development collaboration with
developed countries to produce high-value research products. Indonesia seeks to increase digital
technology suppliers and address legal gaps in regulating robotics in industrial environments,
highlighting the need for comprehensive policy frameworks to navigate the fourth industrial
revolution effectively.

Figure 14.
Different challenges
according to a country’s
level of IR4.0
development

Each country prioritizes different challenges, reflecting varying needs and circumstances.
Germany emphasizes resolving data transfer security and legal regulation to address global supply
chain vulnerabilities. China focuses on enhancing research and development collaboration with
developed countries to produce high-value research products. Indonesia seeks to increase digital
technology suppliers and address legal gaps in regulating robotics in industrial environments,
highlighting the need for comprehensive policy frameworks to navigate the Fourth Industrial
Revolution effectively.

6.2. Government Regulation and Readiness Assessment of IR4.0 for

Each Country
Government regulations and readiness assessments play a crucial role in facilitating the
adoption and implementation of Industry 4.0 (IR4.0) technologies and practices across different
countries. In Germany, the government has established comprehensive regulatory frameworks to
guide companies in navigating the challenges and opportunities presented by IR4.0. These
regulations encompass data protection, cyber security, intellectual property rights, and workforce
training initiatives to ensure a smooth transition towards digitalization and automation.
Additionally, readiness assessments, such as the Industry 4.0 Readiness Check, provide German
companies with structured evaluations of their capabilities and readiness levels for IR4.0 adoption,
enabling them to identify areas for improvement and develop tailored strategies. Similarly,
countries like China, Singapore, Malaysia, and Indonesia have also implemented government
regulations and readiness assessments to accelerate IR4.0 adoption and foster economic growth
in the digital age, as presented in Table 3. These initiatives aim to create an enabling environment
for businesses to thrive amidst the transformative changes brought about by IR4.0.

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Table 3. Government regulation or Year

Country Name of readiness assessment
IR 4.0 regulation and program name launched
readiness assessment Germany Industry 4.0 [165] 2011 Industry 4.0 Readiness Check
for each country
Singapore Industry Transformation Map 2014-2015 Singapore Smart Industry Readiness Index
(ITM) [150] (SIRI)
China Made in China 2025 [124] 2015 China Manufacturing 2025 (CM2025)
Malaysia Fourth Industrial Revolution 2016-2017 Industry 4.0 Readiness Assessment
(IR 4.0) [166] Framework
Indonesia Making Indonesia 4.0 [160] 2018 Indeks Daya Saing Industri 4.0 (INDI 4.0)

The global transition to Industry 4.0 necessitates meticulous readiness assessments and
supportive government regulations across various countries. Germany pioneered this movement
with its Industry 4.0 Readiness Check, empowering companies to evaluate their technological
infrastructure, digitalization strategies, and innovation capabilities through questionnaire-based
assessments and personalized recommendations. China's Made in China 2025 (CM2025) initiative
assesses manufacturing readiness through comprehensive on-site visits, interviews, and
technology analysis. Sample activities within CM2025 include conducting on-site visits to
manufacturing facilities, interviewing management and technical teams, and analyzing technology
adoption levels and innovation strategies. Meanwhile, Singapore's Smart Industry Readiness Index
(SIRI) evaluates companies holistically across technology, process, and organizational dimensions,
employing workshops, interviews, and surveys. Sample activities encompass conducting
workshops with industry stakeholders, interviewing key personnel to assess digitalization efforts
and automation levels, and administering surveys to gauge workforce capabilities. Additionally,
Malaysia's Industry 4.0 Readiness Assessment Framework evaluates digital strategies and talent
development through interviews, workshops, and surveys, providing comprehensive
recommendations for improvement. Similarly, Indonesia's Indeks Daya Saing Industri 4.0 (INDI 4.0)
assesses readiness through surveys, focus groups, and on-site visits, offering tailored
recommendations. These assessments and regulations serve as vital tools in guiding companies to
implement strategic initiatives effectively, ensuring their competitiveness and success in the
dynamic landscape of Industry 4.0.

