Facilitating Industry 4.0 to leapfrog development in Cambodia

For countries like Cambodia, Industry 4.0 technologies challenge the relative cost of capital versus labor and their mix in production.

Productive technology is changing the world in which we live – the way we make and consume things: it’s the 4^th Industrial Revolution, also known as Industry 4.0.

Today, the UN Development Programme (UNDP), the United Nations Industrial Development Organization(UNIDO) and International Labour Organization (ILO) jointly organized a high-level seminar to discuss and identify main policy gaps and develop key recommendations that should facilitate Industry 4.0 in Cambodia.

Industry 4.0 refers to the development of a collection of advanced technologies (3D printing, robotics, biotech, quantum computing), enhanced communications networks, and new production management know-how. These are set to transform productive processes, calling into question fundamental economic concepts – including the division of labor and core comparative advantage. This implies major disruptions in the economics of design, manufacturing, and delivery, with dramatic improvements in productivity via cost reductions and increases in the quality of outputs.  

Pauline Tamesis, UN Resident Coordinator in Cambodia stated that “Industry 4.0 presents huge opportunities but also challenges for Cambodia. There are two sets of issues. First, how can Cambodia access these new technologies, so enabling the economy to leapfrog legacy plant and machinery? Second, how can Cambodia continue to ensure high levels of employment but also reposition itself away from labor-intensive production?”

“The UN is committed to helping the Royal Government of Cambodia to answer these questions – so that Cambodian firms can become early adopters, and workers can acquire new skills and capacities – hence opening up a host of new opportunities.”

For countries like Cambodia, Industry 4.0 technologies challenge the relative cost of capital versus labor and their mix in production. Therefore, it has implications for the location of production and the distribution of rewards between countries and participants in value chains. 

As a result, Industry 4.0 could undermine the traditional account of global economic development whereby investment (and production) would shift from a capital-rich developed north to a labor rich south - via foreign direct investment flows and domestic investment.  This potentially presents major problems for developing – especially low and low middle-income countries – which are struggling to build productive capacity and integrate within global markets.

Attending the event, Nick Beresford, Country Director for UNDP Cambodia, expressed that “the 4^th industrial revolution is already underway and affecting us all. There are challenges but also huge opportunities. And Cambodia is well placed – it is a young country, which two-thirds of the population under 30, and its youth are creative and entrepreneurial, keen and able to adapt and learn. Adoption of these technologies can both unlock their potentials, and deliver the Government’s 2030 and 2050 objectives.”

“To achieve the very ambitious objectives of bringing the Industry 4.0 to Cambodia, strong cooperation between the Government, development partners, private sector, industry, and academia is essential. Through this we can create the necessary conditions for transformation and enable adjustment, delivering positive impacts on our economy and society,” concluded H.E. Tram Iv Tek, Minister of Posts and Telecommunications.