Business | davos special 2019

Innovative ideas to address global challenges

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As a forerunner facing various social challenges, including addressing the aging population, as well as environmental and energy issues, Japan is poised to find solutions and share them with other countries that are also expected to be confronted with these complex problems.

Through hosting the upcoming G20 summit in Osaka in June, the country will promote further cooperation among all relevant stakeholders, both government and non-governmental, toward a future society that realizes both economic growth and solutions for such issues.

The annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, will be a timely occasion for world leaders to address these growing challenges as the conference aims to delve into the topics to “shape a new framework for global cooperation,” preparing for the arrival of “Globalization 4.0” driven by the “Fourth Industrial Revolution.”

Assuming the G20 presidency immediately after the Buenos Aires summit in December, Prime Minister Shinzo Abe stated Japan would seek to realize a “human-centered future society,” promoting discussions in cross-cutting areas.

“Japan is determined to lead global economic growth by promoting free trade and innovation, achieving both economic growth and reduction of disparities, and contributing to the development agenda and other global issues with the SDGs (United Nations Sustainable Development Goals) at its core,” Abe said.

“In addition, we will lead discussions on the supply of global commons for realizing global growth such as quality infrastructure and global health,” he continued. “We will exert strong leadership in discussions aimed toward resolving global issues such as climate change and ocean plastic waste.”

Japan also seeks to realize a society where all people, including women, the young, the elderly and people with disabilities, are able to actively participate. These undertakings are essential to bring about further growth and prosperity.

As the world economic outlook is increasingly uncertain, it’s essential to get rid of obstacles that could hinder further growth. Keys to overcome those barriers are the four elements of free trade, innovation, empowerment and quality infrastructure.

These key issues highlighted by the prime minister will likely to dominate international discussions throughout 2019.

Champion of free trade

As a nation that has enjoyed economic prosperity after World War II under a rules-based, free and open international economic system, Japan has not only been a major beneficiary, but also a consistent supporter of free trade over the years.

In his speech at the U.N. General Assembly in September, the prime minister said: “Should Japan, the country that reaped the greatest benefits of all under this system, ever fail to support maintaining and strengthening that system, who else should we wait for to rise in support of it? Japan’s responsibility is tremendous indeed.”

One recent example showing the country’s commitment to promoting free trade is the Japan-EU Economic Partnership Agreement (EPA).

In July in Tokyo, Japanese and European Union leaders signed the EPA, which is expected to come into force on Feb. 1. The agreement will create a large, free and advanced economic zone with some 640 million people accounting for about 30 percent of the world gross domestic product and 40 percent of world trade.

Another recent development is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, also known as TPP11, that Japan and 10 other countries have strived to finalize to further promote liberalization and facilitation of trade.

The pact, entered into force on Dec. 30, represents around 13 percent of global GDP and covers about 500 million people.

Additionally, Japan has intensified its efforts toward the conclusion of the Regional Comprehensive Economic Partnership negotiations with 15 other countries, including the 10 Association of Southeast Asian Nations (ASEAN) members, China and India. If realized, the agreement would create an economic zone covering about half of the world’s population and about 30 percent of global GDP and world trade.

“In order to expand free and fair economic rules befitting to the 21st century into the vast region extending from Asia and the Pacific to the Indian Ocean, the countries that have created the system and reaped the greatest benefits from that system — that is to say, countries like Japan — must lead the effort,” the prime minister noted at the U.N. General Assembly.

Advancing innovation

In addition to promoting free trade, accelerating innovation is a must to pull the global economy along.

Japan looks to realize
Japan looks to realize ‘Society 5.0,’ a super-smart society where innovations and technologies, making the most of artificial intelligence and robots, are incorporated to create solutions to various issues. | GETTY IMAGES

In a bid to drive innovation, Japan seeks to create “Society 5.0,” a concept addressed in the country’s 2017 Growth Strategy released in June of the same year. It is a smart society where the innovations of “Industry 4.0” and accumulated big data, cutting-edge technologies such as artificial intelligence and robots — all being Japan’s strengths — are incorporated. This vision would provide solutions with the power of innovation to various social challenges, and also present a model where anybody can live a healthy, long life through innovation.

