The COVID-19 pandemic has laid bare the shortcomings of governments around the world. In Japan’s case, management of the health crisis was hampered by an outdated and cumbersome administrative system. While the country may be famed for its futuristic technology, some aspects of government appeared to still be operating in the last millennium. 

As social media was being used to conduct widespread surveys and provide support for people with the disease, many healthcare providers were faxing information about infections to public healthcare centers, where data was aggregated manually. When the government tried to send out nearly $1,000 to each resident, the process was significantly delayed by paper-based administrative procedures. People were told to submit applications online, but an unprepared system forced some local governments to accept mail-in requests only.

Looking to distance himself from his predecessor and address this glaring problem, Prime Minister Yoshihide Suga made the digitalization of Japan one of his top priorities. Within hours of taking office last September, he created the post of digital transformation minister and tasked the latter with creating an agency within a year to lead the national effort.

The project is moving forward at record speed and the Digital Transformation Agency is expected to be operational by September 1 of this year. It will be staffed by around 500 experts, including at least 100 IT engineers hired from the private sector through a fast-track process more readily associated with a business start-up than a public organization.

“I believe that the pandemic is why Japan has been moving forward with digital transformation at an incredible speed. It’s provided a strong lesson to the entire nation,” says Takuya Hirai, Japan’s first Digital Transformation Minister.

Hirai’s agency will act as a command center, reporting directly to Prime Minister Suga. Within five years, it hopes to integrate, standardize and digitalize government processes, ahead of a nationwide transition to the cloud. Simultaneously, the agency will create architecture for new public sector systems while promoting initiatives to encourage digital transformation in the private sector.

“This is an agile, expedited process, similar to starting a company from scratch.”

— Takuya Hirai, Minister for Digital Transformation

“The establishment of the Digital Transformation Agency is an agile, expedited process, similar to starting a company from scratch. Eventually, once the Digital Transformation Agency is in operation, we will have ‘Government as a Service,’” explains Hirai. “This means government services will be accessible and available 24 hours a day, 365 days a year. The convenience of digitalization in various fields such as medical care, education, and disaster prevention is that it will be available whenever and wherever you want.”

The agency will also be different from other government departments in its rejection of traditional, top-down bureaucratic thinking. Instead, it will put user experience at the center of its strategy as it strives to make administrative services simple and intuitive for everyone, including the elderly and people with disabilities.

One of the agency’s key goals is the promotion of Japan’s personal identification cards, called My Number Cards, which will serve as passports to the digital society. These cards are already equipped with IC chips that act as electronic certificates, verifying identity for some online government services. They are also hooked up to an online portal where residents can check what information governments have about them, as well as perform a few administrative tasks. But the government’s strategy is to make the cards much more versatile.

From Japan’s National Diet, the Suga administration is spearheading the process of digital transformation. Shutterstock

By this spring, the ID cards are expected to also begin operating as health insurance cards. By early 2023, the government aims to hold their functions in cellphones. The year after that, they are expected to act as valid driver’s licenses, all while the government continues to improve their authentication functions.

“At that point, it will become possible to digitally identify the person and check the necessary information on the spot, providing finely tuned services. This should lead to greater convenience in people’s daily lives, with citizens able to file tax returns or complete childcare-related procedures online from anywhere using a computer or mobile phone,” said Hirai.

Aspects of the new system are already being piloted. Moving in Japan can be a notoriously long and complicated process. The change of address has to be reported to various government agencies and private businesses. The processes vary from place to place and person to person, leading to frequent mistakes and omissions. To reduce the burden, the government is going to launch an online one-stop moving service allowing residents to report their new contact information to local governments and private enterprises all in one place.

“We need to think about how digital infrastructure, despite being invisible, brings about huge value for society, just like physical infrastructure does. This is the key to revitalizing Japan’s economy on a global scale.”

