Ambassador Kitano's Lecture "Insights from Japan: Future Partnership with Ireland Post Covid-19"
2020/5/28
(Introduction)
It is a great pleasure and honor for me to be given this opportunity to make a presentation at this Asia Matters webinar. Allow me to express my sincere appreciation to my friends and colleagues of Asia Matters, particularly Executive Director Mr. Martin Murray for hosting this session, and Ms. Samantha Hobbs for her valuable support.
These are exceptional and difficult times. I am sure everybody is struggling in this situation. To those who have suffered from Covid-19 and, in some cases, have lost their loved ones, I express my heartfelt sympathy. My sincere respect and appreciation go to the health workers and others who are fighting the virus on the front line.
I am delighted to have an occasion to talk today, since we are moving to the next phase. In Ireland, the first phase of the Roadmap for Reopening Society and Business started last week. In Japan, we have also entered into a new stage, as I will explain later more in detail. We are still fighting against Covid-19. At the same time, we began talking about how we can bring back our normal life and business activities.
Today I would like to talk about three things. First, how Japan manages Covid-19. Second, what changes Covid-19 brings about to our life. Third, how we can respond to that in the context of partnership between Japan and Ireland. In doing so, I include my personal observations in my presentation. Now, let me start.
(Japan managing Covid-19)
You may recall that in Ireland it was on February 29th when the first case of Covid-19 was reported. In Japan, it was on January 16th, one month and half earlier, that the first case was reported. We had relative success in suppressing its spread up until the middle of March. Then, a surge came, leading to the declaration of a State of Emergency on April 7th for seven prefectures. Afterward, it was extended to all forty-seven prefectures. The number of new cases started to decrease considerably since the middle of April. The State of emergency has been lifted gradually region by region. This Monday, on May 25th, it was finally lifted for the five remaining prefectures, including Tokyo. So, now it has been lifted for all the regions in Japan. Relaxation of restriction measures are taken and will be taken in phases. Therefore, generally speaking, Japan has had a trajectory comparable to that of Ireland.
However, Japan’s experience manifests some distinctive features. First, a relatively low death toll. Let me refer to the data of the “Worldometer” site for the sake of international comparison. As of yesterday, May 27th, total deaths in Japan stand at 858, while they are 1,631 in Ireland and 37,460 in the UK. If we look at the number of deaths per one million of population, Japan is 7, while it is around three hundred in Ireland and six hundred in the UK.
While Japan has succeeded in keeping its death toll relatively low, there have been many controversies over the number of tests and a strong call for increasing those numbers. Total number of tests per one million of population in Japan was around two thousand, while it was around sixty-six thousand in Ireland and fifty-six thousand in the UK. On the other hand, we should also bear in mind that, when it comes to the number of tests per infection cases or death tolls, Japan’s numbers of tests are quite high.
Another feature of Japan is soft restriction measures, rather than stringent “lockdown” measures. When Prime Minister Abe Shinzo declared the State of Emergency in April, he stressed it did not represent a “lockdown” or a city blockade. Most of the measures under the State of Emergency are of a voluntary nature, not a compulsory one. The basic structure is that Governors of each prefecture request the cooperation on the part of citizens or companies concerned. There are cases where some people do not comply with this request.
So, some may wonder why Japan is able to manage Covid-19 despite a limited number of tests and soft restriction measures. Japan is still in the middle of this fight against Covid-19. However, I can talk about one of Japan’s strategies to deal with that, which is a “counter-cluster approach.”
A counter-cluster approach is based upon the analysis of early cases. Experts examined how 110 early patients produced secondary infection cases. The result was striking. Out of these 110 cases, in more than eighty cases, they did not produce any secondary infection at all. In around twenty cases, they produced only one infection case. However, there was one case where a patient created four secondary infection cases, one case creating nine secondary cases and one case creating twelve secondary cases. This result indicates that Covid-19 is contagious, but it is not evenly contagious. In a limited number of cases, it is highly contagious, while in many cases it is less so. Therefore, the key to suppress the spread of Covid-19 is to avoid such highly contagious cases which can be dubbed “clusters.”
Experts further examined the situation where clusters emerged. These clusters happened in such situations as boat restaurants, live music venues, parties, gyms and karaoke boxes. What are the common features of these situations? It was the simultaneous occurrence of three factors, namely, first, closed space with poor ventilation, second, crowded places with many people nearby, and third, close-contact settings such as close-range conversation. To avoid these“3Cs”, namely closed space, crowded places and close-contact settings, was identified as an essential requirement to prevent the emergence of clusters.
