METI has been the key actor behind Japan’s national mask policy. The Ministry created a subsidy scheme to boost local production, first selecting a batch of three companies at the end of February (Kowa and Xins for manufacturing masks, and Hata Industries for manufacturing components). A second batch of eight companies was announced on March 13. Overall, 120 companies have been asked to increase their production. In 2018, Japan’s market absorbed 5,5 billion masks, with 20% produced domestically and 70% imported from China. Domestic production boost considerably reduces reliance on Chinese supply. However, import is not excluded. METI has encouraged imports from China since they resumed during the week of February 17, seeking a gradual increase to reach a weekly import of 20 million units per week in early April. METI has announced that these measures will suffice to reach Prime Minister Abe’s supply target. At the beginning of April, there was still some tension on the supply side, and the Japanese government decided to send two sets of washable and reusable cloth masks to 50 million addresses in Japan, to complement the market of surgical face masks.
The digital dimension
Unlike South Korea, Singapore, Taiwan and Hong Kong, Japan makes relatively little use of digital tools. For one thing, there is no quarantine for Japanese nationals as hospitalization is mandatory when testing positive. But there is still an important digital dimension to Japan’s crisis management, and a legal privacy protection issue surrounding it. Prefectural governments have created official accounts on Line, Japan’s most popular free messaging application, that users can add as friends to enter information so that the application can determine if they need to consult in a designated coronavirus facility, provide guidance and store data. But this is not a contact tracing approach, as access is not granted to the list of contacts registered in the Line app of the user. The AI software regularly asks for updates from registered users. In Kanagawa prefecture, 210000 people had registered by the end of March. The Ministry of Health is also using the application Line to run a "National Survey for New Corona Countermeasures" asking the users about different symptoms associated with COVID-19, and their postcode.
One important step was taken by the Japanese government in late March when it requested mobile phone carriers and popular internet platforms such as the GAFA and Yahoo! Japan to provide anonymized data to help with an early identification of clusters. This follows the establishment of a "Cluster Response Section" (クラスター対策班) as part of the February basic policies. In practice, once medical facilities test new cases, the cluster team is dispatched to conduct an epidemiological investigation. A data team under the leadership of NIID brings together data analysis experts from Hokkaido University, a contact tracing team from NIID’s own staff, and risk management analysts from Tohoku University. But given Japan’s privacy legislation, their investigations rely very much on human cooperation.
Facing the economic cost
Japan’s crisis management has been colored by the high stakes linked to the preparation of the 2020 Tokyo Olympics, which were finally postponed to the summer of 2021 by late March. A controversy has arisen, with Former Prime Minister and opposition politician Yukio Hatoyama accusing the government of an "Olympics first" approach with a weak response to the coronavirus crisis in order to project the impression that the city was "taking control of the virus". This accusation however neglects the fact that the Olympics postponement was a necessary measure given the international spread of the virus, and not only the situation in Tokyo. The Olympics is about international prestige, but also investment and economic gains, and their postponement sheds the light on the economic cost of the crisis for Japan. The Japan center for Economic Research estimates that Japan, mostly through public companies, has invested between US$32 and US$41 billion in infrastructure projects, including the additional hotel capacity. The Olympics Committee estimates that the additional cost of delaying the games is 300 billion yen (US$2.7 billion), a cost that does not include the delayed gains for the Japanese GDP in 2020.
Beyond the Olympics, Japan’s answer has to address the global macroeconomic environment, and the impact of weakened domestic activity, especially if the government decides to impose a state of emergency. A first package of measures is approved in mid-February, with 500 billion yen (US$4,5 billion) centered on the tourist and travel industries, with inbound tourism down 58% year-on-year in February, and a projected revenue loss of US$2.8 billion for Japanese airlines between February and April. The government announces a second emergency package of measures of US$4,2 billion in mid-March, including subsidies for freelancers and for parents obliged to stay at home as a result of the closures of schools.
A major economic policy decision is in preparation at the time of writing this article. The Japanese government is preparing a massive 60 trillion yen ($556 billion) stimulus package (close to 10% of GDP) in the form of a special budget to be approved by the Parliament. The measures envisaged include tax facilities for small and medium enterprises, subsidies to maintain employment, facilities for banks to extend loans, and possibly targeted cash handouts to eligible households.
Copyright: Philip FONG / AFP