“API Geoeconomic Briefing” is a weekly analysis of significant geopolitical and geoeconomic developments that precede the post-pandemic world. The briefing is written by experts at Asia Pacific Initiative (API) and includes an assessment of burgeoning trends in international politics and economics and the possible impact on Japan’s national interests and strategic response. (Editor-in-chief: Dr. HOSOYA Yuichi, Research Director, API & Professor, Faculty of Law, Keio University)
This article was posted to the Japan Times on August 3, 2021:
API Geoeconomic Briefing
August 3, 2021
Can Japan break away from its ‘digital defeat’?
Dean, API Institute of Geoeconomic Studies; Senior Fellow, Asia Pacific Initaitive (API)
Distinguished Professor, Keio University
Co-Director, Keio University Cyber Civilization Research Center
Special Advisor to the Cabinet
On Sept. 1, a new digital agency will be launched in Japan, and the Basic Law on the Formation of a Digitalized Society will come into effect, creating a digitally supported, resilient and horizontally connected structure that has the potential for creative development.
With that, the Basic Law on the Formation of an Advanced Information and Telecommunications Network Society, which took effect on Jan. 6, 2001, will be abolished and the IT strategy headquarters set up in the Cabinet Office to implement policies under the law will also be disbanded.
Under a new digital agency, Japan will not only aim to develop its economy based on existing information technology but also change its vertically segmented administrative structure.
The current administrative system, which has been developed piece by piece for the sake of supply-side policies, will be transformed into a system based on the vision and goals set by the supply side with a mission to respect the benefits of the people and industries.
Various administrative departments are set to act in sync to build a social system that functions for the members of society, but only with a convincing mission based on data and evidence can the government plan and establish a new society.
Japan can contribute to global society by using high-quality data to lead efforts to create new rules and standards.
With that in mind, the digital agency will enter the world amid high expectations.
Gaps between governments
The government’s COVID-19 response, which led to the public’s worries and dissatisfaction, has been described as a “digital defeat” for two reasons.
Firstly, while the internet and mobile technology were widely available in Japan, administrative services using such technology did not function well in tackling the virus.
Secondly, it became apparent that the public could not use, had difficulty using or chose not to use the digital apps and services that were actually provided by the government.
But why did such problems emerge?
When the pandemic arrived, countries across the world took various actions to cope with the spread of the virus.
Through this, it became clear to everyone that there are gaps between governments that actively utilized the digital environment — citizen identification systems and services, infection data, testing services, data on hospital beds, vaccination processes and predictions for the effect of lockdowns — to tackle the virus and those that didn’t.
Members of the public do understand the power of digital services. And they also became aware of the fact that Japan, unlike other countries, failed to use these services to deal with this significant contingency. That is what made many view the situation as a digital defeat.
Local governments are, in principle, responsible for providing people with services related to personal information.
Oversimplification of this principle has led to different information systems and digital data formats being set up independently, resulting in numerous data structures and information systems existing separately in a vertically segmented form.
Meanwhile, the central government adopted a cloud system in 2009 to manage an eco-point system that grants points to consumers who purchase eco-friendly household appliances such as air conditioners, refrigerators and TVs.
This came as a shock — on the lines of the 1853 arrival of Commodore Matthew Perry’s black ships to open Japan from national isolation — to the government’s information system.
The decision to introduce the system was made by the Prime Minister’s Office and top bureaucrats, and it worked because it was a centralized system.
But the cloud system did not last long as an overall administrative system, perhaps because it was too extreme a paradigm shift.
The merit of a cloud system lies in the fact that orders can be made to set a variety of detailed and autonomous service policies separately without affecting the basic system.
In other words, if an appropriate, interoperable cloud system is created for central and local governments, it will enable local governments to work on their own initiatives to improve the efficiency of their services, or launch new services quickly at extremely low costs.
In order to realize this, the government should take this opportunity of the establishment of the digital agency to drastically shift its information system linked to local governments’ information systems to a new government cloud.