In Japan’s response to Covid-19, this counter-cluster approach has played an important role. At the same time, various hypotheses have been advanced in order to explain the relatively low death toll in Japan. The daily habit of less social contact, such as to bow for greeting, rather than shake hands, kiss or hug. The daily habit of washing hands and gargling. In Japan, people are taught these hygiene related habits since childhood. The frequent use of masks to protect both oneself and others. A wide usage of CT scans enabling early detection of patients with pneumonia. A possible correlation with universal BCG vaccination. Possible immunity acquired from the first wave. The list goes on.
Despite improvement of the situation, we still need to work hard to minimize the fallout of Covod-19. Now, with that, let us move to the second topic of today, what will be the impact of Covid-19 to our life.
(Changes caused by Covid-19)
Let me start with economic indicators. Last week, Japan’s Cabinet Office announced that Japan’s GDP from January to March this year contracted by 0.9% compared to the previous quarter. This means there was an annualized 3.4% downfall. In order to make an international comparison, I would also like to refer to the economic outlook published by the IMF in April. The IMF predicts the Japanese economy will contract by 5.2% in 2020, while it forecasts advanced economies as a whole will shrink by 6.1%, and Ireland by 6.8%. The IMF also predicts Emerging and Developing Asia will grow by 1.0%, while Emerging Markets and Developing Economies as a whole will shrink by 1.0%. Thus, the good news for Japan’s economy is that Japan will be a country relatively less damaged by Covid-19 among advanced economies and that Japan is located in Asia, which continues to be the most dynamic region in the world despite Covid-19.
Of course, the fallout is not even among sectors. Here is a graph indicating changes in the stock market in Japan from early February to late April by sector. On average, stocks fell by 16.5% across the board. However, the level of decline varies from sector to sector. We can divide sectors into three categories. First, those sectors with smaller declines compared with the average. Second, those sectors of almost the same level of decline with the average. Third, those sectors with bigger declines.
In the first category of smaller declines, we have such sectors as pharmaceutical, food, chemical, electricity/gas, ICT, and land transport. In the second category of almost average decline, we have such sectors as petrol/coal products, service, automobile/transport equipment, and insurance. In the third category of bigger decline, we have banks, securities, maritime and air transport. For example, the stock of ICT industry, which is in the first category, contracted by only 3 %, while air transport industry, which is in the third category, declined by as much as 34 %.
Coming back to the IMF report, it also predicts the outlook for 2021. According to this report, the world economy will contract by 3.0% this year, it will return to a positive growth path in 2021 with a 5.8% rise in output.
I know that currently there are lots of discussion whether the recovery will be “V” shape, “U” shape or “L” shape. It may be too early to make a detailed prediction for next year. Speed of recovery will depend upon various factors. Such as when vaccines will be available. To what extent people will acquire immunity. These factors will influence how long such control measures as travel restrictions and social distancing will remain. The future outlook for recovery will largely depend upon assumption of these parameters.
From my standpoint, there is another important dimension. That is the lasting impact of Covid-19. When big events happen, the world will never come back to the same situation as before. There is inevitably a long-lasting change. It was the case with the economic crisis in 2008. It was the case with the Great Depression in 1929. Our lives will be different, be it great or small.
The change can take place in several layers. It can involve consumption patterns, modality of work, institutions, and patterns of international division of labors. Let us look into them.
This experience of Covid-19 has triggered reviews of supply chains. This is happening on both company level and country level. Through Covid-19, many people have come to realize the vulnerability of depending on supply chains from a small number of sources or countries. Now, the need to diversify supply sources or bring back production bases to home is emphasized. This reform of supply chains is one of the items of emergency economic measures adopted by the Government of Japan in April. It is also one of the international trends. This trend will inevitably bring an impact on patterns of international division of labors. In this circumstance, I suppose we will discuss more whether we can place a long-lasting trust with trading partners.
Some of the institutions might be altered definitively. In Japan, discussion is ongoing whether we would shift to start the academic year in September from the current system of starting in April. This difference in the academic year with many other countries in the world, particularly European countries, the U. S., Canada and China, has been pointed out as one of the challenges in promoting academic exchanges with these countries. Due to the closure of schools since March, education opportunities have been severely limited in many schools. This situation triggered the discussion of shifting the academic year starting from September. Both pros and cons have been advanced for this change. We do not know at this moment what will be the decision on this issue. However, it is one of the on-going discussions in Japan.
