JAPAN TIMES




 

Prime Minister Fumio Kishida’s Cabinet on Friday approved a bill to boost Japan’s economic security in a bid to abate risks associated with rapidly changing geopolitical and geoeconomic circumstances.

Improving economic security is one of the primary policy agendas proposed by Kishida amid the growing rivalry between the United States and China, while the coronavirus pandemic has also prompted the government to rethink the country’s supply chain strategy.

The bill mainly focuses on four areas: strengthening the security of key infrastructure, reinforcing supply chain stability, facilitating public-private cooperation on developing cutting-edge technology and keeping patents on sensitive technologies secret.

“Economic security stretches in a wide range of areas, so it’s not very realistic to cover everything all at once … since the four areas are pressing issues, we are seeking to develop legal systems for those areas,” said Takayuki Kobayashi, minister in charge of economic security, at a news conference on Tuesday.

“The main purpose of economic security is to enable our country to make policy decisions in an independent manner rather than being swayed by other nations’ moves.”

The bill will be deliberated during the ongoing parliamentary session and the government hopes that it will clear the Diet by June.

Kobayashi added that shoring up economic security will lead to acquiring more independence and strength for technology that will eventually bolster Japan’s presence in the global community.

In the meantime, Japan is following in the footsteps of its key ally, the United States, which has been reinforcing its economic security to counter China. The new legislation is apparently designed to prevent the leaking of sensitive information and reduce dependence on imports from the world’s second-largest economy.

The coronavirus outbreak has posed serious challenges for supply chains.
Japan struggled to secure some vital goods, such as face masks and other medical goods, from China in the early stage of the pandemic while chip shortages still continue to be a headache for manufacturers.

In an effort to more smoothly secure semiconductors, Japan plans to invest about ¥400 billion for Taiwan Semiconductor Manufacturing Co. to build a chip factory in Kumamoto Prefecture.

To further reinforce supply chain stability, goods that are vital to businesses and people’s lives will be designated as special goods. The government has not determined which goods will fall under that designation, but semiconductors, medical supplies and rare earths are likely choices.

The government will also give financial support to companies handling such goods.

Companies receiving financial aid will be required to report their business plans. They will be fined up to ¥300,000 if they fail to do so.

As for shoring up infrastructure security, the government will mandate that companies in 14 business sectors report on plans to install infrastructure management systems and who the suppliers will be, so it can conduct advance screening on where they will procure devices and parts.

The 14 sectors are gas, petroleum, power, water, railway, trucking, airlines, airports, international freight, communications, broadcasting, postal services, financial services and credit card providers.

With cyberattacks on core infrastructure increasing around the world, the government intends to make sure that domestic firms are not using devices that pose risks to infrastructure.

If reports are filed falsely or not at all, possible punishments include a maximum two-year prison sentence for the person in charge or a fine of up to ¥1 million for companies. A government official said punishments against individuals would be extremely rare.

The bill is also aimed at strengthening development of important technologies in the areas of outer space, artificial intelligence and quantum computing through closer cooperation between the public and private sectors.

To tighten the control of such technologies, penalties are expected to be imposed on people involved in public-private cooperation that leak related information.

The new legislation will also allow the government to keep patents related to nuclear and weapon technologies undisclosed if it thinks that disclosures will pose a threat to national security.

Sharing such information will be subject to penalties of a maximum two-year prison or up to ¥1 million fine.

While business leaders have expressed concerns that the possible penalties might restrict business activities, they have also shown understanding for boosting economic security, particularly due to the crisis in Ukraine.

“Companies need to make efforts to strengthen economic security when geopolitical risks like the current one emerge,” said Masakazu Tokura, who chairs the Japan Business Federation, in a news conference on Thursday, adding Japanese firms could be targeted by Russian cyberattacks.