The digital agency has a goal to not leave anyone out, meaning realizing a 100% digital service coverage for all regions and people.
Universal services in Japan, with the world’s top-class quality, are currently offered by such entities as police, post offices, insurance firms, fire departments, schools and local governments.
If these entities can comprehensively integrate digital services into their work, they can construct a new social environment that covers the entire nation.
Moreover, Japan’s data centers are almost completely concentrated in the Tokyo metropolitan area, with a few scattered in other regions such as Kansai, Chubu and Kyushu, as they are set up close to large business districts.
If the digital agency is to have a macro perspective to protect data as part of national security, it should view data centers as critical infrastructure and work with other ministries and agencies to quickly decentralize them.
To do so, it will be necessary to come up with specific plans within a few years that combine energy policies and data policies, including building new fiber optic cables, actively adopting renewable energy and setting up more landing stations for submarine cables.
The government has an urgent task to analyze and predict possible geoeconomic risks related to economic and national security and build a cybersecurity system with cutting-edge technology and the ability to cope with such threats.
The digital agency must work to complement insufficient areas in the government’s system while coordinating with existing systems.
It is necessary to make the agency’s role clear in the government’s decision-making process, including discussions in the National Security Council.
Even under the current law, the prime minister can let the digital minister take part in the council’s meetings.
The digital agency, which is in charge of managing national data assets and operating systems related to personal information, needs to protect and manage them with the best quality.
The agency is now faced with the unprecedentedly important mission of managing data of a size and quality the nation has never managed before.
Therefore, the government should create an environment for the agency to become a part of the national security system and work closely with other related agencies.
The government ministries and agencies making procurement orders for information technology systems while not being responsible for designing, implementing and operating them is becoming a serious problem.
The ministries only make procurement orders and leave the rest of the work to system companies to build and operate customized systems. In such a situation, it is difficult for the government and administrators to safely and effectively manage, distribute or share data.
To solve this issue, the digital agency should design, implement and operate a network and an information system on its own as a core system that works 24 hours a day, 365 days a year.
It should also construct a way to constantly monitor and evaluate the safety and vulnerability of the core system.
In order for the agency to get actively involved in the formation of the nation’s digital society — something that has been conducted mostly by private sector-led efforts — three reforms are needed: clarifying basic principles, defining the agency’s roles under the law and securing outstanding human resources.
While the first two reforms can be realized by the Basic Law on the Formation of a Digitalized Society and the law to create the digital agency, a method should be established to secure people who can play a revolutionary role in implementing the reforms.
As a new type of agency which serves to plan and also operate systems, the digital agency needs to have the best people with expertise and successful experiences in the private sector working for the agency.
However, a government agency won’t be able to offer competitive salaries that can attract such highly-skilled people. That means the agency must create organizational values to more than make up for that.
If the digital agency can get involved in designing a high-quality, highly safe system to implement policies and then operating sustainable services that contribute to people, it will become the only organization in Japan that can offer individuals working there the best chance for self-growth.
And if the agency can provide opportunities for people from the private sector to work there, there will be more movement of personnel between the public and private sectors, enabling the agency to keep on securing high-level human resources.
The internet covers the whole world. In order to lead the global governance regarding the internet, it is necessary to have sufficient discussions on a daily basis to establish trusting relationships with allies and other countries which share the same goals.
By doing so, Japan can increase the number of countries with which it bilaterally cooperates on digital policies, which will contribute to putting together proposals for multilateral frameworks such as the Free and Open Indo-Pacific, the “Quad” strategic dialogue between Japan, the United States, Australia and India, the Organization for Economic Cooperation and Development, the Group of Seven and the Group of 20.
It is essential for the agency to secure people who can engage in such activities, as well as implementing other policies such as making its officials communicate in English, inviting advisors experienced in international negotiations and holding exchange programs with international organizations.
The views expressed in this API Geoeconomic Briefing do not necessarily reflect those of the API, the API Institute of Geoeconomic Studies or any other organizations to which the author belongs.