Modality of Work will certainly be one of the areas that will change. Many of you might have noticed news articles the other day reporting that employees of the company Twitter may work from home “forever.” In Japan, a recent survey revealed an interesting result. Although respondents generally felt stress and frustration in remote working, they still indicated a willingness to incorporate remote work as one of their modalities of work even after the crisis is over. In this context, the relevance of the Japanese tradition of “getting approval by seal” and dependence on paper documents have been challenged. It is because these working methods can be an impediment in promoting remote work. As for me, I learned how to sign documents electronically using the function of “markup” during this “stay home” period. This Covid-19 brings about a strong momentum to push forward paperless offices.
Together with modality of work, consumption patterns will certainly change. As in many other countries, widespread usage of on-line shopping will have a lasting impact. In Japan, many people will stay in the new habit of active usage of e-commerce, given its convenience and the consideration to avoid waiting in a queue in a crowded shop. This will apply in many areas. It is symbolic that one of the companies that has been successful during this period in Japan was “Uber-Eats.” In parallel to this, cashless transactions will continue to be used widely. While the usage of cashless transactions has been rather limited in Japan, Covid-19 has made a considerable impact in pushing forward cashless transactions, particularly contactless transactions. This trend will endure even after the dust settles.
We hope for an early recovery from the current situation. At the same time, the destination of this process will certainly not be the same place where we departed from at the pre-Covid time.
(Response to changes)
How can we then respond to such changes in the context of the partnership between Japan and Ireland? That is the third topic for today.
Let me start by sharing with you what we are doing in this situation. This “stay home” situation presents an enormous challenge for business. The same thing can be said for diplomacy. For diplomacy, close-range conversation, if not in crowded places or with poor ventilation, has been an important part of our activities. So, we have shifted our modality of work considerably.
First, we spend lots of time and energy dealing with the Covid-19 crisis itself. I work closely, even more closely than usual, with my colleagues in Ireland to deal with the Covid-19 crisis. We exchange information on each other’s response. We help each other to support the communities of our respective expatriates. We discuss how to help each other to procure the necessary materials and equipment. As the saying goes, a friend in need is a friend indeed. Since we are all faced with similar difficulties, we have all the more reason to help each other as friends.
Second, we meet people on-line, communicate on-line and send out messages on-line, even though we cannot get together physically. Now is a difficult time. Nevertheless, this presents a good opportunity to enhance relationships. I have several people with whom I have been able to strengthen bonds during this period of social distancing. Further, because of this situation, the possible area of activities has been extended. The other day, I had a chance to give a guest lecture at Hitotsubashi University in Japan from here in Dublin. Remote schoolwork made it possible. This is something which would have never happened without Covid-19.
Third, we prepare for the future. Some of the planned activities were called off or put off. We need to reorganize our activities. Now is the time for stocktaking, brainstorming, planning, and rescheduling. This provides us with a good opportunity to have a fresh look at what we are doing.
In preparing for the future, one of the important themes for me is how to adapt to the new reality in the context of partnership between Japan and Ireland. Now let me share with you some of my thoughts.
In general, in the new setting, I see chances to enhance our partnership while acknowledging challenges in some areas.
In a time when we discuss more whether we can place a long-lasting trust with our trading partners, it is important that Japan and Ireland share basic values. As is often pointed out, Japan and Ireland share such basic values as freedom, democracy, respect for human rights and the rule of law, as has been highlighted in the 2018 Japan-EU Strategic Partnership Agreement and the 2013 Joint Declaration between the leaders of the two countries. Most recently, Japan-EU Summit meeting through video-teleconference which took place the day before yesterday (May 26th), also reconfirmed it. We have mutual trust with each other. That is fundamentally important, since mutual trust is the basis for long-lasting relationships. In this regard, I also would like to add that we should be mindful how far the review of supply chains will go. Both Japan and Ireland are highly open economies. We have benefitted a lot from the open and liberal multilateral international framework. It is hoped that we would strike the right balance between the benefits of the international division of labor on the one hand and ensuring solid supply chains for essential products on the other.
Coming back to the chances in the post-Covid time, we should recognize the ever-increasing role of ICT, as we have discussed earlier. This is the area Ireland has strength with an outstanding industry cluster underpinned by the strong presence of multinational giants. As for Japan, as we move further to active utilization of ICT, Japan becomes more accessible from Europe, despite physical distance.
Further, if Japan continues to be a country relatively less damaged by Covid-19, you can have a good prospect for your business in Japan. Japan’s location in Asia, which continues to be the most dynamic region in the world despite Covid-19, will also add another reason for you to look at Japan.