— Mickey Mikitani, Chairman and CEO of Rakuten

“We need to think about how digital infrastructure, despite being invisible, brings about huge value for society, just like physical infrastructure does. This is the key to revitalizing Japan’s economy on a global scale,” says Mickey Mikitani, Chairman and CEO of Rakuten, a leading Japanese digital company. “Digital transformation is endless. There is no finish line.” 

The government understands that for digital transformation to be successful, it will have to protect users’ privacy and security. Authorities are working on a system in which an independent regulatory authority will monitor and supervise how personal information is being handled by both the public and private sectors. And new legislation is expected to be presented to the government this year, renewing basic regulations around personal data with the aim to strike “an appropriate balance between the protection and utilization of data,” in the words of Minister Hirai.

Beyond its borders, Japan has spearheaded the Data Free Flow with Trust initiative. First discussed under Japan’s G20 leadership in 2019, the initiative seeks to develop international rules for the digital age that protect sensitive information while allowing productive data to flow across borders. This, and other ideas related to digitalization, will be highlighted when Tokyo hosts the World Economic Forum’s first Global Technology Government Summit in early April.

Interview with Takuya Hirai, Japanese Minister for Digital Transformation

Takuya Hirai, Japanese Minister for Digital Transformation

The COVID-19 pandemic has underscored Japan’s shortcomings in digitalization, as evidenced by the recent difficulties in sending out relief checks to citizens due to an over-reliance on paper-based bureaucracy. The government is now racing to overcome this lag with a series of bills for digital transformation that will be submitted to the Japanese parliament, the Diet, throughout this year’s session. One of the most ambitious plans is the creation of a Digital Transformation Agency that will act as a central command center, unifying what have so far been individual efforts by public and private organizations to bring their services online. Expected to be operational by September, the agency will also standardize information systems to facilitate cross-agency cooperation. Minister Takuya Hirai explains how initiatives such as the My Number card will allow citizens to easily complete numerous administrative procedures that can currently prove complex and lengthy. The transition to a fully digitalized society will be made from the user’s perspective and provide a wealth of services for life events ranging from medical procedures to moving to a new location. This “human-friendly digital transformation” ultimately aims to create a society where “no one is left behind.”

You have shared your plan to launch a Digital Agency over the next year. How are you going to reach that goal and what does it aim to accomplish?
In the 2021 session of the Diet, we will take all possible steps to ensure a successful fundamental revision of the government’s Basic Act on the Formation of an Advanced Information and Telecommunications Network Society, which was enacted in 2000. We will also focus on submitting bills for digital transformation, including the establishment of the Digital Transformation Agency. We will then make swift and steady preparations to establish the agency on September 1, 2021.

To date, the government’s digitalization efforts have not been thoroughly user-oriented and steps to improve have been half-hearted. In particular, through personal observation, I recognize that there are issues that have arisen from the fact that central government ministries, agencies, and local governments have been promoting digitalization individually in various fields, both in the public and private sectors.

The Digital Transformation Agency will play a role as a control tower that vigorously promotes our society’s digitalization as a whole. It will be a strong organization where the public and private sectors will collaborate efficiently, consisting of officials with specialized training and experience and excellent private sector engineers. I would like to give it the necessary authority to bring digital transformation forward. 

We are preparing rapidly for the establishment of the Digital Transformation Agency. It will have a staff of about 500, and among those, about 100 staff members will be hired from the private sector. We started early recruiting towards the end of 2020, and have already received 1,400 applications for just 30 spots, which is far beyond our expectations. I really appreciate the attention that we are receiving on this matter.

I intend to hire people who share the principles and values of the Digital Transformation Agency and who have the desire and determination to create the momentum required for promoting digital transformation together, and to shape the new organizational culture of the Digital Transformation Agency so that we can realize human-friendly digital transformation and a no-one-left-behind society.

In your recent appearance at the Web Summit, you spoke of the need for the government to stand as an example for positive digital transformation and of the idea of government as a start-up. Could you elaborate on those ideas?
The purpose of digital transformation, or DX, is to promote a human-friendly digital transformation with a view to creating a society where no one will be left behind, where citizens can choose the services that meet their needs and find fulfillment through the use of digital technologies.