Serving as co-chair of the WEF’s Global Future Council on Human Enhancement and Longevity, Makoto Suematsu has spearheaded such efforts in the medical field. He is president of the Japan Agency for Medical Research and Development (AMED).

Japan Agency for Medical Research and Development President Makoto Suematsu believes Japan can present solutions at the forefront of various issues such as a graying society.
Japan Agency for Medical Research and Development President Makoto Suematsu believes Japan can present solutions at the forefront of various issues such as a graying society. | SATOKO KAWASAKI

The WEF council explores how human enhancement could impact society and looks to design innovative governance models to ensure maximized benefits and keep risks under control.

At the council’s November meeting in Dubai, Suematsu raised a number of issues that Japan has been facing, which are expected to be relevant to other countries soon.

Citing an estimated population transition, Suematsu said Japan would have a demographic structure in which two out of three people would be over 50 years old from around 2040. Some other nations are likely to follow Japan’s path in their population structure.

“It’s difficult to imagine only one out of three people being under 50,” Suematsu said. “I asked the council members what a country should do in the event of such a situation. At the same time, we must consider how humans should adjust to a society like this.”

In the coming years, Japan has an important role to showcase to the world “how to deal with the coming super-aging society,” according to Suematsu. Japan could take the lead in realizing “healthy longevity,” in researching and developing necessary medical devices and robotics to assist nursing care personnel, among other things, including global challenges on antimicrobial resistance.

Cyberdyne Inc.
Cyberdyne Inc.’s HAL Lumbar Type for Care Support is designed to mitigate risks of back pain. | PROFESSOR SANKAI, UNIVERSITY OF TSUKUBA/CYBERDYNE INC.

Another important idea and effort Suematsu pointed out in relation to enhanced human health in the future is “data sharing” in the global medical community. AMED has seen results in some areas in this regard.

“It’s actually difficult to share all necessary data among stakeholders from a development phase,” Suematsu said, citing competition among researchers and companies as one of the reasons. “But data sharing would achieve results, albeit gradually.”

For example, on dementia — where treatment is essential in terms of living a healthier, longer life — there is no unified system in place to collect basic data, manage and track it when necessary.

He shared a data sharing experience by AMED, launched in 2015 that saw it serve as a center to direct integrated research from basic research to practical application.

Seeking to end what’s called the “diagnostic odyssey” of patients with undiagnosed conditions, AMED has produced results from its Initiative on Rare and Undiagnosed Diseases, with efforts in line with relevant laws enacted in 2015.

Thanks to data shared among medical institutions on such patients, he noted more than 1,000 people, including those who had suffered from undiagnosed conditions for several decades, have been diagnosed and 18 responsible genes were identified over the past two and a half years since the program started.

As one of the reasons behind the spread of data sharing in this particular field, Suematsu explained, “We started this program based on a policy of ‘no share, no budget.'”

Suematsu also noted another significant data sharing example from the international cooperative effort on the Zika virus, which has apparently advanced relevant research and development.

“There are an increasing number of people who think development would actually proceed faster if it’s promoted collectively at an initial stage before the competition phase, as resources are limited,” Suematsu said.

Empowerment

Initiatives led by AMED and other Japanese parties could contribute to empowering citizens, which could be a factor to drive growth.

“If retirement age is set at 60 or 65, (a future super-aging) society would not be able to support seniors. So, we need to change how seniors work from now so that they can physically train themselves and continue to have social connections,” Suematsu said.

What would be increasingly important in a future world with aging populations and a shrinking labor force is a society in which all people — regardless of age, gender or individual capabilities — are able to take part.

Japan’s Revitalization Strategy announced in 2014 noted the necessity of maximizing the power of women to revitalize society and bring various values.

The number of women who joined the workforce increased by about 2 million from 2012 to 2017, according to a Labour Force Survey by the Ministry of Internal Affairs and Communications.

