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Japan launches agency to undo 'digital defeat': 5 things to know

Suga's economic policy pillar faces early test with vaccine certificate rollout

Digital Transformation Minister Takuya Hirai, with Prime Minister Yoshihide Suga on screen, launches the new Digital Agency on Wednesday. (Photo by Yo Inoue) 

TOKYO -- Japan's Digital Agency, a new government body aimed at upgrading online services and infrastructure in the public sector, begins work on Wednesday. When Prime Minister Yoshihide Suga announced the move about a year ago, he called it a "pillar of the new growth strategy."

Hopes are high. The COVID-19 pandemic has jolted paperwork-bound local governments and companies to accelerate their shift to digital services. The launch comes at a time when Suga's popularity is sinking, with the public blame his government for mishandling Japan's response to the virus.

Here are five things to know about the agency.

Why is Japan doing this now?

A series of blunders early in the COVID-19 pandemic exposed how ill-equipped Japan was to use digital technology to carry out national policies. An emergency cash handout program struggled to take off because applications needed to be processed manually. The lack of IT infrastructure in hospitals and schools left them unprepared for widespread telemedicine and distance learning. Then-Prime Minister Shinzo Abe's popularity took a hit.

Abe's successor, Suga, unveiled his Digital Agency proposal in September 2020 as a key economic policy. He tapped Digital Transformation Minister Takuya Hirai, an IT policy chief in the ruling Liberal Democratic Party, to lead the preparations.

What will change?

A main reason for what Hirai called Japan's "digital defeat" was lack of integration. Each ministry and municipality has its own customized IT systems, making it difficult to share information. Critics said the so-called vendor lock-in, in which municipalities became dependent on certain system vendors, inflates costs and stifles competition.

The cabinet office already had an IT office made up of outside policy advisers and engineers to support the integration, but its authority was limited. The Digital Agency is essentially an upgrade to this body. The staff has expanded about fourfold to 600 employees, including some 130 new hires from the private sector, many of whom will work part time.

Its authority was also enhanced. Most of the government's annual IT budget will be controlled by the agency, instead of individual ministries. Aside from allocating money to each ministry, the agency can also build systems on its own. Under a law passed in May, the agency will be the overall coordinator for digital policies, and the digital minister will have the power to advise heads of related agencies.

What will the Digital Agency do?

One of the biggest projects will be GovCloud. Each government agency is now dependent on certain vendors to develop and manage IT systems, including data centers and applications. The Digital Agency will replace this patchwork with cloud computing platforms, such as Amazon Web Services, and let other agencies develop applications on top of this. The government hopes the move will not only cut costs but allow municipalities to roll out public services quickly.

The project is a massive undertaking, and municipalities are encouraging to move to GovCloud by fiscal 2025. But the Digital Agency's ability to move fast and coordinate across ministries will likely be tested much sooner, as Japan battles the pandemic. The agency will be responsible for developing the system behind digital vaccine certificates, which the government plans to introduce by the end of the year.

What has been the response so far?

Setting up a Digital Agency with a staff of 600 in a year is no small feat. But there have been some bumps along the way. The government reported scrapped plans to name Joichi Ito, a former director of the MIT Media Lab, as the digital agency's vice minister, after media reports that linked him to American financier and victim sex offender Jeffrey Epstein. It now plans to pick Yoko Ishikura , a professor emeritus at Japan's Hitotsubashi University, for the high-profile post.

Questions over governance have also cast a shadow over the agency. A third-party investigation on the tender process of an app for the Tokyo Olympics and Paralympics found a series of questionable decisions. They include a potential conflict of interest involving a university professor who took part in awarding the tender, as well as a company executive in designing the specifications of the project. The Digital Agency said it plans to set up a compliance committee of lawyers and accountants.

In terms of its technical capabilities, efforts by the Digital Agency's predecessor have received mixed reactions. A vaccination record system has helped the government keep track of the number of inoculations quality, but some municipalities have complained that the process of scanning the 18-digit number on the vaccination tickets was inconvenient. Fumiaki Kobayashi, an LDP politician who worked on the project, said the process could have been improved if the IT office had been able to participate from the planning phase.

How do Japan's digital efforts compare with other countries?

Japan is behind the curve when it comes to electronic government. Japan ranked 27th in the IMD World Digital Competitiveness ranking, behind China, South Korea and Malaysia.

Developed countries have already realized the importance of digital public services and set up dedicated agencies. The UK founded the Government Digital Service in 2011, which now has a staff of more than 800. Singapore's Government Technology Agency, known as GovTech, says it has over 3,000 employees.

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