The Digital Transformation Agency will oversee and supervise the central and local governments’ information systems. Besides that, we will also put in place essential systems. In this way, we will be able to offer the services that people rightfully hope to receive, designed thoroughly from ordinary citizens’ perspective. We believe that implementing such DX in administrative procedures in a way that applies to all citizens will have a significant ripple effect beyond the public sector. The government must set an example in terms of promoting society’s digitalization as a whole.

‘Government as a Start-up’ is an important slogan for us to promote digitalization. It illustrates how the establishment of the Digital Transformation Agency is an agile, expedited process, similar to starting a start-up company from scratch. Eventually, once the Digital Transformation Agency is in operation, we will have ‘Government as a Service.’

What are Japan’s Individual Number cards and do how they aim to further digitize Japanese society?
The Individual Number Card, also known as “My Number Card”, is equipped with an IC chip that functions as an electronic certificate. It can be used for identification, that is, to verify both the identity of the user online and in-person; and for authentication, to prove that electronic documents created and sent through various applications are genuine and have been created and sent by the user himself/herself. The My Number Card is, in this sense, the highest level of identification card. It is essential as a safe, secure and convenient ‘passport for the digital society’ that allows users to complete various procedures online.

From now on, we would like to make the My Number Card available for use in a variety of administrative services. By March 2021, we want it to start functioning as a health insurance card. By the end of FY 2022, we aim to install the functions of this card (electronic certificate) in mobile phones. By the end of FY 2024, we also want to start using this card as a driver’s license. We are also working to thoroughly improve the usability of this card’s authentication functions.

With these improvements and through the expansion of the digital service, the My Number Card may be used as a health insurance card, driver’s license or any other type of qualification certificate, and at that point it will become possible to digitally identify the person and check the necessary information on the spot, providing finely tuned services and leading to greater convenience in their daily lives as citizens can file tax returns and complete childcare-related procedures online from anywhere using a computer or mobile phone.

In addition, the electronic certificate function of My Number Card provides an online identity verification service officially guaranteed by the government. Private services are increasingly using this card for identity verification in situations such as opening online brokerage or bank accounts and signing mortgage contracts online.

The government-operated website, “Mynaportal” is a site where citizens (users) can check their own information held by administrative agencies and make various applications online by verifying their identity using their own My Number card.

The government provides the functions offered by Mynaportal as application program interfaces (APIs), not only to administrative agencies but also to the private sector. Mynaportal plays a role as an “information hub” connecting citizens, the government and the private sector in the digital society by supporting both private and public online services that have partnered up with the APIs of Mynaportal.

In this way, the My Number Card, which allows people to identify themselves online and the “Mynaportal”, which provides various services online, support the digital society as its foundation, creating a convenient society where citizens can use various services from anywhere at any time.

Some countries, particularly China, have become highly digitalized in a way that has negative effects on the freedoms of individuals and certain groups. How will the Japanese government’s digitalization strategy incorporate privacy and data protection?
Since the year before last, Japan has been advocating the basic concept of ‘Data Free Flow with Trust,’ intending to overcome differences among countries in the handling of personal information and develop international rules to ensure the free flow of data across borders while protecting privacy and security,

In the establishment of the Digital Transformation Agency, in the ‘Ten Guiding Values for a Digital Society’ announced at the end of last year, “mitigating uncertainties surrounding digital technologies by ensuring the protection of personal information and preventing misuse” was set as a goal for the “Security and Safety” of digitalization. The government has outlined the direction of the development of database registers and other basic data to create new values through the further utilization of data, which has become a source of value with the digitalization of society.

At the same time, with the ‘Final Report on the Review of the Personal Information Protection System’ released at the end of last year, the government is going to establish a system in which the Personal Information Protection Commission, an independent regulatory authority, will uniformly monitor and supervise the handling of personal information, regardless of whether it is in the public or private sector, at the national or local level.

