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Japan should aim to make more sophisticated use of information technology now that Internet access has become widespread, the government said in an annual white paper released Tuesday.

In the 2002 report, the Public Management, Home Affairs, Posts and Telecommunications Ministry also calls for development of technology that paves the way for ubiquitous Internet access.

The paper was adopted at a Cabinet meeting in the morning.

It calls on firms to make better and more cost-efficient use of IT and move on from an infrastructure-building phase to a value-added phase. It cites a survey in which 95.1 percent of firms polled said they have introduced computer networks.

These companies are now starting to use IT to cut costs, with 73.8 percent incorporating accounting and personnel management systems and 40.1 percent using integrated back-offices.

But the report encourages firms to become even more sophisticated in taking advantage of IT by also boosting its use in e-commerce and sales support. Currently, only 23.2 percent use IT for e-commerce and 36.8 percent for sales support.

The report estimates the economic effects of IT investment are greater than those of overall private business investment.

It says IT-related capital stock, worth 44 trillion yen, or 4 percent of total private-sector capital stock in 2000, helped underpin Japan’s economic growth in the five years to 2000, as it buoyed the economy by 1.13 percent to attain an average 1.43 percent annual growth.

The paper calls on IT manufacturers to direct research and development toward sectors in which Japan is a world leader, such as mobile communications devices, intelligent home appliances and human-machine interfaces.

IT ventures are expected to boost the IT services market, with electronic certification business, data centers, application services and e-learning all projected to show large increases by fiscal 2006.

The report calls for spreading broadband networks to provide users with more choices on the Internet, including the ability to watch movies, play games, take part in e-learning and download heavy content.

It says the secondary use of television programs is expected to expand with the spread of broadband. Currently, 54.9 percent of individuals get frustrated using content on the Internet due to slow and unstable data transmissions, according to the report.

Concerns about cybersecurity could be a major reason why individuals are hesitant to use the Internet, with 77.7 percent of individuals saying they worry about providing credit card and other personal information on the Net.

Regarding local government activities, the report calls for providing administrative information on Web sites and setting up online bulletin boards and registration systems.

Local governments are trying to provide more information and services online, but progress has been slow due to a lack of financial and human resources, it says.

ACCJ seeks incentives

The American Chamber of Commerce in Japan called on the Japanese government Tuesday to introduce tax incentives similar to those in the United States to encourage corporate investment in information technology.

These incentives should cover not only purchasing costs for hardware but also fees for software and all IT-related services, including training, education, consulting, system design and development, operations and outsourcing, the group said.

“Unfortunately, past efforts to promote a revolution in the use of IT have focused almost exclusively on hardware and facilities supporting hardware,” the ACCJ said in a written viewpoint on Japan’s IT policies.

“Only a handful of measures were meant to promote the use and development of software, which plays a critical role in the development of an information-based society and offers great potential in its intellectual property value,” it added.

Referring to similar incentives under a U.S. law enacted in March, the ACCJ proposed Japan give such incentives as cuts in depreciation periods for IT equipment and software purchases, plus tax credits permitting firms to deduct a certain percentage of IT investment from corporate income taxes.

The ACCJ said it believes the proposed incentives are “a wise investment that will pay off handsomely for Japan now and in the future, spurring a virtuous cycle of economic growth, productive gains and future economic growth.”

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