The Japanese government is keen to collaborate with wide-ranging stakeholders, both domestic and international, to fulfill the goal of women’s empowerment. One instance is the launch of World Assembly for Women (also known as WAW!), held continuously since 2014.

Tsukiko Tsukahara, president of consulting firm Kaleidist K.K., pointed out the importance of seeing the empowerment of women in the economic context, citing an example of Japan’s economic policy that incorporated the idea.

Kaleidist K.K. President Tsukiko Tsukahara, who is serving as the executive director of the W20 Japan 2019 Steering Committee, stresses the importance of both diversity and inclusion.
Kaleidist K.K. President Tsukiko Tsukahara, who is serving as the executive director of the W20 Japan 2019 Steering Committee, stresses the importance of both diversity and inclusion. | YOSHIAKI MIURA

“It’s not always the case that women’s empowerment is promoted in the context of economic growth strategies in other countries,” said Tsuhakara, whose company provides consultancy services on diversity management and inclusive leadership. “But these efforts need to be accelerated further.”

She noted that there are an increasing number of Japanese companies placing more emphasis on diversity, but Tsukahara pointed out that is not enough to boost their business performance.

“The idea of inclusion is also essential. These two elements together will produce innovation and lead to improvement of productivity,” Tsukahara emphasized. “I’d also like those parties promoting women’s empowerment to incorporate the effort into their business strategies and produce results, not just doing it solely for the sake of women.”

Ahead of the G20 conference, this year’s WAW! will be concurrently held with the Women 20 (W20) in March. The W20 is an engagement group with a mission to achieve gender equity, launched in 2015 during the G20 summit in Turkey. This year’s W20 theme is Closing the Gender Gap for New Prosperity.”

Tsukahara, who also serves as the executive director of the W20 Japan 2019 Steering Committee, said the Japanese organizers of the W20 hope to make a meaningful contribution, building on the discussion that had taken place at the previous W20 meeting in Argentina in October.

A gender mainstreaming strategy was stated in the G20 leaders’ declaration document adopted at the Buenos Aires summit. Tsukahara praised this outcome as “significant progress.” She argued, however, what has been discussed and accumulated at the W20 meetings over the past several years has not yet been incorporated into each country’s policies, nor has it produced results.

“Unless we establish a mechanism to examine how proposals made through the W20 were implemented, and how we can push relevant parties to perform them if not conducted yet, it would be nothing but talk,” she said. “Therefore, it’s time to build such a framework.”

Tsukahara continued: “When thinking about how Japan can contribute in a meaningful way, it would be to strengthen the governance of the W20. We’d like to strengthen its legitimacy.

“We have communicated with our counterparts in each country, and we have received their understanding (on this direction).”

She noted that Japan could fully exercise such an ability to craft a necessary management framework for the W20 as the government has already produced solid, workable plans and administrative programs based on relevant laws and rules.

“I believe we need to establish a feasible system in terms of operation and management, something sustainable, keeping the W20 running,” Tsukahara said.

‘Quality infrastructure’

Reliable and durable infrastructure is an indispensable social and economic foundation when enhancing connectivity to pursue economic prosperity and stability in any country.

Connectivity will be enhanced through quality infrastructure that is built and operated in accordance with international standards such as open access, transparency, economic efficiency in view of life cycle cost and fiscal soundness.

Under the G20 presidency this year, Japan will continue its efforts to elaborate an international standard of quality infrastructure shared by the G20 countries.

At the G7 Ise-Shima summit held in Mie Prefecture in 2016, leaders agreed to promote “strong, sustainable and balanced growth and to enhance resilience” through promoting quality infrastructure investment.

Japan, under the “Expanded Partnership for Quality Infrastructure” announced in May that year, pledged to provide financing of approximately $200 billion for infrastructure projects across the world by 2021.

“Against the backdrop of growing global demand for infrastructure, promoting export of our country’s quality infrastructure would serve as an essential element to our economic growth, but at the same time, it would seek to establish win-win relationships with partner countries through contributing to their development,” Abe said in announcing the expanded initiative.

