Gov new Digital Agency – The next step in the war against faxes and hankos?

For many decades a curious mix of high-tech and archaic habits, Japan is now pushing ahead with ambitious plans to digitise its economy and society. The pandemic laid bare some of the issues that have left Japan lagging other advanced economies in the digital transformation (DX) stakes.

These included the reliance on faxes to report Coronavirus infection numbers, delays in financial support payments due to inadequate and unintegrated IT systems and a lack of digital infrastructure that has stopped many from working fully remotely.

So hampered was Japan’s response that Takuya Hirai, minister for digital transformation and now chief of the new Digital Agency, described it as “digital defeat.”

The agency launched on September 1 with a remit to address these problems and many more besides. Accelerated digitisation was one of the pillars of Yoshihide Suga’s platform in his bid to be prime minister, and his tenure lasted just long enough to see the agency created.

Suga urged staff at the launch ceremony to,

With a staff of 600, more than a quarter of whom have been hired from the private sector, the agency has been tasked with creating digital vaccine passports by the end of the year. A system linking residents’ My Number ID to their bank accounts to speed up the delivery of payments from the government, and the digitisation of more than 30 other administrative processes, are to be implemented by March 2023. It will then attempt to fix the incompatibility of IT systems across local governments by 2026.

Leading from the top

Minister for vaccines and administrative reform Taro Kono, also current frontrunner in the race to be next prime minister, has been an advocate of eliminating needless bureaucracy and inefficiency. If he does become the next PM, that should put further impetus behind the DX drive, something likely to receive significant pushback in Kasumigaseki, local authorities and even private companies.

Along with disconnected agencies and municipal governments, due in part to Japan’s decentralised governmental system, concerns about privacy and use of personal data have also contributed to the lack of progress, and may yet prove to be an obstacle.

In May, when the legislation for the agency was being debated by lawmakers, a resolution was passed requesting measures be put in place to prevent unauthorised sharing or leaking of personal information. The agency has been instructed to ensure the private data of citizens is protected under any new processes introduced.

This follows a set of revisions to the Act on the Protection of Personal Information (APPI) passed in June last year and set to come into force in April 2022. The amendments expand the scope of the APPI, originally enacted in 2003, and will force companies to be more transparent about their use of personal data, and to protect it more securely or face legal sanctions.

Such measures will be essential to winning the trust of citizens, a prerequisite if Japan is to take the bold steps needed to realise a digitalised society. Enhanced cybersecurity should also help prevent the kind of data breaches that have struck Japanese companies and government agencies in recent years.

In April, the government accused the Chinese military of being involved in the hacking of more than 200 Japanese firms and research entities, including the JAXA space agency. Then in a separate incident, the foreign and transport ministries admitted in May that information including more than 76,000 email addresses, and ironically enough, study materials on creating a digital government, had been leaked.

Playing catch-up

For a country that was the birthplace of numerous early advances in digital technology, Japan has since fallen significantly behind the global curve. In the 2020 IMD World Digital Competitiveness ranking, it came in 27th out of 63 countries, behind Ireland, Estonia and Malaysia. Its worst performances in the sub-rankings were 56th for business agility and 46th for talent.

These factors of entrenched intransigence and the shortage of qualified IT personnel will be significant barriers to the advance of DX in Japan.

And the stakes could hardly be higher. A report by the Internal Affairs and Communications Ministry predicts that if Japanese firms digitised to the same extent as their US counterparts, it would boost overall sales by up to 68 trillion yen ($618 billion).

As an illustration of how far there is to go and the kind of resistance to change likely to be encountered, consider Taro Kono’s failed crusade against the fax machine. When appointed minister for reform in September last year, Kono set his sights on ending outdated practises like the use of hanko seals and the facsimile.

In April this year he announced that government ministries and agencies should stop using faxes by June unless there was a compelling reason not to. Kono’s taskforce was swamped with more than 400 complaints from government entities insisting that the fax was indeed indispensable and the reform was quietly dropped.

By: Gavin Blair