The Japanese Diet was convened on January 18, and most of its attention is expected to be on budgetary measures (the third supplementary budget for FY2020 and the regular budget for FY2021) and revisions to the so-called COVID-19 laws. The third supplementary budget has been passed after significant struggle in parliament, with the opposition criticizing the government over its poor response to the pandemic and a growing number of political scandals. Most of the budget was used to finance the government’s Go To Travel campaign.
Support for the government of Prime Minister Suga Yoshihide has not fared well. According to a Nikkei/TV Tokyo opinion poll, the Cabinet’s disapproval rate increased by 2 percentage points to reach 50%. Its approval was at 74% in September last year. A lack of leadership is cited as the main reason for the drop in support. Respondents have been critical of the government’s reaction to the pandemic, with more than 75% saying the declaration of a state of emergency came too late. The government has been widely criticized for prioritizing the economy and not taking effective measures to stop people’s movement.
Despite calls for stricter measures from the public, the administration has been grilled in parliament for its plan to pass legislation containing criminal punishments for noncompliant people and businesses. Eventually, the opposition and ruling parties agreed to cut criminal punishment provisions from the revised infectious disease control law, while maintaining a framework for the imposition of fines. Although the parties reached an agreement, the tense debate over the issue early on may be a preview of the upcoming months. Coupled with growing instability within the LDP leadership, this may make it difficult for Suga to stay on as premier.
This month’s edition of Policy Radar covers developments in Healthcare, Digital and Energy.
Suga says Japan will secure 310 million doses of COVID-19 vaccines
During a plenary meeting of the House of Councillors, Suga said that he expects the country to secure over 310 million COVID-19 shots. The vaccination rollout will start with medical professionals, people aged 65 or older and people with pre-existing medical conditions. Suga said that the government would do its utmost to share scientific information regarding effectiveness and adverse effects with the public. The government has secured doses from Pfizer’ for about 72 million people, more than half the country’s total population. It has also signed an agreement with AstraZeneca for 60 million people, and another with Moderna for 25 million people. The Pfizer vaccine is still under review by the Health Ministry, but is expected to be approved on February 15 for people aged 16 and older. Moderna is not expected to receive approval before May, while Astrazeneca just filed for approval at the beginning of February. Health Minister Tamura Norihisa has expressed confidence that the government can start its vaccination campaign now that it has secured a contract. It is rumored that the ministry will start vaccinating the general public around April-May, but Chief Cabinet Secretary Kato Katsunobu has noted that there is still no detailed schedule. There were worries that the EU’s latest export curbs on vaccines would severely impact Japan’s supply, but the EU’s approval of exports to Japan has given the government a clearer picture of its vaccination schedule.
Growing calls for separation of the Health Ministry from Labor and Welfare units
The Ministry of Health, Labour and Welfare (MHLW) is facing growing calls for a reorganization. The three ministries were merged in 2000 in an attempt to centralize government and break bureaucratic sectionalism. Some members of the ruling Liberal Democratic Party have called for the ministry to be broken up as it has been involved in numerous scandals. On top of this the pandemic has increased the Health Ministry’s responsibilities, creating greater incentives to split off the labor section. Administrative Reform Minister Kono Taro said that the government is currently focused on fighting COVID-19, but added that the LDP would seriously consider the matter after the pandemic ends.
Langley Insight: The Cabinet Bureau of Personnel Affairs, which provides the prime minister with significant control over the appointment of senior ministry officials, is also the subject of proposed administrative reforms. Critics say the current situation leads top officials to follow the wishes of political leaders, rather than the needs of the whole population. However, since the 2014 administrative reforms, the government has been able to effectively control one of the world’s most powerful bureaucracies. These reforms are not priorities for Administrative Reform Minister Kono, who is focused on creating a centralized vaccination program and digitizing government procedures.