Now let me move from generalities to specifics. I have lots of expectations for each of the key sectors. Let me start with agri-food products. This is the area where Irish exports have increased in the last several years and are also expected to expand further benefitting from the phased decrease of tariffs under the Japan-EU Economic Partnership Agreement in the coming years. Although demand is disrupted at the moment, it is hoped that the level of demand will recover in the medium and long run. New trends of consumption, such as higher demand for e-commerce and in-house consumption will provide new chance for business.
Pharmaceuticals are naturally one of the areas of high attention in the post Covid-19 world. Although the level of demand has decreased due to “stay home” for the moment, the whole world has recognized the importance of this sector through this crisis. This has been one of the key sectors for Japan’s FDI to Ireland. Since Japan and Ireland both have a strong industry in this sector, collaboration between the two countries is promising. In Japan, we also discuss the possibility to expand tele medicine or online medicine, which would create new business chances.
Financial services are all the more important as we try to deal with this crisis and recover from it. It is also another key area for Japan’s FDI to Ireland. This sector has an important role to play to support the economic activities of companies and individuals. At the same time, this sector provids business solutions for daily transactions. There are new business chances, since new modalities of work and business require new modalities of payment. In this context, fintech will play an even more prominent role in wider areas in the new environment.
Transport and Tourism are important areas which require special attention. As mentioned earlier, air transport is one of the sectors most severely hit by Covid-19. It is an area directly linked to aircraft leasing, which is another key area of Japan’s FDI to Ireland. We are to watch various parameters, such as how the health and safety considerations, particularly requirements for social distancing, will play out, how people’s desire to travel will come back, and how do they affect the revenue structure of this industry. I have a strong hope that both transport and tourism will regain its dynamism soon, since they represent an important part of our bilateral relationship.
In this regard, sport is an area where early recovery is strongly hoped. Regrettably, sports activities have been frozen all over the world across disciplines since March. So, it is encouraging to see the sports scene is coming back gradually. While I am personally a big sports fan, I place special attention to this area from my professional perspective. For me, one of this year’s big events is the rematch in rugby between the Brave Blossoms and green jerseys at the Aviva stadium on November 21st. The big event of next year is, of course, the Olympic and Paralympic Games in Tokyo from July to September. These events provide a valuable occasion of people-to-people exchanges. Allow me to mention one example. In Japan, there is a town called Iwate-machi which will host a camp for the Irish women’s hockey team for the Olympic Games. This town is strongly committed to hockey and many people in the town play hockey. The town would like to partner with some local communities in Ireland even after the Olympic Games are over. These are the things I very much would like to help and support.
In a nutshell, I have lots of expectations for the future partnership between Ireland and Japan. My plan, which is also shared with my colleagues in Ireland, is to bring these positive expectations into a policy document. As I touched upon earlier, both leaders of Japan and Ireland formulated the “Joint Declaration “Partnership for Innovation and Growth” in 2013. It is high time to update this document. I personally regard it as one of my most important agendas.
There are lots of things I would like to achieve through this work.
Enhancement of cooperation in political, economic, and people-to people exchange areas. Highlighting key sectors for trade and investment. In the 2013 Joint Declaration, we mentioned five areas, namely agri-food, financial services, ICT, life sciences and clean technologies. In view of the current situation including the change caused by Covid-19, we are to discuss what to think about this. I would like to emphasize the importance of capturing the opportunity provided by Japan-EU Economic Partnership Agreement. I would like to underline the possibility of cooperation in start-ups in such areas as ICT, fintech, other technologies. Between our two countries, I would like to gear up cooperation among various stakeholders including academia, higher education, research institutes, industry and local governments. I would like to confirm tourism in both directions is in the interest of both countries. I hope this work will provide us with a good opportunity to map out the future orientation of our partnership for the years to come.
(Closing)
In concluding, Covid-19 presents a tremendous challenge for us and it will change the environment in which we operate. We have to adapt to the new settings, like it or not. From the standpoint of partnership between Japan and Ireland, there are chances we can make use of, while there are challenges we have to address. My role as Ambassador of Japan to Ireland is to help and support to maximize the benefits arising from new opportunities and minimize the damages.
It is encouraging that today we have the presence of those who are interested in this partnership. I am delighted to work with you in pushing forward the relationship between our two countries. I am keen to work together with Asia Matters who have been playing an essential role in boosting business relations with Asia in general and with Japan in particular. I welcome all the initiatives of Asia Matters, such as business summits focusing on Japan and twinning between local governments to bolster business partnerships. I am looking forward to continue working together in these areas.
