Revolution dotcom

JAPANESE Prime Minister Mr. Yoshiro Mori has made information technology a key plank of his economic policies. A governmental high power panel that wants Japan to overtake the United States as a high speed IT giant by 2005 has come out with the outline of a bill to be tabled in the current session of Parliament. The expert panel has required the government to identify high priority projects with clear goals and set time frames to help Japan fully harness its infotech potential - experts asking the bureaucrats for guidance, a case of putting wolves in charge of the chicken coops. It is a moot point if the credit for launching the IT revolution should go in full to Mr. Mori or in part to his predecessor in office Mr. Keizo Obuchi, who visualised "Better Governance in the New Millennium" and had set up a commission in March 1999 to prepare a blueprint for this purpose.

Without entering into the details of the recommendations of Mr. Obuchi's Commission for the New Millennium it is suffice to say that the core of the Commission's recommendations had pleaded among other things for "for global literacy". The basic elements of the "global literacy" are the mastery of information technology tools such as computers and the internet and the mastery of English as the international lingua franca. The information technology revolution visualises in particular the rapid development of the internet, upgrading its infrastructure and strengthening its IT training. While the full report has not come for public debate as was visualised and the recommendations are kept under wraps, the Mori Government has suddenly launched an aggressive IT offensive, thanks to the recent G-8 Okinawa Summit on "digital divide".

Commenting on the Government's ambitious drive to catch up with the U.S. on information technology, Japan's famous management guru (and a former partner in McInsey and Co.), Dr. Kenichi Ohmae has said that the government's plans are a "sham" being foisted on the Japanese people. Dr. Ohmae has said that Japan does not have the required education system. He described language difficulties as among the biggest barriers confronting the Japanese people. He pointed out that Singapore, Hong Kong and India are successful IT societies because of their mastery of English. Besides, the government has not carried out fundamental changes in legislation to create an IT revolution in society. Even according to the government there are 733 regulations and 124 laws obstructing E-commerce and "vested interests like accountants, lawyers and teachers' unions" are opposed to changes as they fear the consequences of the promotion of an "On Line Government" by 2003. Dr. Ohmae declares in a recent article that the "IT revolution won't happen" in Japan.

The IT outline approved by the expert's panel and passed on to the government for whetting was reported to be full of lofty ideas. For example, it suggests that the private sector take the lead in powering the IT reforms and the role of government should be limited to promoting fair competition. There are some who suspect that the whole exercise was an attempted cover-up of the mega expenditure on traditional roads and bridges through diversion of funds to the information highway - "part of a smoke- screen for the old style pork barrel spending". The new scheme, it is reported, contemplates the issuance of "IT vouchers" to 100 million people over the age of 20 who would each receive vouchers worth about 60,000 Yen (approximate $ 55) to help defray the cost of courses in the use of computers and the internet. The estimated cost of the exchequer is expected to be 300 billion Yen. It is not surprising that Dr. Ohmae has accused the government of being misguided by some strong private interests. He has pointed accusing fingers at Sony, Fujitsu and Toshiba in particular, and said that between them they will sell 40 million of their own computers to the government as part of the policy they have outlined for the government. In these days of dog eating dog in politics or business, no comments on the story, even if true.

There is then the other side of this misadventure. As an increasing number of foreign companies flock to open shop in Japan's budding internet market, the world's second largest, they are discovering a process far more laborious than they imagined. Apart from the traditional regulatory hurdles that are integral to Japan's cosy corporate environment, many non-Japanese companies hoping to offer internet-based services are finding that they have to tackle problems of internationalisation in some areas, which means rebuilding entire programmes. It is said that the difference between localising a web page and internationalising its underlying source code can be seen as analogous to the difference between writing computer manuals and writing software. To wish for quick results in a long drawn out exercise, will make a well-meaning reform an exercise in futility.

Japan's economy has been in and out of recession so many times in the last ten years. Prof. Hajime Karatsu of Tokoi University in Tokyo who headed a special panel set up by the late Mr. Obuchi to examine industrial competitiveness is convinced that Japan's decline is related to the decline of its manufacturing industry. A fundamental problem facing Japan's economy, according to the annual white paper on international trade of the Ministry of Trade and Industry (MITI), is that the manufacturing sector is losing its overall competitiveness in world markets. Whereas the financial sector (including the banking sector) is officially promoted through measures such as Japan's "Big Bang", the manufacturing sector is left to fend for itself and the focus on glamorous new industries such as information technology has cast into shadow the once strong image of the manufacturing sector, especially among the younger workers. While the future is in the dotcom companies, what is the future of the dotcom companies themselves?

Goldman Sachs, the international investment banker, predicts that the world market for international services in information technology will grow from $ 349 billion in 1999 to $ 585 billion four years from now. It is often heard that it is the dotcoms that are in the service sector, which will rake in larger profits than those that provide goods. It must, however, be remembered that the expected massive inflow of profits from IT transactions on the Net cannot be the substitute for real growth in the manufacturing sector. What Japan needs is a strong dose of fiscal reform to pull itself out of the quagmire it is in. Even IT companies will not usher in a revolution unless it is preceded by the necessary reforms in the education system. First thing first should be the guideline and Japan is bound to succeed in the "third industrial revolution" given the Japanese penchant for making virtue out of necessity.

N. KRISHNASWAMI

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