A digital revolution for Japan… and the world

Two years ago, Japan declared a digital revolution.

Despite a well-earned reputation for high-tech hardware – think robots, automobiles and high-speed trains – our country had fallen behind in the digital era. Government, in particular, was stuck in the analog Dark Ages, with clerks shuffling endless paper forms, many marked with the red ink of traditional hanko stamps.

Inconvenience for citizens wasn’t the only consequence. This backwardness meant lost opportunities in areas like education and healthcare, as public systems weren’t equipped for remote learning and diagnostics. It stifled innovation, too, because laws and regulations couldn’t accommodate technological change. And it left Japan’s economy less prepared for shocks like the COVID-19 pandemic: emergency financial aid programmes, for example, had to be organized manually, and took months to deliver as a result.

This society-wide digital deficit is what the government was determined to change.

Since the announcement of our “digital transformation” initiative in September 2020, we’ve made great strides. A cabinet-level Digital Agency, which I oversee as minister, started operating last year, and coordinates the effort across government departments and the private sector. The Agency’s budget for this fiscal year is 472 billion yen, or a little over $4 billion. Priorities include promoting digital IDs, developing new digital public infrastructure, and accelerating research into next-generation semiconductors and post-5G telecom networks.

But achieving a digital revolution requires more than just upgrading technology. Increasingly, we’re finding that it requires a legal revolution, too.

The Special Commission on Digital Administrative Reform has identified some 9,000 rules and regulations that need to be revised to make online public services possible. Amending them will be a daunting task, especially in a country whose legislative wheels can turn painfully slowly. But we have a plan to tackle it, one that we hope will serve as a model for other countries facing similar challenges.

First: how exactly do laws and regulations stand in the way of digital transformation? The problem is that behind every out-of-date administrative process is an out-of-date rule – a law that says, for instance, that forms need to be submitted in person or checked manually by an official. Such rules mean that, even if more up-to-date digital solutions exist, they can’t be implemented. The result is inefficiency and waste.

Take factory inspections, for example. Traditionally, inspectors visit factories on set timetables – say twice a year – to look for safety or environmental violations. Inspections often require that production lines be shut down, leading to lost production. But in modern “smart” factories, every piece of machinery is equipped with sensors that feed data about their operations into information networks. Regulators can use that data to keep an eye out for problems in real time. If it’s done right, everyone benefits – the public gets better regulation at lower cost, and the burden on businesses is reduced.

So how can a country change 9,000 laws? Obviously, amending them one-by-one would take too long. One solution is omnibus legislation, which will change many laws at once. The Special Commission has been sifting and categorising the problematic laws, looking for common issues, in order to make that process easier.

Deciding how, exactly, the rules should be changed is another major challenge. To address it, the Special Commission has recently issued a set of five “digital principles” that would guide the amendment process, as well as all future new legislation.

The idea is that every law and regulation, national and local, has to tick five boxes before being adopted. The main principle is that all administrative procedures need to be executable digitally. The others are designed to ensure government data is standardized and sharable, and that regulation is fundamentally more agile – that is, flexible and focused on outcomes rather than procedures.

In the factory case above, for example, a traditional regulation might dictate that a plant “must be inspected once every x weeks by y people.” But an agile regulation might say instead that that is “must be monitored to prevent x behaviour or control y risks” – a more “future-proof” formulation that would allow regulators to adapt to changes in technology or other circumstances.

Centralized coordination of the “digital legal revolution” is crucial. In Denmark, a country that has been ahead of the curve on this issue, an Agency for Digitization examines all new legislation to make sure it is “digital ready.” Japan already has an agency, the Cabinet Legislation Bureau, that reviews draft legislation to make sure it is consistent with existing laws. Inspired by the Danish example and the Cabinet Legislation Bureau, we have credited a Digital Legislation Bureau inside the Special Commission to make sure new laws conform to Japan’s digital-transformation goals.

The bureau has already started work, reviewing bills for the current session of the Diet, Japan’s national legislature.

Some in Japan have expressed scepticism about the digital transformation programme. Can the government really change so many laws? Does it have the political will? I would answer yes—because there is no other choice. Citizens increasingly expect to be able to live and work online, and that expectation has only intensified with the Covid-19 pandemic. Any government that doesn’t deliver will pay the price.