Thank you very much for your kind attention.
It is a great pleasure and honor for me to be given this opportunity to make a presentation at this Asia Matters webinar. Allow me to express my sincere appreciation to my friends and colleagues of Asia Matters, particularly Executive Director Mr. Martin Murray for hosting this session, and Ms. Samantha Hobbs for her valuable support.
These are exceptional and difficult times. I am sure everybody is struggling in this situation. To those who have suffered from Covid-19 and, in some cases, have lost their loved ones, I express my heartfelt sympathy. My sincere respect and appreciation go to the health workers and others who are fighting the virus on the front line.
I am delighted to have an occasion to talk today, since we are moving to the next phase. In Ireland, the first phase of the Roadmap for Reopening Society and Business started last week. In Japan, we have also entered into a new stage, as I will explain later more in detail. We are still fighting against Covid-19. At the same time, we began talking about how we can bring back our normal life and business activities.
Today I would like to talk about three things. First, how Japan manages Covid-19. Second, what changes Covid-19 brings about to our life. Third, how we can respond to that in the context of partnership between Japan and Ireland. In doing so, I include my personal observations in my presentation. Now, let me start.
(Japan managing Covid-19)
You may recall that in Ireland it was on February 29th when the first case of Covid-19 was reported. In Japan, it was on January 16th, one month and half earlier, that the first case was reported. We had relative success in suppressing its spread up until the middle of March. Then, a surge came, leading to the declaration of a State of Emergency on April 7th for seven prefectures. Afterward, it was extended to all forty-seven prefectures. The number of new cases started to decrease considerably since the middle of April. The State of emergency has been lifted gradually region by region. This Monday, on May 25th, it was finally lifted for the five remaining prefectures, including Tokyo. So, now it has been lifted for all the regions in Japan. Relaxation of restriction measures are taken and will be taken in phases. Therefore, generally speaking, Japan has had a trajectory comparable to that of Ireland.
However, Japan’s experience manifests some distinctive features. First, a relatively low death toll. Let me refer to the data of the “Worldometer” site for the sake of international comparison. As of yesterday, May 27th, total deaths in Japan stand at 858, while they are 1,631 in Ireland and 37,460 in the UK. If we look at the number of deaths per one million of population, Japan is 7, while it is around three hundred in Ireland and six hundred in the UK.
While Japan has succeeded in keeping its death toll relatively low, there have been many controversies over the number of tests and a strong call for increasing those numbers. Total number of tests per one million of population in Japan was around two thousand, while it was around sixty-six thousand in Ireland and fifty-six thousand in the UK. On the other hand, we should also bear in mind that, when it comes to the number of tests per infection cases or death tolls, Japan’s numbers of tests are quite high.
Another feature of Japan is soft restriction measures, rather than stringent “lockdown” measures. When Prime Minister Abe Shinzo declared the State of Emergency in April, he stressed it did not represent a “lockdown” or a city blockade. Most of the measures under the State of Emergency are of a voluntary nature, not a compulsory one. The basic structure is that Governors of each prefecture request the cooperation on the part of citizens or companies concerned. There are cases where some people do not comply with this request.
So, some may wonder why Japan is able to manage Covid-19 despite a limited number of tests and soft restriction measures. Japan is still in the middle of this fight against Covid-19. However, I can talk about one of Japan’s strategies to deal with that, which is a “counter-cluster approach.”
A counter-cluster approach is based upon the analysis of early cases. Experts examined how 110 early patients produced secondary infection cases. The result was striking. Out of these 110 cases, in more than eighty cases, they did not produce any secondary infection at all. In around twenty cases, they produced only one infection case. However, there was one case where a patient created four secondary infection cases, one case creating nine secondary cases and one case creating twelve secondary cases. This result indicates that Covid-19 is contagious, but it is not evenly contagious. In a limited number of cases, it is highly contagious, while in many cases it is less so. Therefore, the key to suppress the spread of Covid-19 is to avoid such highly contagious cases which can be dubbed “clusters.”
Experts further examined the situation where clusters emerged. These clusters happened in such situations as boat restaurants, live music venues, parties, gyms and karaoke boxes. What are the common features of these situations? It was the simultaneous occurrence of three factors, namely, first, closed space with poor ventilation, second, crowded places with many people nearby, and third, close-contact settings such as close-range conversation. To avoid these“3Cs”, namely closed space, crowded places and close-contact settings, was identified as an essential requirement to prevent the emergence of clusters.
