Japan’s cutting-edge technology development to get boost from new law

The Yomiuri Shimbun

7:00 JST, May 13, 2022

The passage of a bill to promote economic security is the first significant step for Japan’s future development of cutting-edge technologies. The government is looking to aggressively bolster this development, while also working closely with the private sector to better protect Japan’s technologies.

The government hopes the bill will achieve this by preventing cyber-attacks against critical infrastructure and leaks of technologies. Additional legislation, securing sufficient funds for these policies and accurately grasping the needs of the private sector remain important, pertinent items on the government’s to-do list.

Takayuki Kobayashi, minister for economic security, was pleased after the bill was passed in the House of Councillors on Wednesday.

“We have taken an important step toward becoming a nation that can fully protect the lives and livelihoods of the people from an economic perspective, in any circumstance,” Kobayashi said during a press conference at the Diet after the bill’s passage. “Preparations to quickly put these steps into practice must be accelerated.”

Providing support for the development of advanced technologies is one of the legislation’s four pillars. The government will seek Cabinet approval for basic guidelines on this issue this autumn, and later establish a council on public-private cooperation that will form the core of this initiative.

The move to bolster support for advanced technologies was prompted by Japan being left in the dust of the United States and China in research and development.

Japan’s total expenditure on R&D amounted to about ¥18 trillion in 2019. This was about one-quarter the expenditure of the United States, which spent the most of any nation, and about one-third of China’s spending. China’s R&D expenditures have soared 160% since 2009 to be second in the world, while South Korea’s spending has doubled. Strikingly, Japan’s spending on R&D inched up by 10% during the same period.

“We can’t beat the United States and China with a strategy that focuses of quantity,” a senior official of the Cabinet Secretariat told The Yomiuri Shimbun. As a result, the government plans to concentrate investment in selected technologies that will become crucial to economic activity and Japan’s security, such as supersonic transport.

Final decisions on selecting these technologies will be made after discussions by groups of experts. Some previous public-private efforts have floundered due to a failure to meet the needs of the private sector. The success, or otherwise, of these upcoming initiatives likely will hinge on the technologies selected after considering the level of development achieved in other nations.

The government’s provision of financial assistance to the private sector has the advantage of enabling engagement in high-risk R&D programs. The government aims to have a fund dedicated to economic security eventually reach about ¥500 billion, so locking in the required budget appropriations will be crucial.

The government considers the bill enacted Wednesday as just the first step in crafting legislation designed to strengthen Japan’s economic security. As part of efforts to boost research in cutting-edge technologies, a key focus will be setting up a security clearance system under which access to sensitive information is granted only to people officially certified as not presenting a risk of leaking this information.

Such clearance systems already operate in nations such as the United States and the United Kingdom. Japanese economic circles have been crying out for such legislation to be compiled in Japan to enable more active participation in joint research projects with other countries.

The introduction of a security clearance system was shelved during the crafting of the latest bill due to concerns over the background checks that would be conducted on researchers and other personnel. However, calls trumpeting the necessity of such a system have been growing louder within the Liberal Democratic Party, and the government will start carefully considering the submission of a draft bill on this issue.

Hopes, concerns

Business circles have high hopes the new bill will reinforce the security of critical infrastructure and strengthen the supply chains for items such as semiconductors. However, deep-rooted concerns that the legislation could impose restrictions on freedom of economic activity and increase workloads linger.

Keidanren (Japan Business Federation) Chairman Masakazu Tokura welcomed the bill’s passage.

In a statement issued Wednesday, Tokura said it was essential to work toward strengthening economic security. “The business world will be more sensitive to risks and will play its part in ensuring the nation’s economic security,” he said.

Fujifilm Corp. Senior Executive Vice President Takatoshi Ishikawa also indicated support for the bill.

“The production of medicines and drugs comes with risks such as technology leaks,” Ishikawa said at a press briefing after the company announced its financial results Wednesday. “The government also wants to ensure the domestic production of pharmaceuticals, so I hope we can work together in some form.”

The new law, however, does not spell out any concrete rules for companies. The specified important goods and business operators that will be subject to inspections beforehand will be determined later by a governmental and ministerial ordinance.

A senior executive of a major electronics manufacturer was worried that the additional checks and reports would be time-consuming and expensive, which could “delay the development of new businesses.”

At another major manufacturer, a senior executive also had concerns, saying, “The goods subject to the checks need to be properly narrowed down.”