October 1, 2020


JAPAN: New government begins work on digital agency but pitfalls await

BY Tobias Harris

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( 5 mins)
  • Prime Minister Yoshihide Suga has stated that he will prioritize the pursuit of a digital transformation, with a particular focus on creating a digital agency to oversee the overdue digitalization of public services.
  • His government has already begun work on legislation to create a new agency, which is expected to be submitted to the Diet next year.
  • While the administration wants to move quickly, its planning team faces significant questions about the structure of the new agency that could either delay its realization or hamper its effectiveness.

The Suga administration is forging ahead with plans to create a digital affairs agency that will complete the long-delayed process of digitalizing the provision of public services and promote greater use of information technology in the economy and society more broadly. Suga has stressed the importance of “digital transformation” (DX), which has become an especially urgent challenge due to Covid-19. The pandemic revealed gaps in the Japanese government’s ability to process and distribute medical data, disperse subsidies, and shift schools to remote learning. The private sector has also struggled to adapt, making digitalization a critical issue to boost productivity and promote more family-friendly “working styles,” both priorities Suga has inherited from the Abe administration. Indeed, in a series of planning documents issued in July, the Abe administration spoke of a “Digital New Deal” to digitize public services and promote new investments in digital infrastructure, human capital, and research & development as essential for boosting growth in the post-Covid-19 world. Whether Suga is able to advance this initiative – which faces considerable administrative challenges – will be an early test of his pledge to deliver concrete improvements to the public.

The government is aiming to draft a basic policy by the end of the year and have legislation establishing the agency ready for the Diet by the ordinary session in early 2021. An office to draft the reform bills officially commenced work on Wednesday, 30 September. Reflecting the prime minister’s determination to overcome “bureaucratic sectionalism,” the office has drawn upwards of 50 bureaucrats from the Ministry of Economy, Trade, and Industry (METI), the Ministry of Internal Affairs and Communications (MIC), and other related ministries to foster a whole-of-government approach to DX. It also includes at least 10 members from the private sector, reflecting the lack of IT expertise within the government. Takuya Hirai, Suga’s digital affairs minister, and other officials have suggested that the administration could recruit from the private sector to staff the agency’s leadership.

As plans for the new agency take shape, it is apparent that Suga will continue the long-term process of concentrating power in the prime minister’s office and cabinet secretariat, which reached new heights during his predecessor’s administration, thanks in no small part to Suga’s own efforts. The aggressive timetable also reflects a lesson learned from the Abe administration. During the Abe administration, ambitious reforms were repeatedly watered down due to drawn-out timetables, as proposals went from high-level growth strategies to administrative advisory councils to legislation over several years, giving opponents ample time to weaken reforms. These delays often reflected the absence of the prime minister’s direct engagement, hampering the prospects for success. Prime ministerial involvement is usually a necessary if not always sufficient condition to the successful realization of a reform proposal.

Suga and his senior-most advisers are therefore certain to be heavily involved in drafting the reforms and overseeing the work of the digital affairs agency. The legislative package could include changes to up to eight laws, but it appears that the main legislative change will be a revision of the Cabinet Office Law that would place the digital affairs agency under the direct supervision of the prime minister. While previously Hirai suggested that the agency might be temporary, in an interview Wednesday he hinted that it could actually be a permanent agency that would consolidate virtually all digital management functions – including systems procurement, which could give the agency a substantial budget – into the agency. Some ideas for the agency also envision it taking responsibility for unifying local government systems with the national government.

However, there are still unanswered questions about how the new agency will function. It is unclear, for example, whether the digital affairs agency will incorporate existing offices within the Cabinet Secretariat, including the National Center of Incident Readiness and Strategy for Cybersecurity (NISC), an organization created in 2015, a preexisting chief information officer (CIO), and the secretariat’s IT General Strategy Office. To the extent that data privacy and the protection of personal information will be essential work for the new agency, it may also have to absorb functions of the cabinet secretariat’s privacy commission and the information disclosure and personal information protection review board. Meanwhile, while the administration has stated that it wants to move IT functions from ministries to the digital affairs agency, it is unclear just how extensive this consolidation would be, since a potentially significant number of bureaus from across the government could be considered work related to digitalization. If the government leaves bureaus in their home ministries, it would leave the agency vulnerable to sectionalism and poor coordination; if it takes a broad approach and truly attempts to consolidate IT-related offices from across the government, the process would inevitably take longer to realize and the result could be a new “superministry” that could take time to coalesce. Finally, any digital initiative has to contend with personnel shortages, as both the government and private sector have acknowledged that Japan has an insufficient number of IT professionals, a skill gap that could grow over the course of the decade without greater investment in skill development.

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