Robots: The next growth sector in Southeast Asia?

Blue robot. Credit: Peyri Herrera

With ASEAN seemingly poised to displace China from manufacturing and other fields as it moves up the value chain, robotics and automation may be the next promising growth sectors to attract investments from venture capitalists and private equity firms in Southeast Asia.

Packaged food, medical supplies and dental braces already pass through the mechanical and speedy hands of robots before making their way to consumers.

Able to work quickly, precisely and tirelessly, robots are gaining traction worldwide in multiple industrial sectors, among them  manufacturing, construction, medicine and in the defence sector. Their benefits? Superior productivity and efficiency for businesses, as well as facilitating safer and superior working conditions for workers.

Lim Say Leong, assistant vice president of marketing at Swiss automation firm ABB, recently gave an interviewcommenting that preparation for advancements in robotics was necessary, saying: “Industries must act now to prepare themselves in integrated automation for when the economy recovers; where further automation will lead to a less labour intensive and more productive future, with less resources and time used to produce more goods at a high and consistent quality.”

Industrial robots are highly versatile and flexible in their operational environment, and can be programmed to perform a broad range of complex tasks, unlike industrial automation machinery, where machines perform a repetitive set of operations.

Also Read: ASEAN could replace China as manufacturing and consumption hub

Future Prospects

With global adoption accelerating, the International Federation of Robotics (IFR) has estimated that 200,000 industrial robots were installed worldwide in 2014, a 15 per cent increase over 2013. In Asia Pacific (APAC) markets, robot sales are set to increase by ~16 per cent over the 2015-2017 period.

In Singapore’s case, robotics is especially critical. Manufacturing accounts for 27 per cent of the GDP in 2012, according to a report by the Singapore-German Chamber of Industry and Commerce.  Investments in robotics and automation can deliver productivity gains in productivity, An example of robotics technology being deployed in the city-state are robotic drug storage and dispensing machines at a number of public hospitals in Singapore.

These machines can select drugs based on their bar codes, update stocks automatically and issue alert when stocks are running low. Reports from hospital staff indicated that this reduced the risk of human error in filling out prescriptions and reduced waiting time for patients. It also freed up pharmacists’ time for interacting with patients and educating them on their medication.

With the advent of 3d printing and product life cycles rapidly shrinking, there’s a compelling need for manufacturers to be rapid, flexible and able to retool for different product needs. Robotic production and automation can help companies produce small product volumes rapidly, allowing for different iterations and more adaptability to both market and customer needs.

Robots can aid manufacturers achieve considerable cost reductions and long-term savings, particularly in terms of life-cycle costs, energy consumption, rentals and cost efficiency. Robots do not need pensions, light or air conditioning to operate in. By enabling efficient operations in smaller space, this allows expensive industrial real estate to be used more efficiently.  Greater precision in robotics also enhances production and reduces wastage.

In combination, robotics and automations will drive down production costs. The average payback period for a robotics investment is estimated to be between one and three years.

Also Read: EXCLUSIVE: Rotimatic creator gets Series A funding from NSI Ventures

ASEAN Prospects

While the loss of jobs may be a concern, along with businesses being reluctant to invest and innovate, Singapore is most likely to be the first ASEAN country to see the a wave of automation in industries with chronic labour shortages. Robots can help ease labour pressures on companies while ensuring consistent quality in output, rather than creating redundancies.

Amongst the emerging ASEAN middle class, a significant portion will be averse to what are seen as menial, dirty, dangerous and dull tasks – all of which manufacturing requires at one point or another. Having robots handle such work will enable companies to design better jobs and workflows.

Existing factory workers can be retrained to operate and service the robots as technicians, moving the labour force up the value chains as a whole through retraining. The software solutions that control robots are increasingly simple and intuitive, enabling significant operational ease-of-use.

Robots can also be deployed in uncomfortable or hazardous environments (e.g. welding operations) in places such as shipyards or chemical plants, where workers risk exposure to injury and harmful chemicals.

Commenting on opportunities this presents to ASEAN, Lim stated “Faced with an uncertain economic outlook, lower oil prices and increased market volatility, businesses have to rethink ways to add value to their products and services. Cheaper Asian countries have the competitive advantage of high volume and low cost in their production chain; players that will stand out are those who provide customisation and cater to the individual needs of customers.”

Related Story: Singapore Angel Network & CBA invest $250k in Jay Robotix

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.