Based on the above, the government is planning to enact DX bills in the 2021 Diet, including the renewal of the Information Technology Basic Act and the Personal Information Protection Act, to promote the digitalization of society as a whole while striking an appropriate balance between the protection and utilization of data.

What did the pandemic teach you and your ministry about the importance of digital transformation? Do you believe the crisis will act as a catalyst to accelerate reform?
While dealing with the COVID-19 pandemic, several issues have come to light. For one thing, in the effort to provide uniform cash handouts of 100,000 yen to all citizens, the government had trouble providing them promptly. This was because the procedures for the registration of account information to local governments were not entirely digitalized. In Japan, a communication network still based on the old system remains in effect, such as handwritten or faxed reports of positive cases from health centers and hospitals to the government.

I understand that these issues have arisen because central and local governments, in particular, have been promoting digitalization individually, which has affected various areas of the public and private sectors.

In my opinion, the main cause for this is that we have been half-hearted in our efforts towards digitalization, and we were not thoroughly taking the users’ perspective. I strongly feel that to realize the services that citizens rightfully want, and to create a society where people can experience the convenience of digitalization, it is necessary to promote digital policies that are thoroughly user-oriented.

On the other hand, I believe that working from home, online medical care, and online education have become somewhat rooted in society by now as an effect of COVID-19. We need to use this momentum, and we cannot take a step back. It should become the engine of the digitalization of society and it presents opportunities for DX.

In any case, I believe that dealing with the COVID-19 pandemic has served as an opportunity to underscore Japan’s lag in digitalization. I believe that the reason why Japan has been moving forward with DX at an incredible speed is that the entire nation has shared such lessons.

How would you describe Japan’s vision for a digital society?
Digitalization is just a method, not a purpose. The vision of DX, including the creation of the Digital Transformation Agency, is, to put it another way, for the government to create a ‘digitalized society without being conscious about being digital.’

The government will create a society where, even when everything becomes digital, there will still be a mechanism for people to help people, and where the old Japanese saying of “when in trouble, let’s help each other” is further utilized through the use of digital technologies that everyone in society can benefit from.

At the end of last year, the Working Group on Digital Transformation-Related Bills, which is a meeting to discuss the government’s DX, compiled a vision for the future of the digital society and ideas for a comprehensive review of the IT Basic Act, Basic Act on the Formation of an Advanced Information and Telecommunications Network Society, including Ten Guiding Values for a Digital Society. This policy will be reflected in the comprehensive renewal of the IT Basic Act in the Diet in 2021.

What role do you and your ministry have to play in bringing this all to fruition?
The Digital Transformation Agency is a symbol of regulatory reform and a pillar of the government’s growth strategy. Its role is to create a society where people can get the services they rightfully expect and experience the convenience of digitalization. For example, to transform the system for administrative procedures into a service that is easy to use (UI/UX) for the elderly, people with disabilities, and people who dislike using digital technology. The Digital Transformation Agency will manage the procurement systems that were different in each agency; it will reorganize the overall vision and architecture to construct a system that will enable the interconnection of data between the central and local governments’ systems, based on the basic premise of joint use through cloud services designed by the central government. Also, the Digital Transformation Agency will strongly promote the development of policies for systems in the public sector, such as medical care, education, and disaster prevention. It will also promote the study of specific measures to enable DX in the private sector. Both of these issues have been conducted separately by each ministry and agency until now.

To realize these goals, I strongly feel that I must take the lead in vigorously promoting DX and that the Digital Transformation Agency, as the command post for the formation of a digital society, must be given a robust overall managing function, including the right to issue orders.

What are the benefits of a more digitalized society overall, and what challenges will it help Japan overcome?
As a result of the COVID-19 pandemic, our society has changed dramatically from traditional lifestyles to assuming complete services online. As trans-boundary movement is limited by the pandemic, I believe that by shifting to digital in all areas of government services, such as regulations, benefits, taxes and statistics, we will be able to promote data collaboration between the public and private sectors and the private sector’s response to the digitalization of public administration. This will lead to the promotion of DX in the private sector and bring about innovation in people’s lives and companies’ business strategies, which will help improve productivity, enhance profitability, and revitalize socioeconomic activities.

