The Journal The Authority on Global Business in Japan

The Internet Economy Task Force (IETF) of the American Chamber of Commerce in Japan (ACCJ) has been assigned the development of viewpoints and policy recommendations for Japan’s engagement with the Internet economy and related issues.

As Yoshitaka Sugihara, chair of the IETF says, “The Internet is a resource for development and new business. But as it develops, a number of challenges exist, including regulatory and cross-border ones.”

To this end, the IETF liaises with the business community in Japan and the US, as well as with the relevant authorities in government in both countries, to find solutions in areas where difficulties for business may arise.

Megumi Tsukamoto, vice chair of the IETF agrees. “If we can support and encourage more US–Japan collaboration—not only between private sectors, but also government-to-government—to make a smarter world, then that would be a success.”

One feature of the Internet economy, Sugihara explains, is the fast-changing nature of products and services that are being created.

While everyday data flows are usually defined by national boundaries, the Internet has given rise to the borderless nature of data flows.

This aspect of the new economic landscape has created a need for greater collaboration between countries if mutual economic growth is to be achieved, and that collaboration includes US–Japan relations.

Moreover, “The close collaboration between the US and Japan on the Internet economy,” Sugihara says, “can be leveraged and extended to other regions, including Asia.”

What’s more, a key agenda item for the IETF is cyber security and related concerns: an over reliance on data localization—as compared with using more robust globalized data flow systems and standards—Sugihara says, can lead to vulnerabilities in domestic network security.

“These concerns are similar to the old debates over managed economies and free trade,” Sugihara explains.

“In the short term, managed trade worked well. But, eventually, it was generally understood that free trade made more sense.” Thus, the IETF recommends adoption of global data flow standards and cross-boarder Internet governance norms.

The IETF, furthermore, has worked closely with government and industry in the area of personal data protection.

“The Personal Data Protection Act amendment is one of the critical issues for all private companies which are operated in Japan,” Tsukamoto says.

In a July 2014 viewpoint, titled “GOJ Policy Review on the Protection and Utilization of Private Data,” the IETF recommends that companies be able to aggregate and use data to benefit customers.

And proper controls ought to be included to ensure personal data is protected.

The new data protection act, passed on September 3, 2015, will be a priority item for the IETF during the rest of the year and into 2016, with the next IETF dialogue set to commence in December this year.

For Sugihara and Tsukamoto, the pot of gold at the end of the rainbow is the imminent development of the Internet of Things (IOT).

“If the Internet economy develops into the IOT, which is the integration of industry and the Internet,” Sugihara says, “then the potential for economic growth is limitless.”

Tsukamoto shared similar sentiments. “The IOT, big data, and artificial intelligence are included in the government’s growth strategy for 2015. The Internet economy, moreover, is recognized as an engine for growth.

“With the government of Japan thinking positively, and Japanese companies being aggressive on IT investment, I’m quite optimistic that the Internet economy would strengthen Japanese competitiveness.”