"Key Y2K Issues in the Asia-Pacific Region"

Keynote Speech by Takeo Shiina
Chairman, The Y2K Advisors' Conference of Japan
APEC Y2K Symposium
(April 22, 1999, Shangri-La Hotel, Singapore)


Distinguished guests, ladies and gentlemen.

I am honored to have this opportunity to speak at this symposium today, to address hundreds of executives, policy makers, experts, and industry representatives from around the APEC region.

Based on a proposal put forward by Mr. Keizo Obuchi, the Prime Minister of Japan, numerous events designed to promote measures to solve Year 2000 problems are taking place during the APEC Y2K Week, April 19 to 30, in participating economies. In that context, this symposium is a significant event, where we are all gathered to work on solving this critical issue.

"Disasters befall us when we least expect them," said a well-known Japanese physicist and essayist who lived in the early part of this century. This is a common phrase in Japan to remind us that we should always prepare for the worst.

In the Year 2000 problem, are we facing an unpredictable natural disaster, like an earthquake, helpless to do anything until a calamity occurs?

The answer is NO. We know what the problems are, and know that these problems can be diminished if we are determined and spend enough time and resources on them. We also know the deadline, and it can not be extended. From this perspective, the Year 2000 issue becomes a challenge, rather than a problem, subject to management through appropriate plans and actions. In fact, we have already scored two successes by surviving January 1, 1999 and April 9, 1999, the ninety-ninth day of this year, two of the dates on which date-data related problems were predicted to happen. This shows, if we are fully aware of the issue and take the necessary measures in cooperation with each other, possible adverse impacts on our society can be minimized.

Today, in my capacity as chairman of the Japanese government's Y2K Advisers' Conference, which has been charged by the Japanese government to come up with recommendations to handle the Y2K problem, I would like to speak on what actions Japan has taken since late last year, as well as presenting our basic stance and recommendations to make ourselves Year 2000 ready. I am very happy to be able to share with you our experiences in Japan, and hope this helps all APEC governments and businesses facing the same Y2K challenge.

Three years ago in Japan, there has hardly any mention made of the potential issues except by a few computer specialists and scholars. Some large corporations had started preparing for the Year 2000 challenge, but in general, the issue was not a matter of concern for most Japanese people. In addition, very little information about this issue, if any, was made available to the public.

Furthermore, I recall that late last year, there was an assessment made of Japan's Year 2000 readiness that put Japan somewhere in the middle of the pack, considerably behind the top group that included the US and other front runners.

In order to move forward on this issue, the Japanese government decided to establish a special organization called the "Y2K Advisors' Conference" in September last year. In the 7 months since then, I feel the systematic efforts being made by both the private and public sectors are producing concrete results in Japan.

This Y2K Advisors' Conference was established under a special government organization consisting of all 24 cabinet ministers, called "the Advanced Information and Telecommunications Society Promotion Headquarters" which has been responsible for fashioning the country's basic IT policies for the past 5 years. It was Prime Minister Obuchi himself who decided to take the leadership role to tackle the Year 2000 problems and organized this special conference to discuss and promote measures on the issue, together with private sector representatives from important and critical sectors, such as public utility, finance, energy, airline, railway, telecommunication, broadcasting, medical care and small and medium-sized enterprises.

The mission of this Conference is to give direct advice to both the central and local governments on Year 2000 problems, as well as to increase awareness, promote private sector efforts, and monitor and report on the progress made nationwide. As its first project, the Advisors' Conference determined it was necessary to compile a "Y2K Action Plan", and it was accepted by the government and released to the public in September 1998. The Action Plan included a list of to-do items that public and private sectors are expected to implement to improve their Y2K preparedness. Some of the items include the planning of necessary actions to be taken by each responsible party, monitoring of overall progress status by the government and development of contingency plans by every organization concerned. It also encourages independent verification, specifically, simulation tests to be completed by the end of June 1999.

This Action Plan puts emphasis on four basic steps for every organization nationwide to follow. They are; (1) To clarify the lines of authority and responsibility in every organization using computers and to implement remedies under the strong leadership of top executives, (2) To conduct extensive testing in order to ensure functionality of the entire computing system, without confining the test to any sample organizations or type of computer equipment, (3) To set up contingency plans to prepare for unexpected events, and (4) To make the information on the status and progress of Year 2000 readiness available to the public.