Japan seeks to export its shinkansen technology, which is known for its safety and stability.
Japan seeks to export its shinkansen technology, which is known for its safety and stability. | GETTY IMAGES

In order to enhance connectivity through quality infrastructure, Japan’s partnership with other countries covers a wide range of sectors, including those of railways, airports and ports, energy and technical assistance in traffic and disaster management areas, among others.

For instance, the Japan International Cooperation Agency (JICA) has helped infrastructure and economic development in Southeast Asia, through involvement in projects to improve the East-West Economic Corridor and the Southern Economic Corridor. These corridors are meant to encourage development and integration of the region.

The region-wide projects extend to a wide range of infrastructure in both corridors. They include the Hai Van Tunnel on Highway 1 in Vietnam, which is the longest tunnel in the region and part of the East-West Economic Corridor project. In Laos, JICA supported the project for the improvement of National Road No. 9, which is vital for socioeconomic development in the country.

For the betterment of the Southern Economic Corridor, the organization assisted in the Laem Chabang Port construction project in Thailand, which is one of the largest ports in the country. Japan also supported the building of the Tsubasa Bridge (“tsubasa” meaning “wings” in Japanese) over the Mekong River in Cambodia, enabling Vietnam, Cambodia and Thailand to be connected by a single road.

Seeking a virtuous cycle

With the continued pressure for economic and social demand to achieve improved quality of life, all nations regardless of their size or level of development must address global-scale issues in the energy and environmental fields.

Both economic development and environmental protection must be sought in a sustainable manner, with the help of private investment.

“In the field of energy and the environment, it is necessary for us to actively incorporate private investments in these fields and create a virtuous cycle for the environment and growth, rather than seeing it as two choices between environmental conservation and economic growth,” the prime minister stressed at the closing of the G20 Buenos Aires summit in December.

“From those perspectives, I would like to hold constructive discussions on the contributions of the G20 on global issues, such as climate change and plastic waste in the oceans,” Abe said.

Protecting the environment

Scorching summers, torrential rains and large typhoons — Japan is a country that has been hit by extreme weather in recent years that has brought severe damage. For Japan, climate change is not a distant threat.

To address climate change, the country has promoted efforts to shift to a decarbonized and circular society, while contributing to implement the Paris agreement, an international framework to combat global warming and climate change.

One of Japan’s unique contributions is from outer space, thanks to undertakings by the Ministry of the Environment, the National Institute for Environmental Studies and the Japan Aerospace Exploration Agency (JAXA).

In October, Japan launched the second Greenhouse Gases Observing Satellite (GOSAT-2 or Ibuki-2), following the first GOSAT (Ibuki) launched in January 2009, as the world’s first satellite dedicated to monitoring greenhouse gases from outer space.

Greenhouse Gases Observing Satellite
Greenhouse Gases Observing Satellite | JAXA

Precisely monitoring to understand the state of global warming, and observing the concentration, increase and decrease in such gases around the world are essential to promoting global warming countermeasures, according to JAXA.

JAXA explained that the aim of the satellite project is to contribute to the global effort toward prevention of warming, including monitoring greenhouse gas absorption and emissions.

GOSAT excels in collecting data across most of the globe accurately and uniformly as a single sensor takes measurements from outer space. Many countries are supplied with these measurements for free as fundamental data to study the actual state of the planet.

Since the launch of GOSAT in 2009, other countries and regions, including the U.S., Europe and China, launched their own observation satellites.

“Japanese technology keeps evolving through the development of observation satellites that get better at doing this. Going forward, we hope that we can contribute to a better world for all,” said Akiko Suzuki, director of public relations at JAXA.

Akiko Suzuki, director of public relations at the Japan Aerospace Exploration Agency, has been active for many years in promoting the full utilization of data obtained by the agency
Akiko Suzuki, director of public relations at the Japan Aerospace Exploration Agency, has been active for many years in promoting the full utilization of data obtained by the agency’s satellites.