The benefits include, for example, government services available 24/365. The convenience of digitalization in various fields such as medical care, education, and disaster prevention is that it is available whenever and wherever you want.

We also want to establish a more enriched lifestyle where people can lead a quality life with a variety of choices, regardless of location or age, and where the free time is increased by efficiency, and can be used for further investment and socioeconomic activities, contributing to economic growth, as well as for a variety of community activities and leisure.

Further, by establishing rules that facilitate data distribution across various fields, we can also hope to see the creation of new businesses.

What potential do you see for collaborating with the US in terms of digitalization?
Against the background of increasing data volume due to the progress of digitalization and the promotion of innovation, as well as the improvement of AI capabilities, countries around the world are developing and promoting data strategies, seeing data as the foundation of national wealth and international competitiveness in a digital society.

In the U.S., the Federal Data Strategy was formulated in 2019 with the goal of utilizing the data held by government agencies, and based on this strategy, action plans have been created and specific initiatives have been promoted.

In Japan, too, we have decided to urgently address the following three issues, based on the belief that it is extremely important to promote digital data development, which is indispensable for a prosperous digital society. The first is the development of basic data such as database registries. The second is the development of a platform including rules and tools. And the third is the development of a trust framework.

This is the result of the Data Strategy Task Force’s first report, released last December, on a comprehensive data strategy for Japan as a whole, including the public and private sectors, to build a digital infrastructure suitable for a digital nation in the 21st century.

We would like to further promote information exchanges and collaboration with the U.S. for future cooperation.

Are there any projects, technologies or ideas coming out of Japan that you would like to highlight?
In Japan, the public and private sectors are working together to reduce the burden of procedures on citizens in various life events.

For example, when moving to a new place, citizens with work and family commitments are overwhelmed by the need to individually notify various government agencies and private businesses of their names, new addresses, and other information. Besides, it has been pointed out that the necessary procedures differ from person to person and that the organizations involved are numerous, making it difficult to grasp the entire picture of the necessary procedures and easily causing omissions.

In response, the government is promoting the ‘One-Stop Service for Moving’ to reduce the burden of procedures associated with moving and prevent these omissions. Users of this service will be able to use portal sites provided by the private sector as their contact point, and by using their My Number Card, they will be able to carry out procedures needed for both the local government and the private sectors in one-stop.

As described above, we are promoting efforts to efficiently reduce inconveniences for citizens while collaborating and utilizing the strengths of the private sector. Japan has been advancing these policies from the user’s perspectives by holding ‘service design workshops’ where relevant organizations from the public and private sectors gather together, conducting demonstration experiments, and exchanging opinions on the specific image of the services to be realized.

A website called the ‘Digital Transformation Idea Box’ has also been set up to solicit a wide range of opinions and ideas from the public, including consumers, businesses, the IT industry, and local and central government officials. This is another effort to reflect useful, constructive, and popular opinions in policies from the people and users’ perspectives.

The most popular ideas submitted to the Idea Box are selected and we make sure to visualize how the idea can be used to design a policy. By linking policies and original ideas, the public’s opinions are used as the “seeds” of policies, and the process of “sprouting (policy progress)” and “blooming (realization)” is expressed in an easy-to-understand manner.

The Digital Transformation Co-Creation Platform was established at the end of last year as a place for discussion with local government officials from all over the country who are willing to participate in examining local government systems, the perspective of on-the-ground operations and technology. This is in response to feedback from the Idea Box and open dialogues with local government officials that the digitalization of rural areas requires a system in which local government officials, who actually do the work on the ground, are actively involved. A wide range of local government officials from all over Japan with a strong desire for DX will be invited to participate, and together they will discuss issues related to the digitalization of local areas from a user perspective.

The Digital Transformation Agency, which will be launched in September, is also intensely aware of the importance of taking the citizen’s perspectives into consideration. I am determined to rapidly promote and develop people-friendly digitalization so that no one will be left behind.