MHLW begins periodic discussions on the revision of Clinical Research Law
The Health Ministry has begun considering the revision of the Clinical Research Law. So far, discussions have taken place through the Health Science Council clinical research subcommittee, which aims to compile a set of proposals by the end of fiscal 2022. The MHLW is required to review the law five years after its enactment and recommend necessary revisions. The subcommittee has focused on four areas: generic drugs, the introduction of the “sponsor” concept, the reduction of administrative burdens and the positioning of observational research. On generic drugs, the study group is considering whether low-risk clinical research should be excluded from the specified clinical research category through a review of the off-label scope. On the sponsor concept, the ministry wants the panel to further discuss whether the idea can be introduced into the Clinical Research Law to centralize the management of study planning, monitoring and reporting. The subcommittee will meet five or six more times to discuss these issues, and report to MHLW.
Government considering use of My Number IDs for a unified vaccine rollout
The Japanese government is mulling the use of its national ID system for the coronavirus vaccine rollout program. The government wants a unified approach to distributing the vaccines, in contrast to how economic aid was delivered at the beginning of the pandemic. The government is considering using the “My Number” ID system, rather than having vaccines distributed differently in each municipality through a coupon system. The government wants to link vaccination coupons to My Number identification numbers under a centralized information system from spring onwards. Suga has said that he is thinking of different ways to manage the vaccination system’s data.
Langley Insight: A project team within the LDP has been working to compile a proposal to ensure a smooth vaccination system before inoculations begin in late February. The team is under both The Research Commission on the Social Security System and the Coronavirus Control Headquarters. The project team is discussing ways to secure a stable supply of vaccines for Japan, ensure quick delivery to healthcare institutions, allocate the number of vaccines per healthcare institution, ensure fastest rollouts to target populations, ensure safety of medical staff and people at vaccination sites and, lastly, respond to adverse vaccine reactions. Issues like getting vaccines to remote islands and small villages, or people unable to go to vaccination sites because of their medical conditions have also been discussed.
METI to promote digital reform by pairing foreign startups with Japanese companies
This month, the government will establish a new framework to promote cooperation between foreign startups and medium-sized enterprises located in rural areas. The aim of the program is to advance the digitization of domestic companies’ operations. METI will specifically pair domestic midsize firms with foreign startups by introducing them, setting up meetings and carrying out market research. The government will provide support in five specific areas: decarbonization, healthcare, mobility, retail and agritech. The latter will get significant funding from the FY2021 budget. Foreign startups targeted will be from Singapore, Vietnam, Indonesia, India, Israel and Australia. Through the same framework, the Industry Ministry will also advise and assist the companies in investing in and acquiring foreign companies.
Langley Insight: The initiative indicates the government is taking big steps to promote digital transformation, especially relating to domestic companies making parts and materials. A senior official of METI believes that the program through the pairing of foreign startups and domestic companies will advance the momentum for digital reform within the country.
FSA to favor companies carrying out decarbonization efforts through financing
The Financial Services Agency (FSA) will ask banks and companies to increase their decarbonization efforts through the addition of measures in their bank guidance policy, ultimately favoring those companies that invest or want to invest in renewables. The FSA will also request companies show internal information about climate change. This will be done by encouraging the disclosure of climate change information through the Task Force on Climate-related Financial Disclosures. Companies wishing to reduce carbon emissions will also get support from the FSA, which will ask banks to support change through advice and funding. This said, the FSA will not push for disinvestment from polluting companies. The FSA also convened its first expert panel meeting on sustainable finance so as to discuss climate change and sustainable growth, aiming to compile a set of proposals for this summer. The efforts will lead to easier fundraising and investment for eco-friendly companies. Guidelines will be discussed in cooperation with METI and the Ministry of the Environment. This change is in line with Japan’s pledge to be carbon neutral by 2050.
Development Bank of Japan launches ¥53 billion fund for wind power energy
The Development Bank of Japan, a government-institution, has begun a ¥53 billion fund to promote the expansion of Japan’s wind power sector. Funding comes from insurers, regional banks, Green Power Investment (GPI) and the Development Bank of Japan itself. The fund has already bought three wind farms and two solar panel projects, with an estimated energy capacity of around 220 megawatts. The development bank has partnered with GPI for a number of its projects, but it is considering partnering with other energy providers to help them build more energy infrastructure in Japan. The government deems wind energy as a critical asset to achieve carbon neutrality by 2050. Purchasing facilities so providers can reinvest capital in new projects is a way of attracting them to Japan.
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