World Economic Series: Rebooting the World Economy – Japan

With H.E. Mr Yasumasa Nagamine, Ambassador of Japan and Mr Naoki Ota,Digital and Technology Advisor to the Government of Japan

Following the successful launch of the World Economic Series last week, the first country-based session was led by the Embassy of Japan. His Excellency Mr Yasumasa Nagamine, Ambassador of Japan, and Mr Naoki Ota, digital and technology advisor to the Japanese Government, led a discussion underscoring the importance of free trade with more than 300 attendees from all over the world, including several Ambassadors to the UK, the UK Ambassador to Japan and 40 other guests from Tokyo.

His Excellency the Ambassador highlighted the importance of Japan’s early understanding of the risk of Covid-19, particularly when the Diamond Princess cruise ship was struck by the virus in Yokohama in February. As a result, the country was able to contain the virus from China in its early stages, declaring a State of Emergency in April that was lifted after just six weeks. Thanks to such prompt action, there have been fewer than 1,000 deaths in Japan in a population of 126m, with only 18,000 positive coronavirus cases as of the end of June, and an excess mortality of 0 per cent in the winter/spring season.

Reflecting that the virus recognises neither nationalities nor borders, Mr Nagamine highlighted various factors that also aided the country in its fight against infection, in particular easy access to doctors and the population’s awareness of hygiene and prevention – mask wearing is customary in Japan in the winter months. Additionally, rigorous contact tracing, including among people with no symptoms, has proved effective so far in preventing a second or third wave, and restricting incoming visitors and quarantine measures have also helped.

With regards to the economy, he noted that the IMF forecast for this year is -5.8 per cent and +2.4 per cent next year, and Japan’s economic response to the pandemic has been unprecedented. A further supplementary budget enabled a second economic package of 117 trillion Japanese yen, or 1.1 trillion USD. Combined with the earlier package it totals more than 200 trillion Japanese yen, or 1.86 trillion USD, so the economic measures are very robust. Divided into two parts, it focuses on emergency support and then a V-shaped recovery programme. Support for SMEs, households and the self-employed, along with tax reductions and deferrals provide the emergency support, while national and local subsidies provide stimulus to the most affected sectors such as tourism, transport and entertainment, and support for the local economy such as in agriculture and fisheries. Free trade and free trade agreements are extremely important at this time. Additionally, there is the need for securing domestic manufacturing in basic goods and maintaining global supply chains. As Japanese businesses are going through troubled times, there will also be support for both domestic and overseas operations. In Mr Nagamine’s opinion, protectionist measures only aggravate the situation. The UK is the largest Japanese investment destination in Europe, and Japanese businesses have established very effective supply chains around Japan, the UK and Europe.

Of particular importance in Japan’s recovery is the digital policy; Society 5.0 has been a major task of Japan’s economic policy since before the arrival of coronavirus. Conceived to create a rich and effective way of life, the pandemic has underscored the urgent need for its four pillars: the promotion of teleworking, particularly in government and SMEs, achieving the goal of distant learning in schools and universities, the digitisation of medical and health services and the government sector services.

He concluded by saying that international co-operation is vital to build back better. The importance of digital technologies today Mr Naoki Ota, digital and technology advisor to the Japanese Government, focused on the importance of data ownership in the new worlds we could be facing. Citing the cancelled Sidewalk Toronto project, a smart city concept that failed over data privacy concerns, he spoke about Japan’s Smart City or Super Cities concept which aims to enhance inclusive growth by deploying digital technologies and implementing regulatory reforms. There is one condition for Smart City or Super Cities selection, which is citizen participation, where citizens have data ownership.

Participation in digital transformation with digital technologies has been very active in Japan. During the pandemic the city of Tokyo created a web project with 400 civil engineers, including teenagers, to develop and operate web services to record what was happening and to change behaviours among its citizens. Developed in three days, they were created as open source so everyone could contribute and use the site. In addition, a contact-tracing app was developed, proving that initiatives deployed by technology can tackle social and economic issues.

HM Ambassador to Japan, Paul Madden, also emphasised Japan’s strong underlying public health system with a public focus on avoiding the three Cs: closed spaces, crowds and close contact. He observed that Japan didn’t go into as strict a lockdown as other countries and now there is a sense of things returning to normal, or a new normal, with shops and restaurants busy and even an exhibition of treasures from the National Gallery in London opening at Tokyo’s Museum of Western Art. Business meetings are resuming, such as the virtual visit to Japan by the Lord Mayor of the City of London. Virtual meetings allow close and regular contact with the major Japanese investors in the UK, and the current negotiations for the UK Japan Free Trade Agreement (FTA) have been more or less permanent, which has been helpful given the time pressures caused by the parliamentary timetable.

The FTA will be an important spur to the business relationship with an opportunity to go further in some areas such as digital services, creating possibilities for UK companies around funding fintech, as well as healthcare and life sciences and also infrastructure investment with a focus on green recovery with low-carbon energy. He concluded that it’s clear that the partnership of Japan and the UK is going to be more important than ever.

Wide-ranging debate

The discussion that followed highlighted similarities in approach among countries that had not previously considered this possibility, such as Namibia where green technology for infrastructure is extremely important. It was noted that Africa is a continent with a young population who are all digitally focused and use data for innovative purposes such as recording cattle movements in remote areas. Open data is a key topic in Africa, and new digital services could be launched there. In this regard, it was noted that Japan has been working closely with countries in Africa to promote infrastructure-building co-operation based upon the Principles for Promoting Quality Infrastructure Investment, which includes a climate change and environment principle.

In response to a question about the balance of free trade principles and the domestic supply of goods and services, while Japan feels the need to keep the supply of medical and healthcare equipment stable following the difficulties in securing supplies in the early weeks of the pandemic, it was also felt to be a global issue that requires further debate with a global solution.

Further questions focused on data and privacy, with Japan opening up 5G to a very secure provider and ensuring no over-restriction on the free flow of data.

At the conclusion of this wide ranging discussion, all participants agreed that this type of debate could create new relationships and achieve greater co-operation on the common issues that all countries face in the Covid-19 era.

Report By Sarah Cartledge

Senior Editor, Public Policy Projects

8th July 2020