More active measures must be sought in tackling climate change and slow the pace of global warming. Energy conservation would help alleviate environmental burden, and Japanese companies have worked to develop new technologies and relevant products.

For instance, transparent solar panels have been developed that can double as glass while generating electricity so as to reduce energy use in buildings. In the housing sector, some residences are equipped with not only solar power generation facilities, but also lithium-ion batteries and energy storage systems equipped with such batteries provided by Japanese companies like Panasonic Corp. and Eliiy Power Co. to store energy both for daily use and emergencies.

Japan has much to contribute in the environmental arena, including sharing technology related to renewable energy.
Japan has much to contribute in the environmental arena, including sharing technology related to renewable energy. | GETTY IMAGES

Waste management efforts

Marine plastic waste has become a serious global issue that requires urgent international action. As an island nation, Japan has a direct stake in addressing the pollution.

Waste management also needs to be properly addressed, in terms of not only public health care, but also in preventing refuse from polluting rivers and oceans. Japan has promoted reduce, reuse and recycle, and shared its knowledge and its best practices.

By applying advanced technologies, Japanese firms and research institutions have strengthened their efforts in addressing marine plastic waste. For instance, one company has developed a 100 percent plant-derived bioplastic, which decomposes biologically in seawater.

An eco-friendly, biodegradable polylactic acid, which is decomposed by microorganisms found in soil, is under development by Japanese researchers. The bottles pictured represent various stages of the plant-based plastic
An eco-friendly, biodegradable polylactic acid, which is decomposed by microorganisms found in soil, is under development by Japanese researchers. The bottles pictured represent various stages of the plant-based plastic’s decomposition. From left — zero weeks, two weeks, four weeks and six weeks. | JAPAN BIOPLASTICS ASSOCIATION

At the Japan-ASEAN summit held in Singapore in November, the prime minister pledged to strengthen cooperation with leaders from Southeast Asian nations that face similar environmental challenges. Abe said Japan would expand cooperation with ASEAN countries in combating marine plastic debris.

In a bid to help improve waste management, relevant Japanese parties have collaborated with their counterparts in other countries to come up with lasting solutions.

In Sri Lanka, developing sustainable, low-cost technology that effectively tackles the challenges of waste management has been a long-standing issue.

Experts from JICA and Japanese companies have worked to reduce environmental stress through appropriate waste management by creating guidelines — developed by researchers from both countries — for final disposal sites based on pollution control techniques for landfills.

Trial runs of the guidelines are underway under three local authorities. Japanese experts hope the implementation of guidelines will spread nationwide in Sri Lanka.

The Bangladeshi capital of Dhaka has enjoyed rapid economic growth in recent years but also faced serious waste issues due to the dramatic increase in its population. Despite increasing amounts of garbage, the amount of collected waste was very low. JICA and other Japanese parties have supported local efforts represented by the Clean Dhaka Project.

As a result, the amount of collected waste increased from 1,400 tons a day in 2003 to 3,400 tons a day in 2014, according to JICA. It also helped establish an organization to comprehensively engage in waste management.

In Palestinian territories, waste collection and transport is also a major issue and Japanese experts have been working to address the tasks with local counterparts.

In addition to grant aid projects for the provision of equipment, including garbage collection vehicles and containers, the technical cooperation projects have seen the launch of waste collection and transport services through the Joint Service Councils within the West Bank and Gaza Strip, according to JICA.

G20 summit in Osaka

As the host of the G20 Osaka summit, Japan is well-positioned to bolster international collaborative efforts to solve issues in the world. Despite the economic growth over the last few decades, the growing sense of marginalization from such growth could have an adverse effect toward continued pace of globalization.

As the global economy remains uncertain and challenges for global issues rise, world leaders are expected both at Davos and the G20 Osaka summit to present a viable vision and solutions.

With the world shifting focus toward Japan for its presidency of the G20 summit, the true challenge for the nation is how we can invite other partners — both governmental and non-governmental — to join forces and extend these positive contributions on a global scale.

“Japan’s outlook for G20” pages are sponsored by the government of Japan.


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