In order to ensure implementation of the Action Plan, the progress of public and private sector organizations is monitored and published quarterly by the government. Among them the focus organizations include; 26 central government ministries and agencies and 128 quasi-government corporations; local governments of 47 prefectures and 3,255 cities and towns; five major industry sectors, which are finance, energy, telecommunication, transportation, and medical care; and small and medium enterprises. The progress reports are reported to the Advisors' Conference, and for each problem found, follow-up measures are to be implemented jointly by the government and the private sector, without delay. In the event of noncompliance, the government is to take appropriate actions immediately.

As of March this year, the survey shows that the government and five critical private sectors have made remarkable progress toward the completion of most simulation tests by June.

Following the announcement of the Action Plan, the Y2K Advisors' Conference recommended to the Prime Minister four key objectives to be achieved, which I think are relevant to other economies.

The first objective is to establish crisis management systems. In order to help organizations in Japan develop their own contingency plans, public and private sector specialists gathered to form a working group, under the Y2K Advisors' Conference, and compiled "The Year 2000 Computer Problem Guideline for Business to Draft a Contingency Plan" in April. Initially, 200,000 copies were printed and distributed mainly to small and medium-sized companies, as well as national and local business organizations. It was also posted on the Web for wider distribution. This guideline incorporates a number of helpful features designed to assist company executives, especially those of small and medium enterprises. It is to be used as a hands-on manual to formulate a contingency plan, describing ten steps to follow, with sample checklists and worksheets.

The second objective is information disclosure to avoid either an overreaction to or an underestimation of the Year 2000 problems. The government has been posting Y2K information on "the Prime Minister's Official Residence" home page, and the contents are updated regularly. This kind of information disclosure by the government on the Web should prompt private businesses to voluntarily disclose their Y2K related information.

In addition, the government, with the cooperation of private businesses, recently has compiled and released a document entitled "The State of Y2K Readiness in Goods and Services in Everyday Use by the General Public." Due to the extensive media coverage, we are making good progress in our efforts to increase public awareness and to diminish anxiety about this important issue.

The third objective is assistance to small and medium enterprises. It is necessary to provide the utmost support to small and medium enterprises, because it is clear that the actions they have taken, so far, for Year 2000 conversion are insufficient. In this area, toll-free contact numbers to regional Information Centers have been providing needed information and guidance by specialists. The government also offers special tax incentives and low interest loans.

The fourth objective is related to embedded microchips. It is important for all microchip manufacturers and distributors to provide relevant information to their clients. To promote information disclosure, the Japanese government decided to make public its surveys of these companies, and has done so twice, so far.

As I have stated at length, Japan has made a great deal of progress over the last seven months since the Advisors' Conference was established. Particularly in the areas of crisis management and information disclosure, we have been quite successful.

We have only eight months left before the transition to the new millennium.
254 days, to be exact.
Given the significant progress Japan has made in the past seven months, however, I believe a great deal can yet be achieved in the next eight months, if the representatives gathered here for this symposium are determined to work arm-in-arm to solve our mutual problems.

Tremendous efforts are under way, but there is still much more to be done.

Next, I would like to outline some of the key points that I consider to be important to further promote Y2K readiness.

First of all, Global cooperation is indispensable.

In this global age where network based commerce is expanding and companies are woven into borderless telecommunication networks, a small problem in just one part of the network might have unexpected effects on the entire network. For example, there may be negative impacts in the product supply chains. Especially, the APEC economies are very closely linked, as is shown by the fact that more than 70% of their international trade takes place within the APEC region. Therefore, every individual concerned is required to fully understand the importance of the issue and cooperate with each other, in addition to taking responsibility for their own problems.

One of the areas this symposium is focusing on is cross border issues. There already have been tremendous efforts made to tackle this side of the issue by many international organizations, as well as industry sectors like finance and transportation. The key to the success of the efforts rests in the cooperation of all concerned. Exchanging necessary information and close cooperation to minimize the impact of problems will surely lead us to a solution. Disclosure of the progress status of Year 2000 conversion, especially concerning critical infrastructure, would provide a basis for risk assessment and contingency planning for cross border impacts. Each individual player in these international efforts need to fully realize and shoulder their share of the responsibility, with a view to overcoming the problem together.