In Japan’s response to Covid-19, this counter-cluster approach has played an important role. At the same time, various hypotheses have been advanced in order to explain the relatively low death toll in Japan. The daily habit of less social contact, such as to bow for greeting, rather than shake hands, kiss or hug. The daily habit of washing hands and gargling. In Japan, people are taught these hygiene related habits since childhood. The frequent use of masks to protect both oneself and others. A wide usage of CT scans enabling early detection of patients with pneumonia. A possible correlation with universal BCG vaccination. Possible immunity acquired from the first wave. The list goes on.
Despite improvement of the situation, we still need to work hard to minimize the fallout of Covod-19. Now, with that, let us move to the second topic of today, what will be the impact of Covid-19 to our life.
(Changes caused by Covid-19)
Let me start with economic indicators. Last week, Japan’s Cabinet Office announced that Japan’s GDP from January to March this year contracted by 0.9% compared to the previous quarter. This means there was an annualized 3.4% downfall. In order to make an international comparison, I would also like to refer to the economic outlook published by the IMF in April. The IMF predicts the Japanese economy will contract by 5.2% in 2020, while it forecasts advanced economies as a whole will shrink by 6.1%, and Ireland by 6.8%. The IMF also predicts Emerging and Developing Asia will grow by 1.0%, while Emerging Markets and Developing Economies as a whole will shrink by 1.0%. Thus, the good news for Japan’s economy is that Japan will be a country relatively less damaged by Covid-19 among advanced economies and that Japan is located in Asia, which continues to be the most dynamic region in the world despite Covid-19.
Of course, the fallout is not even among sectors. Here is a graph indicating changes in the stock market in Japan from early February to late April by sector. On average, stocks fell by 16.5% across the board. However, the level of decline varies from sector to sector. We can divide sectors into three categories. First, those sectors with smaller declines compared with the average. Second, those sectors of almost the same level of decline with the average. Third, those sectors with bigger declines.
In the first category of smaller declines, we have such sectors as pharmaceutical, food, chemical, electricity/gas, ICT, and land transport. In the second category of almost average decline, we have such sectors as petrol/coal products, service, automobile/transport equipment, and insurance. In the third category of bigger decline, we have banks, securities, maritime and air transport. For example, the stock of ICT industry, which is in the first category, contracted by only 3 %, while air transport industry, which is in the third category, declined by as much as 34 %.
Coming back to the IMF report, it also predicts the outlook for 2021. According to this report, the world economy will contract by 3.0% this year, it will return to a positive growth path in 2021 with a 5.8% rise in output.
I know that currently there are lots of discussion whether the recovery will be “V” shape, “U” shape or “L” shape. It may be too early to make a detailed prediction for next year. Speed of recovery will depend upon various factors. Such as when vaccines will be available. To what extent people will acquire immunity. These factors will influence how long such control measures as travel restrictions and social distancing will remain. The future outlook for recovery will largely depend upon assumption of these parameters.
From my standpoint, there is another important dimension. That is the lasting impact of Covid-19. When big events happen, the world will never come back to the same situation as before. There is inevitably a long-lasting change. It was the case with the economic crisis in 2008. It was the case with the Great Depression in 1929. Our lives will be different, be it great or small.
The change can take place in several layers. It can involve consumption patterns, modality of work, institutions, and patterns of international division of labors. Let us look into them.
This experience of Covid-19 has triggered reviews of supply chains. This is happening on both company level and country level. Through Covid-19, many people have come to realize the vulnerability of depending on supply chains from a small number of sources or countries. Now, the need to diversify supply sources or bring back production bases to home is emphasized. This reform of supply chains is one of the items of emergency economic measures adopted by the Government of Japan in April. It is also one of the international trends. This trend will inevitably bring an impact on patterns of international division of labors. In this circumstance, I suppose we will discuss more whether we can place a long-lasting trust with trading partners.
Some of the institutions might be altered definitively. In Japan, discussion is ongoing whether we would shift to start the academic year in September from the current system of starting in April. This difference in the academic year with many other countries in the world, particularly European countries, the U. S., Canada and China, has been pointed out as one of the challenges in promoting academic exchanges with these countries. Due to the closure of schools since March, education opportunities have been severely limited in many schools. This situation triggered the discussion of shifting the academic year starting from September. Both pros and cons have been advanced for this change. We do not know at this moment what will be the decision on this issue. However, it is one of the on-going discussions in Japan.
