Analysis of the Impact of Artificial Intelligence on The Development of Industry 4.0 in Indonesia

Abstract

This study analyzes the impact of Artificial Intelligence (AI) on the development of Industry 4.0 in Indonesia. Using a mixed-method approach, this study combines quantitative analysis of a survey of 500 companies with in-depth interviews and focus group discussions with industrial stakeholders. The main objective of this research is to identify the level of AI adoption, its impact on productivity, the challenges of implementation, and its broader economic and social implications. The results show that 42% of Indonesian companies have adopted AI technology, with significant variations across industries. The manufacturing and financial sectors lead in adoption, while the agricultural and small and medium-sized enterprises (SMEs) sectors lag behind. Regression analysis reveals a strong positive correlation (r = 0.68, p < 0.001) between AI adoption and productivity increase, with an average efficiency increase of 27%.
The main challenges in implementing AI include the lack of skilled labor, digital infrastructure constraints, and regulatory uncertainty. A structural equation modeling (SEM) model shows that a 10% increase in AI adoption has the potential to increase GDP growth by 0.5% in the medium term.
This study concludes that AI plays a crucial role in driving the development of Industry 4.0 in Indonesia, but requires a holistic approach to maximize benefits and mitigate risks. The main recommendations include increasing investment in education and training related to AI, developing fiscal incentives for AI adoption in lagging sectors, accelerating digital infrastructure development, and establishing a comprehensive regulatory framework.
This study makes a significant contribution to understanding the role of AI in industrial transformation in developing countries and provides empirical grounds for developing policies that support the integration of AI into national economic development strategies in Indonesia.