Japan woefully behind in race to beat millenium bug

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Link November 19 1999 ANALYSIS

The land of the rising sun may be facing Y2K meltdown. Richard L. Grant reports

) A millennium countdown clock is repaired in Tokyo but can Japan manage Y2K failure?

Japan woefully behind in race to beat the millennium bug Japan, the land of the rising microchip, known throughout the world for the production of dazzling electronic gadgetry and state of the art cars, should, on the face of things, be the country best prepared for the Y2K (Year 2000) millennium bug. It is not.

The image of Japan as a high-tech society is flawed. Urban middle-class Chinese children are more likely to be computer literate than their Japanese peers. Information technology is only just coming on line in many big institutions; the Japanese Foreign Ministry, for example, became fully computerised only last year.

The Japanese Government has become the first in the world to admit things might get messy in the new year. It recently warned its citizens to stockpile at least two days' supply of food, water, heating fuel and batteries for portable radios and flashlights. It has also called on all citizens to have hard copies of all financial data to hand in case the banking system crashes.

Recent reports on the status of Y2K preparedness in Japan indicate that these government warnings may be more than just precautionary. According to a "preparedness index" published by Warburg Dillon Read, Japan ranks below Hungary, Chile and Thailand. Although all major financial houses and infrastructure systems (oil, transport, and telecoms) are Y2K compliant, many of these institutions have conducted little or no contingency plans or exercises should things go wrong.

The picture is even less encouraging however in the healthcare sector. As of June 30, this year, the latest figures available, only 19 per cent of medical facilities designated "key" by local governments in Japan have completed simulation of medical equipment, a mere 8 per cent had taken steps to correct the millennium bug, while 70 per cent were still in the process of doing so. Equally alarming, only 22 per cent of these key facilities had tested their medical information services and, while 62 per cent are now in the process of making these systems Y2K compliant, only 14 per cent had actually completed the process.

Hospital staff are now being instructed on how to operate medical equipment, such as respirators, by hand.

Also worrying is the lack of preparedness of small and medium-sized companies (SMEs) in Japan. Again, as of June 30, a full 21 per cent of SMEs surveyed were only just considering the need to make their operations Y2K compliant and a staggering 34 per cent of those companies that rely on PCs with a calendar function are only contemplating upgrading their equipment. Given the dependence of the large Japanese conglomerates on SMEs as subcontractors, this lack of preparedness must be deeply worrying.

The lack of contingency planning and crisis-management exercises for the millennium bug is a cause for real concern. In recent years the Japanese have shown a troubling inability to respond well in times of crisis.

Believing that their infrastructure was earthquake proof, the Japanese were stunned by the magnitude of the great Hanshin earthquake of 1995 which killed more than 5,000 people. The Prime Minister was not informed of the disaster for 14 hours and the military was not sent in for 24 hours, leaving people to fend for themselves. All offers from outside Japan, including sniffer dogs and assistance proffered by US military stationed in the country, were refused.

Similarly, although suspicious of the Aum Shinrikyo cult, the Japanese police did not launch any serious investigation of the group until after it had launched a poison gas attack on the Tokyo subway, killing five and injuring thousands. The Japanese reaction to these and other events, including the recent accident at a nuclear reprocessing facility, together with the political gridlock that holds sway in Tokyo, is a source of disquiet about how Japan will deal with a major millennium crisis.

Although the Japanese people are deeply ill at ease after Hanshin and the Aum Shinrikyo attack, the Japanese Government is striving to appear on top of the situation.

For example, in September it established a Y2K Task Force within the Cabinet Office and an organisation has been set up within the Prime Minister's residence to gather and disseminate information throughout Japan in the run-up to the new year.

Yet, within the Government itself, Japan would appear to have developed insufficient contingency plans if things do go wrong.

One survey reported that the Government had drawn up contingency plans in case of computer failure for only 6 per cent of the 324 leading computer systems used in its ministries and agencies.

The state of readiness in the private sector is not much better. Earlier this year, in a report to the Prime Minister's advisers on the Y2K problem, it was revealed that, although most of industrial Japan is now Y2K compliant, only 20 per cent of companies in the private sector have drawn up crisis management plans.

Japanese companies are now taking precautions. NEC, the giant electronics group, is stocking up on two weeks' supply of computer parts so that it can continue to operate through the new year and some Japanese rail companies are planning stoppages on New Year's Eve in case the rail system fails.

Equally important, information about the state of readiness for the year 2000 is difficult to obtain. In a survey conducted on SMEs in the prefecture of Fukushima by the local government only one seventh of 15,000 SMEs asked about Y2K preparedness even replied; of those who did, only half thought that they were at risk.

Another survey, conducted by HSBC, showed that only 8 per cent of 298 companies listed on the Tokyo Stock Exchange had completed their plans for the Year 2000 and many provided inadequate details on their progress.

Professor Shunpei Kumon of the International University has stated that this lack of information is a serious problem.

He says: "If businesses do not disclose information, people might suspect that problems are being concealed . . . withholding information will do more harm than good."

The danger for Japan is probably not one of total chaos at midnight on New Year's Eve. A more likely scenario is that a glitch will in one of the sectors unprepared for the millennium bug could cause disruption.

This in turn could lead to unwarranted panic, in a country that has not undertaken comprehensive crisis management exercises and where information has not been circulated or has been distributed inadequately.

A poor reaction to a relatively minor Y2K problem could provoke a larger crisis. The Japanese people, bewildered by the loss of a high-growth economy and frustrated by the inability of their politicians to fix the economy, are not prepared for large-scale problems that could result from the millennium bug.

Of course, a real crisis in Japan provoked by the change to the year 2000 would also have broader implications outside Japan.

If Japan is ill-prepared, one must wonder about the state of readiness of the less-developed countries in Asia, and particularly China.

A widespread economic crisis in the region sparked by the Y2K bug would make that of July 1997 pale in comparison. If this were to occur Japan would be in no position to help; neither would her friends and allies.

-- Homer Beanfang (Bats@inbellfry.com), November 19, 1999


.....which probably begs the question: How do you say "toast" in Japanese?

-- I'm Here, I'm There (I'm Everywhere@so.beware), November 19, 1999.


-- Count Vronsky (vronsky@anna.lit), November 19, 1999.

Gloom, gloom, gloom... bla, bla, bla...

"It recently warned its citizens to stockpile at least two days' supply of food, water, heating fuel and batteries..."


"toast?"... how about SIONARA!

"It has also called on all citizens to have hard copies of all financial data to hand in case the banking system crashes."

Check out Y2K and the World Trading System Look at the table of the World's largest banks. 8 of the top 25 banks - including the largest bank in the world - are in Japan.

Advice? Keep good records.

Can we ALL say SIONARA boys and girls?

What is the Japanese translation for TEOTWAWKI? [actually that sounds sort of Japanese already. It can be our contribution to the language]

-- Linda (lwmb@psln.com), November 19, 1999.

Want to bet on a change in government sometime next year?

-- Mad Monk (madmonk@hawaiian.net), November 19, 1999.

>Two days worth of food.

Sounds like they are Y2K ready to me--the contingency plan = cannibalism. ;-)

-- cgbg jr (cgbgjr@webtv.net), November 19, 1999.

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