7. Conclusions
A comparative review study on Industry 4.0 development has been conducted. The review
study particularly analysed and presented the challenges in implementing Industry 4.0 in
developed and developing countries. Germany, China, and Singapore were categoried as a
developed country; while Malaysia, and Indonesia were categorised as a developing country. These
categories were based on the year of implementing Industry 4.0 which has been presented in
Section 6.2.
Germany and China prioritize manufacturing advancements through digitalization and IoT,
reflecting their global competitiveness goals. Meanwhile, Singapore implements its Industry 4.0
strategy via the ITM, focusing on manufacturing, R&D, and skills. Similarly, Malaysia prepares for
IR 4.0, emphasizing digital transformation across sectors. Challenges such as skills gaps and cyber
threats must be addressed for successful Industry 4.0 adoption, ensuring sustainable growth and
competitiveness. The convergence of these efforts underscores the global shift towards a digitally
driven industrial landscape. Globally, numerous countries are embracing the ethos of Industry 4.0
revitalization, propelled by digital technology and the internet. According to Deloitte's predictions,
the United States leads the world in manufacturing competitiveness and technological
advancement, followed by China, representing European nations such as Germany, Japan, India,
and South Korea, among others. Korea, representing Asia, Mexico for Latin America, and Taiwan,
Canada, and Singapore, the latter being a small Southeast Asian country with the highest GDP, are
also noteworthy players in the global manufacturing arena.
Germany is more confident with its technological progress because it does not consider
manufacturing technology the main challenge. However, based on the literature study, we found
that Germany considers the main challenges to be Investment Capital, Employee Qualifications,
and Labor Security. Using Data Transfer and the Legislation that protects it. In contrast to China,
which places Manufacturing Capabilities as the main challenge that must be answered with
technology, the next challenge is that Research and Development, and R&D must be increased in
intensity and quality, and Human Capital must be increased to meet the needs of industrial

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revitalization. China is still focused on low-value manufacturing production even though the
quantity is large. This is related to the Chinese government's policy of protecting small industries
such as MSMEs and small industries, which have survived amidst intense business competition.
The Chinese government plans to become the world's leading manufacturing industry, as stated in
"Made-in-China 2025". Singapore and Malaysia both grapple with multifaceted challenges in
transitioning to Industry 4.0. Singapore focuses on workforce skills, cyber security, SME adoption,
regulatory agility, and infrastructure. Malaysia addresses similar hurdles, including workforce skills,
cyber security, and digital infrastructure access. Collaboration among stakeholders is crucial for
both nations to develop adaptive regulations, bridge the digital divide, support SME integration,
and foster cultural changes. A coordinated approach is essential for leveraging Industry 4.0
opportunities and ensuring sustainable economic growth.
The low labor productivity factor was one of the reasons for the initiation of Making Indonesia
4.0, the Indonesian version of Industry 4.0. The main objective of this fourth industrial revitalization
is to make Indonesia a top ten global economic power by 2030. The implementation of the Making
Indonesia 4.0 initiative shows a positive direction. However, this movement requires massive
industrial transformation to have a significant impact. For companies in Indonesia, the average
Industry 4.0 transformation readiness index is at a medium level with a value of 2.14 (INDI 4.0
scores range from level 0 to level 4) from the results of self-assessments carried out by
manufacturing companies in Indonesia in 2019. The INDI 4.0 instrument revealed that the
Technology and Factory Operations pillars had the lowest scores compared to other pillars. On the
other hand, the workforce's quality is a challenge every country faces. Everyone applies training as
the primary way to increase creativity and dedication without abandoning discipline and a good
attitude.
Future works of this review study will present the Industry 4.0 assessment methods in other
developed and developing countries. With more more dicussion on the Industry 4.0 assessment
on developed, developing countries can benchmark and learn from the develop countries to
achieve a better Industry 4.0 tranformation and application. With more comprehensive Industry
4.0 review study in developing countries, it can be revealed which pillar or criteria need to be
improved. Transfer technology from developed countries to developing country will also an effect
of the review study related to the Industry 4.0 in the future.

Author’s Declaration
Authors’ contributions and responsibilities - The authors made substantial contributions to the
conception and design of the study. The authors took responsibility for data analysis,
interpretation, and discussion of results. The authors read and approved the final manuscript.
Funding – The authors acknowledge the Polish National Agency for Academic Exchange (NAWA)
No. BPN/ULM/2022/1/00139/U/00001 for financial support. The corresponding author also would
like to thank the Faculty of Mechanical Engineering, Opole University of Technology for the part-
time University Professor program in 2024.
Availability of data and materials - We do not analyse or generate any datasets, because our work
is a comparative review
Competing interests - The authors declare no competing interest.
Additional information – No additional information from the authors.

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