The government also should encourage the country's businesses to exchange information with each other on their regular operations. For instance, manufacturing companies are closely interwoven into the web of material suppliers, product distributors and customers, both domestically and internationally, making their systems mutually dependent. Their own initiative and cooperation is the fundamental force to expand Y2K readiness.

We also have to understand that contingency planning is becoming increasingly important, with only 254 days before the new year.

As I stated, a detailed guideline for organizations has already been published and is now widely available to the public. Contingency preparation, however, should not be limited to organizations. It is my opinion that every family should have their own contingency plans, which is the key to make the social infrastructure Year 2000 ready. In order to facilitate such actions, information dissemination is critical. In this respect, the roles of local government and various NPO's and NGO's are important, and their activities should be fully utilized.

When disseminating information, it is important to note the clear distinction between fact and fiction.

I have heard ridiculous stories in relation to the Year 2000 problem. One such story is about electric devices like refrigerators and washing machines breaking down in everyone's homes when the new year comes. Other stories of this kind claim that your car's engine will suddenly stop while you are in the middle of an intersection, with all the traffic lights stuck on green, at the very instant that the new year starts. You also might have heard similar kinds of horror stories relating to airlines, elevators, power lines and so forth. We may hear more of these stories as we approach the year 2000.

A lot of these stories have been blown completely out of proportion, and in fact are no more than remote possibilities. But if people have an insufficient level of information, these fictional stories can easily cause anxiety and overreaction.

I remember in the early 1970's, when the Japanese economy slumped along with the sharp rise of oil prices, people in Japan panicked because of rumors that there would be a terrible shortage of toilet paper and laundry detergent. The panic was amplified at the sight of vacant shelves in the "daily necesseties" section of supermarkets, and this national hysteria continued for weeks.

That is why the Japanese government published a booklet called "The State of Y2K Readiness in Goods and Services in Everyday Use by the General Public" to avoid those possibilities. The booklet was prepared to answer the questions that the general public might have about their daily life. For example, you can find in the booklet that electric appliances like air conditioners, refrigerators, and such things as automobiles and traffic lights, are basically free from Y2K problems.

The Year 2000 problem is a product of the information society. If so, information technology, or IT, can also be a tool in our Y2K toolbox.

Revolutionary advances in IT have significantly altered our way of life by increasingly diminishing the restraints of time and space. Although nations and regions still play significant roles in our lives, information flows freely regardless of conventional national borders. The progress in IT has enhanced interactive communication and business transactions.

It is important for governments and businesses to fully understand this characteristic of information society, and to make the most out of the Internet and other media. Taking advantage of these technologies will surely increase the exchange of experience and know-how to work out things together, as well as avoid unnecessary confusion caused by erroneous information.

In fact, the Y2K challenge is presenting us an opportunity to construct a new social paradigm for the 21st Century.

I believe in the capabilities of the technologies that characterize a highly advanced information age. By making full use of new technologies, which are continuously progressing, we can construct a totally new world to succeed the industrial society of the 20th Century.

The Year 2000 problem has made us aware that every country, every business, and even every individual in the world is interconnected and interdependent in an advanced information society. We are gaining valuable experience that will help us usher in a new world, a world very different from the one we are accustomed to, and we are doing so together. What we see together is the bright future ahead, and not "the end of the world as we know it."

During the programs scheduled for later today and tomorrow, we are devoting ourselves to discuss what each country can do in the coming months before the clock strikes midnight at the end of the year. We should be persistent in working on this issue until the last minute, and continue to make every effort we can.

Not only efforts like the APEC Y2K Week and this symposium, but many more regional and international activities are needed to meet the year 2000 challenge. Future activities similar to this APEC Y2K Symposium or other international gatherings will mark a milestone for the information society in the 21st Century. I would like to emphasize that leaders of each country and industry sector have to continue their efforts to tackle this issue, in cooperation with others around the world. And in my capacity as chairman of the Y2K Advisors' Conference of Japan, I will do my best to help Japan contribute to solutions to the problems.

I would like to close my remarks by introducing a proverb which goes "Be prepared, and you will have no worries." Let me emphasize again that the Year 2000 issue is not a disaster, but a challenge all of us have to tackle arm-in-arm, proactively, with a strong sense of responsibility.

I would like to thank the three sponsoring countries of this APEC Y2K Symposium, Singapore, Canada, and Japan, and many others who made this special event possible.

Thank you very much.