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March 9, 2021


JAPAN: Challenging agenda awaits as Diet considers digital agency legislation

BY Tobias Harris

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On Tuesday, 9 March, the House of Representatives began deliberations on a government legislative package to create a digital affairs agency, one of Prime Minister Yoshihide Suga’s top priorities upon becoming prime minister last year.

After the pandemic revealed significant shortcomings in the government’s ability to use information technology, the agency will primarily focus on digitalizing government services. However, the Suga administration envisions that the agency will also serve as a “control tower” for the digitalization of the economy and society more broadly. But the agency’s creation is largely the result of two decades of failure by Suga’s predecessors to digitalize the government and spur greater investment in IT by the private sector, which has resulted in Japan’s lagging behind many of its peers in digital competitiveness. In 2020, Japan actually slipped four spots on International Institute for Management Development’s (IMD) annual digital competitiveness index and is now ranked 27 out of 63 countries, with middling or low marks in all areas other than its network infrastructure and its scientific research infrastructure.

The agency’s most urgent priority will be unifying information management within the central government – which will mean overcoming barriers between rival ministries – and helping local governments shift to a national cloud-based data management system. It will also assume responsibility for the “My Number” personal identification system and other personal data management programs, which means it will also be tasked with encouraging broader use of the My Number program to improve the delivery of public services. The program, launched in 2016, has attracted relatively limited participation – perhaps as low as 20% of the population – amidst privacy concerns. The legislative package also envisages the agency playing in a role in the Suga administration’s other digital transformation (DX) programs, including efforts to encourage small- and medium-sized enterprises (SMEs) to adopt IT and spur new business formation in advanced sectors. The government also plans for the agency to play a role in cybersecurity, although the agency’s relationship with existing cybersecurity organizations within the cabinet secretariat and broader national security establishment is unclear.

Finally, the digital agency will also spearhead efforts to meet a perceived shortfall in IT expertise within the government and in the private sector, including assisting the development of criteria to assess the digital skills of prospective public employees. The Ministry of Economy, Trade, and Industry (METI), for example, has warned that Japan as a whole could have a shortfall of 790,000 IT professionals by 2030. The government also wants to enable IT professionals to move in and out of government – an exceedingly rare practice in Japan’s seniority-based public administration. On this point, the agency will lead by example. It is expected to fill roughly 100 of 500 posts with external hires, and it is possible that the agency’s lead administrator could also come from the private sector.

While opposition lawmakers have raised concerns about data privacy and cybersecurity under the new agency, the risk of a regional and demographic digital skill divide, and the potential for improper relationships between the agency and private companies, none of these issues is likely to derail the legislation’s passage in April. The agency will then be launched in September.

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