Japan’s digital agency head blames regulation for preventing progress

The minister in charge of Japan’s new digital agency has blamed decades of conservative regulation for holding back the country and declared that the nation’s technological ambitions were being stifled by its “laws, systems and customs”.

Karen Makishima told the Financial Times in an interview that the country had moved too slowly to loosen rules on emerging technologies, stifling companies and industries in areas where they might otherwise be global leaders.

Officials at Japan’s ministry for economy, trade and industry have also told the FT of growing concerns within the government and corporate sector that Japan was reaching a “last chance” moment for fundamental change if it wanted to avoid falling permanently behind competitors.

The constraints on new technologies made even less sense, said Makishima, since, as Japan’s population aged, the available workforce would decline and technology could offer significant labour savings.

“Although Japan has technical capabilities, its rules are not based on that,” Makishima said, adding that the country had been slow to formulate a national strategy on digitisation despite its reputation for cutting-edge electronics, robotics and other critical technologies.

“In terms of technology, I feel that Japan has a very high level of ability at the basic level. The problem is that we have not been able to use a digital way of thinking to amplify this capacity,” she said.

Makishima pointed to the rules and conventions that governed the use of drones and sensors, technologies that could save significant amounts of human labour. Both technologies could be used to complete low-risk standards checks on buildings, tunnels, bridges and other projects but existing rules mean such tests are all invalid unless confirmed by a human.

“There is naturally a difference between the risk of accidents at construction sites of a large-scale project worth hundreds of millions of yen and of a project worth just tens of thousands of yen. However, the same rules are applied today for safety confirmation regardless of the scale of the project,” she said.

The idea for the digital agency was introduced last year by Yoshihide Suga, the then prime minister, to accelerate the use of technology to provide government services. The agency had already begun operations in September this year just before Fumio Kishida took over as prime minister. The agency is racing to assemble a series of “digital principles” to convert Japan into a more digitised society before the end of the year.

Makishima admitted that many believed the agency had been created too late and the country was still battling to overcome outdated social and economic systems.

She said these shortcomings had been exposed during the early phase of the Covid-19 pandemic. An emergency cash handout programme took months to organise because the procedure needed to be managed manually. The lack of IT infrastructure in schools left students across the country unprepared for distance learning.

Other members of the Kishida administration have also expressed concern about the pace of digital change. Takayuki Kobayashi, the economic security minister, was recently reported saying that Japan needed to speed up progress on the potential issuance of a digital currency.

Makishima said the matter was not one that had came under the purview of the digital agency.

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