Japan Prioritizes Digital Transformation to Public Services

Japan’s efforts to drag its public services into the digital age are getting some financial heft behind them. The government’s Digital Agency, established last September, looks set to have ¥472 billion to spend in the upcoming fiscal year, starting in April. Its budget priorities are heavy on technological upgrades: Promoting My Number ID cards (¥102.7 billion), subsidizing new industrial infrastructure (¥2.2 billion) and accelerating research into next-generation semiconductors (¥14.8 billion) and post-5G telecom networks (¥10 billion).

Yet achieving a digital transformation of government requires more than just new technology. Laws and regulations need to change, too. According to some estimates, as many as 60,000 national and local rules need to be revised to make online public services possible. That’s a daunting task, especially in a country whose legislative wheels turn as slowly as Japan’s. Jonathan Soble spoke to Teruka Sumiya, a project specialist at the World Economic Forum Centre for the Fourth Industrial Revolution, about what is being done to bring Japan’s laws and regulations into the digital era, and how far the country still has to go.

We hear a lot about how the Japanese government is trying to go digital and bring public services online. It’s a big job — hanko stamps and form-filling at city hall won’t give way to smartphone apps overnight. And it’s about more than just technology, isn’t it? There’s a whole legal aspect to it that makes it an even bigger task than people imagine. That’s right. Behind every out-of-date administrative process is an out-of-date rule — like a law that says forms need to be submitted in person or checked manually by an official. Even when analog procedures aren’t explicitly required, they’re often encouraged by default.

Many regulations don’t include standards for record keeping, so different agencies and local governments come up with their own formats and processes. The result is a mishmash of mostly low-tech, incompatible systems. Modernizing the rules is as important as modernizing the technology, if not more so. It’s going to require a whole new approach to legislation. Laws and regulations are revised infrequently — every three years at best, but sometimes just once every few decades.

Obviously, with tens of thousands of rules that need updating, that’s not enough to accomplish digital transformation. We need a way to move faster. And there need to be rules for the rules — requirements that every law be compatible with a digital world. Those requirements haven’t existed before, and that has led to missed opportunities.

What kind of missed opportunities?

Take tourism, for example. In 2017, the government revised the Hotel Business Act, the main law governing licensing and regulation of the hotel industry. The act was written in the 1940s and hadn’t been updated since. The revision did things like eliminate the legal distinction between Western-style hotels and traditional ryokan, and scrap minimum-room requirements to accommodate small operators like guesthouses and Airbnb. But it did nothing to make licensing and record-keeping digital.

Different prefectures still have different license-number formats, different application forms, and of course it’s all on paper and accessible only by sifting through file cabinets. These things could have been addressed when the law was updated — it was only five years ago, after all, well into the digital revolution — but they weren’t.

So what, if anything, has changed since 2017?

A lot, actually. We’re finally seeing real movement for change, especially in the last year or two. The new Digital Agency is part of that, and there are some important new initiatives to address the rule-making aspect of digital transformation in particular. For example, the Centre for the Fourth Industrial Revolution Japan has been advising a government task force that has been working on a set of “digital principles” that could shape legislation for the digital age — exactly the kind of rules that I mentioned before.

The idea is that all laws and regulations, national and local, would have to check five boxes before they’re adopted. The main principle is that all administrative procedures required by the law need to be executable digitally. The others have to do with things like making government data more standardized and shareable, as well as — and this is an especially crucial point in my view — making regulation more agile.

What does “more agile” regulation mean, exactly?

Agile governance means making rules that are flexible and responsive — rules that can adapt to changing circumstances, or be tailored to suit different needs or levels of risk. It’s the opposite of the traditional static, one-size-fits-all approach to regulation. One reason that governance need to become more agile is to keep up with changes in technology, but technology also enables a more agile approach. Innovations like Big Data and the Internet of Things mean regulators can gather more information more quickly, and often in less intrusive ways.

Take factory inspections, for example. Traditionally, inspectors visit a factory every so often — once a week or once a month, say — to look for safety or environmental violations. The inspection often requires that production lines be temporarily shut down. But in modern factories — so-called smart factories — every piece of machinery is equipped with sensors that feed data about their operations into information networks. Regulators can use that to keep an eye out for problems in real time. So instead of crafting a law that says “factories must be inspected once every X weeks by Y people” it makes more sense to say “factories must be monitored to prevent X behavior or control Y risks.” If it’s done right, everyone benefits — the public gets better regulation at a lower cost, and the burden on businesses is reduced as well.

In Japan, there has recently been some limited experimentation with agile regulation. The Ministry of Economy, Trade and Industry, for example, has a pilot program involving oil refineries. But making agility a fundamental principle of digital-age governance would be a huge step forward.

So we have a government that clearly wants to go digital, and now a set of principles that could guide the legal side of the process. But who is going to make sure that this actually happens?

One idea that we’re advocating is to create a central authority to review laws and regulations to ensure they’re fit for the digital age. We think of it as the Digital Cabinet Legislation Bureau — after the Cabinet Legislation Bureau, which is an actual agency that reviews draft legislation to make sure it doesn’t conflict with other laws, complies with the Constitution and so forth. The CLB is a powerful agency. Its digital equivalent would send rules that don’t make sense in the digital age back to the drawing board.

Educating the people who make the rules in the first place will be important, too. I think Japan could emulate countries like Denmark, which has training programs for civil servants and legislators to bring them up to speed on technological developments and their implications for governance.

And finally there’s pressure from the public, which I think is increasing. People expect to be able to do things smoothly and easily online now, and the COVID-19 pandemic has made differences in the technological capacity of different governments stand out even more starkly. People know Japan is behind, and at some point a government that doesn’t deliver is going to pay the price.

Japan’s five digital principles

The government’s ad hoc task force on digital administration recently proposed five digital principles to shape the work of legislators and civil servants in the digital age.

  • Digital execution and automation: Procedures shouldn’t require written forms, in-person filings or hands-on checks by officials at designated physical places — they should be executable digitally and, if possible, automated. The goal is end-to-end digital processing, both within the government and between the government and its constituents, suppliers and other stakeholders.
  • Agile governance: Regulations should focus on desired end results — the risks to be mitigated or the performance to be achieved — rather than stipulating rigid and uniform processes and procedures. Regulatory supervision should make full use of available data and be open to continuous updates and improvements.
  • Public-private partnership: Government should make use of private-sector innovation to improve user experiences by, for example, adopting user interfaces and other technologies developed by private companies.
  • Interoperability: Systems should be interoperable, so that national and local governments, quasi-public entities, and the private sector can share data smoothly.
  • Infrastructure sharing: The public and private sectors should share a common basic digital infrastructure for things like digital IDs and base registries. Procurement specifications should be standardized to avoid siloing among different agencies, levels of government and other entities that provide public services.

(Source: The Japan Times | Pic: Hanko, Scott Ashkenaz)

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