Modality of Work will certainly be one of the areas that will change. Many of you might have noticed news articles the other day reporting that employees of the company Twitter may work from home “forever.” In Japan, a recent survey revealed an interesting result. Although respondents generally felt stress and frustration in remote working, they still indicated a willingness to incorporate remote work as one of their modalities of work even after the crisis is over. In this context, the relevance of the Japanese tradition of “getting approval by seal” and dependence on paper documents have been challenged. It is because these working methods can be an impediment in promoting remote work. As for me, I learned how to sign documents electronically using the function of “markup” during this “stay home” period. This Covid-19 brings about a strong momentum to push forward paperless offices.
Together with modality of work, consumption patterns will certainly change. As in many other countries, widespread usage of on-line shopping will have a lasting impact. In Japan, many people will stay in the new habit of active usage of e-commerce, given its convenience and the consideration to avoid waiting in a queue in a crowded shop. This will apply in many areas. It is symbolic that one of the companies that has been successful during this period in Japan was “Uber-Eats.” In parallel to this, cashless transactions will continue to be used widely. While the usage of cashless transactions has been rather limited in Japan, Covid-19 has made a considerable impact in pushing forward cashless transactions, particularly contactless transactions. This trend will endure even after the dust settles.
We hope for an early recovery from the current situation. At the same time, the destination of this process will certainly not be the same place where we departed from at the pre-Covid time.
(Response to changes)
How can we then respond to such changes in the context of the partnership between Japan and Ireland? That is the third topic for today.
Let me start by sharing with you what we are doing in this situation. This “stay home” situation presents an enormous challenge for business. The same thing can be said for diplomacy. For diplomacy, close-range conversation, if not in crowded places or with poor ventilation, has been an important part of our activities. So, we have shifted our modality of work considerably.
First, we spend lots of time and energy dealing with the Covid-19 crisis itself. I work closely, even more closely than usual, with my colleagues in Ireland to deal with the Covid-19 crisis. We exchange information on each other’s response. We help each other to support the communities of our respective expatriates. We discuss how to help each other to procure the necessary materials and equipment. As the saying goes, a friend in need is a friend indeed. Since we are all faced with similar difficulties, we have all the more reason to help each other as friends.
Second, we meet people on-line, communicate on-line and send out messages on-line, even though we cannot get together physically. Now is a difficult time. Nevertheless, this presents a good opportunity to enhance relationships. I have several people with whom I have been able to strengthen bonds during this period of social distancing. Further, because of this situation, the possible area of activities has been extended. The other day, I had a chance to give a guest lecture at Hitotsubashi University in Japan from here in Dublin. Remote schoolwork made it possible. This is something which would have never happened without Covid-19.
Third, we prepare for the future. Some of the planned activities were called off or put off. We need to reorganize our activities. Now is the time for stocktaking, brainstorming, planning, and rescheduling. This provides us with a good opportunity to have a fresh look at what we are doing.
In preparing for the future, one of the important themes for me is how to adapt to the new reality in the context of partnership between Japan and Ireland. Now let me share with you some of my thoughts.
In general, in the new setting, I see chances to enhance our partnership while acknowledging challenges in some areas.
In a time when we discuss more whether we can place a long-lasting trust with our trading partners, it is important that Japan and Ireland share basic values. As is often pointed out, Japan and Ireland share such basic values as freedom, democracy, respect for human rights and the rule of law, as has been highlighted in the 2018 Japan-EU Strategic Partnership Agreement and the 2013 Joint Declaration between the leaders of the two countries. Most recently, Japan-EU Summit meeting through video-teleconference which took place the day before yesterday (May 26th), also reconfirmed it. We have mutual trust with each other. That is fundamentally important, since mutual trust is the basis for long-lasting relationships. In this regard, I also would like to add that we should be mindful how far the review of supply chains will go. Both Japan and Ireland are highly open economies. We have benefitted a lot from the open and liberal multilateral international framework. It is hoped that we would strike the right balance between the benefits of the international division of labor on the one hand and ensuring solid supply chains for essential products on the other.
Coming back to the chances in the post-Covid time, we should recognize the ever-increasing role of ICT, as we have discussed earlier. This is the area Ireland has strength with an outstanding industry cluster underpinned by the strong presence of multinational giants. As for Japan, as we move further to active utilization of ICT, Japan becomes more accessible from Europe, despite physical distance.
Further, if Japan continues to be a country relatively less damaged by Covid-19, you can have a good prospect for your business in Japan. Japan’s location in Asia, which continues to be the most dynamic region in the world despite Covid-19, will also add another reason for you to look at Japan.
