The government’s plan to introduce an identification numbering system covering all citizens carries serious potential risks. It could end up benefiting only the information technology (IT) industry, whose members regard the plan as a big business opportunity.

The Abe government has submitted to the Diet four legislative bills to launch the “common number” system dubbed “my number” system. It has two purposes: “streamlining administrative procedures” and “maintaining a fair balance between financial burdens and benefits” in social welfare.

Specifically (1) each citizen will be assigned a new identification number, (2) an “individual numbering card,” which would serve as an ID card, will be issued to each person, and (3) personal information on each individual will be fed into an integrated chip embedded in the card, thus setting up an information net that enables the government to verify tax declarations and applications for administrative services submitted by individual citizens.

This kind of numbering system will improve the efficiency of administrative procedures. But fears have been expressed that it could infringe on privacy — the very reason why many attempts to build such a numbering system have failed in the past.

Indeed, in various other countries that have adopted this kind of numbering system, serious social problems have cropped up at times because it is difficult to protect private information as society relies on the Internet more and more.

Another concern is that members of the IT industry are bent on benefiting from the government’s scheme, which they believe will bring them business opportunities worth trillions of yen, creating a hotbed of contention for concessions.

In Internet transactions, an individual or a corporation regularly changes passwords to maintain security. Under the proposed ID system, however, a citizen will carry the same assigned number for his or her entire life for use in transactions and procedural matters. Therein lies the risk.

In the United States, a number of identity theft cases have been reported involving Social Security numbers, which remain unchanged for life. Damage caused by this type of crime is said to amount to $50 billion a year in the U.S., and Congress has held public hearings to discuss possible changes to the system.

Koji Ishimura, a professor of tax laws at Hakuoh University, says it would be anachronistic for Japan to introduce a new national ID numbering system at a time when other countries are giving such systems a second look.

“I cannot think of anything other than the interests of the IT industry as a factor in pushing such a scheme,” he says, “because once it is launched, the industry will enjoy enormous business opportunities, larger than those created by the Basic Resident Register Network system” (started in 2002), which assigns an 11-digit number to every citizen.

This BRRN system, which cost the government a huge sum of money, was initially hailed as the way to improve social security services, but in reality it has proved to be of little value.

As if oblivious to this failure, the government is now trying to introduce an entirely new numbering system on top of the existing BRRN. This has led a well-informed journalist to criticize the government’s scheme as a “wasteful public works project” that will necessitate enormous yearly maintenance costs, which in turn will benefit only the IT industry.

The Democratic Party of Japan, which had opposed the BRRN system, did a sudden about-face when it came to power in 2009 and started supporting the idea of a new numbering system.

Ishimura thinks that behind the about-face was the support given to the new system by the Japan Trade Union Confederation (Rengo), which includes labor unions of Nippon Electric Co. and other major IT companies. Rengo is a major source of votes for the DPJ.

It isn’t just the DPJ that has changed its mind. An alliance of Liberal Democratic Party members opposed to the new numbering system, which was formed last year when the party was in opposition, has collapsed under pressure from lobbying activities by the IT industry.

At a press conference held last year by NTT Data Corp. on July 31, a ranking executive, when asked how much the new numbering system would boost sales revenue for the IT industry, said that since the system would evolve from the public sector into financial and other business fields, the industry could see sales amounts rise by hundreds of billions of yen.

An industry insider goes much higher, estimating that the actual increase could reach trillions of yen.

As the scope for using the numbering system expands, so will the risks of system abuse as, for example, when somebody impersonates another with criminal intent. A ranking official of the LDP has said such risks would be avoided if use of the new system is limited to the public sector, but admits that serious potential dangers will arise with private-sector use.

Despite such risks, preparations for introducing the scheme are progressing exactly the way the IT industry wants. The “my number” bill stipulates that while the system will be applied first to fields like social security, taxation and disaster relief, endeavors toward wider application in other administrative areas and in the private sector must be made as needed.

The problem is there is little chance that the potential risks associated with increased use of the system in the private sector will be fully debated during Diet deliberations of related bills. That’s because with all three major parties — LDP, DPJ and Komeito — backing the proposed system, passage of the bills is practically assured.

Regardless of whether the system functions as intended, the IT industry will reap windfall benefits. The most vociferous opposition to the proposed system has disappeared, and preparations for the system are progressing smoothly.

This is an abridged translation of an article from the March issue of Sentaku, a monthly magazine covering Japanese political, social and economic scenes.

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