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Business trends

Telework? Japan still wants stamps on the dotted line

Workers brave coronavirus and head to the office to press 'hankos'

The carved hanko seals used in lieu of signatures remain an ingrained part of Japanese corporate culture.

TOKYO -- The Japanese business practice of signing off on documents with a personal seal poses an obstacle in efforts to adopt telecommuting amid the coronavirus pandemic.

Despite efforts to address the problem, only slightly more than 40% of Japanese corporations have digitized contracts even partially, according to a survey on information technology usage released in March by JIPDEC and ITR. Fewer than 30% have configured computer systems or put rules in place to allow for telework.

Even if companies digitize documents, many managers must come to the office to stamp them because internal regulations bar them from taking home their hanko -- the carved stamps used in lieu of signatures.

Creating a telework-friendly environment is a crucial issue as the government moves to draw up emergency economic measures. It hopes to make rapid progress on such fronts as establishing a framework for authenticating contracts.

Chat app operator Line still relies on paper and hanko. Various departments have asked the legal team to quickly digitize contracts. Line enters into well over 1,000 contracts every month, according to legal department head Masamichi Yamamoto -- each must be stamped with a hanko.

So employees involved in contracts have no choice but to come in even if urged to work from home. Line's legal department has accelerated the introduction of an electronic contract system, which started last June, and will initially shift about 30 contracts away from paper before the Golden Week holidays of early May.

A worker handling legal affairs at an agricultural startup said that creating a contract, stamping it with a hanko, affixing a revenue stamp, mailing it to the other party to have it stamped with a hanko, and having it mailed back takes a week. The source, who sometimes needs to come in on weekends, expressed hope that e-contracts will be introduced to improve productivity., which operates an e-contract service, said companies using the service for the first time in February grew about 30% to 40% from a year earlier to a record high, with the tally up 10% or so in March.

But concern is deep-rooted about whether a digitized contract without hanko stamped on paper can be guaranteed authentic. To prove that a contract is real, there needs to be a record of when it was created, who created it, and to whom it was issued. The solution is to use a highly trustworthy service that combines such features as a cloud computing platform that makes altering data difficult, time stamps, and a certification framework for electronic corporate seals.

The cloud is ideal for managing large volumes of transaction data where each piece is not important, such as transportation expenses paid with railway smart cards. The Ministry of Finance and the National Tax Agency are moving to make it easier for companies to use the cloud by revising rules so that transaction data created digitally from the start does not have to be saved on paper.

But for important contracts, the issue is whether a digital contract will be treated as valid in case of a dispute.

For time stamps, companies offering the service need to be certified. But the trustworthiness of the time stamps could be called into question in such cases as cross-border patent disputes between corporations.

The Ministry of Internal Affairs and Communications plans to create a framework in which the central government certifies service providers directly as early as fiscal 2021. It recently set up a study group to hammer out technical conditions.

Corporate e-seals have not caught on in Japan. The ministry is now drawing up standards to encourage the private sector to establish a certification framework. A discussion panel is expected to launch this fiscal year, with an aim of bringing a private-sector framework onstream as early as fiscal 2022.

The European Union has created a list of companies offering e-seal certification services that meet its standards. Nearly 180 companies were on the list as of October.

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