Now let me move from generalities to specifics. I have lots of expectations for each of the key sectors. Let me start with agri-food products. This is the area where Irish exports have increased in the last several years and are also expected to expand further benefitting from the phased decrease of tariffs under the Japan-EU Economic Partnership Agreement in the coming years. Although demand is disrupted at the moment, it is hoped that the level of demand will recover in the medium and long run. New trends of consumption, such as higher demand for e-commerce and in-house consumption will provide new chance for business.
Pharmaceuticals are naturally one of the areas of high attention in the post Covid-19 world. Although the level of demand has decreased due to “stay home” for the moment, the whole world has recognized the importance of this sector through this crisis. This has been one of the key sectors for Japan’s FDI to Ireland. Since Japan and Ireland both have a strong industry in this sector, collaboration between the two countries is promising. In Japan, we also discuss the possibility to expand tele medicine or online medicine, which would create new business chances.
Financial services are all the more important as we try to deal with this crisis and recover from it. It is also another key area for Japan’s FDI to Ireland. This sector has an important role to play to support the economic activities of companies and individuals. At the same time, this sector provids business solutions for daily transactions. There are new business chances, since new modalities of work and business require new modalities of payment. In this context, fintech will play an even more prominent role in wider areas in the new environment.
Transport and Tourism are important areas which require special attention. As mentioned earlier, air transport is one of the sectors most severely hit by Covid-19. It is an area directly linked to aircraft leasing, which is another key area of Japan’s FDI to Ireland. We are to watch various parameters, such as how the health and safety considerations, particularly requirements for social distancing, will play out, how people’s desire to travel will come back, and how do they affect the revenue structure of this industry. I have a strong hope that both transport and tourism will regain its dynamism soon, since they represent an important part of our bilateral relationship.
In this regard, sport is an area where early recovery is strongly hoped. Regrettably, sports activities have been frozen all over the world across disciplines since March. So, it is encouraging to see the sports scene is coming back gradually. While I am personally a big sports fan, I place special attention to this area from my professional perspective. For me, one of this year’s big events is the rematch in rugby between the Brave Blossoms and green jerseys at the Aviva stadium on November 21st. The big event of next year is, of course, the Olympic and Paralympic Games in Tokyo from July to September. These events provide a valuable occasion of people-to-people exchanges. Allow me to mention one example. In Japan, there is a town called Iwate-machi which will host a camp for the Irish women’s hockey team for the Olympic Games. This town is strongly committed to hockey and many people in the town play hockey. The town would like to partner with some local communities in Ireland even after the Olympic Games are over. These are the things I very much would like to help and support.
In a nutshell, I have lots of expectations for the future partnership between Ireland and Japan. My plan, which is also shared with my colleagues in Ireland, is to bring these positive expectations into a policy document. As I touched upon earlier, both leaders of Japan and Ireland formulated the “Joint Declaration “Partnership for Innovation and Growth” in 2013. It is high time to update this document. I personally regard it as one of my most important agendas.
There are lots of things I would like to achieve through this work.
Enhancement of cooperation in political, economic, and people-to people exchange areas. Highlighting key sectors for trade and investment. In the 2013 Joint Declaration, we mentioned five areas, namely agri-food, financial services, ICT, life sciences and clean technologies. In view of the current situation including the change caused by Covid-19, we are to discuss what to think about this. I would like to emphasize the importance of capturing the opportunity provided by Japan-EU Economic Partnership Agreement. I would like to underline the possibility of cooperation in start-ups in such areas as ICT, fintech, other technologies. Between our two countries, I would like to gear up cooperation among various stakeholders including academia, higher education, research institutes, industry and local governments. I would like to confirm tourism in both directions is in the interest of both countries. I hope this work will provide us with a good opportunity to map out the future orientation of our partnership for the years to come.
(Closing)
In concluding, Covid-19 presents a tremendous challenge for us and it will change the environment in which we operate. We have to adapt to the new settings, like it or not. From the standpoint of partnership between Japan and Ireland, there are chances we can make use of, while there are challenges we have to address. My role as Ambassador of Japan to Ireland is to help and support to maximize the benefits arising from new opportunities and minimize the damages.
It is encouraging that today we have the presence of those who are interested in this partnership. I am delighted to work with you in pushing forward the relationship between our two countries. I am keen to work together with Asia Matters who have been playing an essential role in boosting business relations with Asia in general and with Japan in particular. I welcome all the initiatives of Asia Matters, such as business summits focusing on Japan and twinning between local governments to bolster business partnerships. I am looking forward to continue working together in these areas.
Thank you very much for your kind attention.