Current Policy on Digital Economy

Ministry of Economy,Trade and Industry

Hiroshi YoshidaDeputy Director-General for IT Strategy

Commerce and Information Policy Bureau, METI

Feb 2019

1. Future Vision of Japan – Society 5.0

2. Future Industry of Japan – Connected Industries

3. Policy for Realizing Our Future

(1)Transforming to Digital Society

(2)Capacity Building

(3)Supporting Startups

(4)Cyber Security

(5)Innovation and Emerging Technology

4. Way Forward

Contents

1. Future Vision of Japan- Society 5.0 -

Cyber Space

Physical Space

Society that is Integrated by AI/IoT Balances Economic Advancement

& Resolution of Social Problems

Human Centered

Society 5.0: Human Centered and Sustainable Society

3

What is Society 5.0?

Society 5.0 is a human-centered society that balances economicadvancement with the resolution of social problems by a systemthat highly integrates cyberspace and physical space.

4

In Society 5.0, new value created through innovation will eliminateregional, age, gender, and language gaps and enable the provision ofproducts and services finely tailored to diverse individual needs andlatent needs.

Economic Development and Solutions to Social Problems in Society 5.0

5

Society 5.0 in Robotics :Promoting technological development & tackling the aging society

https://mainichi.jp/premier/business/articles/20160114/biz/00m/010/020000c

Kaori Tama Higashi Care Center (Kawasaki-city)

6

Society 5.0 in Services: Boosting productivity & finding solutions for shortage of human resources

http://www.itmedia.co.jp/news/articles/1703/31/news105.html

“CORO” working at a fast food restaurant

7

Society 5.0 in Traditional Crafts: Preserving techniques & acquiring new customers with AI

http://ascii.jp/elem/000/001/601/1601278/

“Roquro” allows users to create their own 3D models with their hands.

8

Society 5.0 in Finance: P-P money transfer

https://kyash.co/

https://paymo.life/bizhttps://linepaycorp.com/ja/

9

Society 5.0 in Education: Promotion of Active learning(Original problems for each student using AI)

https://qubena.com/blog/qr-franchise/ 10

2. Future Industry of Japan- Connected Industries -

What is “Connected Industries”?

Currently, businesses connect in a variety of ways depending on sectors or business conditions, levels of effort necessaryfor introducing IT, and other issues.Some businesses may keep their connection within their factories, while others may connect with their business partnersor other companies in the same sector, or directly connect with their customers or markets.Connecting industries beyond the existing business relationships may establish a new industrial structure.

Connecting a variety of industries, companies, people, machines, data and other social elements, contributing to...

Creating new added value and products/services using AI, etc., and improving productivity for...

Solving social challenges, such as “Aging society”, “Labor shortages”, “Environment and Energy restrictions”, etc.

Enhancing industrial competitiveness→ Improving people’s lives

Promoting the healthy development of the national economy

”Connected Industries” Concept

12

Connected Industries

Dissemination of know-how by dataHumans and robots working

(in concept) together

Data for better productivity

New services and solutionsbased on data

Disseminating to local companies and SMEs.

Analyzing data by AI

Future goals

Connecting data and using data efficiently will encourage innovation,better productivity and dissemination of technology.

13

“Society 5.0” and “Connected Industries”

First Industrial Revolution

- Acquisition of power

(steam engine)

Second Industrial Revolution- Power

innovation (electric power,

motors)

Third Industrial Revolution

- Advance of automation (computers)

Fourth Industrial Revolution

- Autonomy based on Big-data,

AI and IoT

Primitive society

Agricultural society Industrial society Digital society

Society 5.0Ultra-smart society

<Society>

<Technology>

<Industry>

Connected Industries

Things × ThingsHumans × Machines/Systems

Companies × CompaniesHumans × Humans

(Dissemination of knowledge and skills)

Suppliers × CustomersLarge companies x SMEs

Regions × RegionsFields × Digital

Various forms of collaboration

Creation of a new society

(Human-centric &Solution-oriented)

Development ofprivate companies

• New value created by various connections• Collaboration of Individuals

→Creating new business models

14

Priority areas in Connected Industries

15

[WG] Manufacturing and Robotics

[Major Projects and Future Directions]

Make the Robot Revolution Initiative Council (RRI) a joint secretariat

[Major participating companies and organizations]

DMG Mori, Japan Chamber of Commerce and Industry, Hitachi, Fanuc, MHI, Mitsubishi Electric, RRI, IVI, The University of Tokyo

・Japan and Germany hold a joint

expert meeting on internationalstandards and cyber security asa common basis.

→ Progress in efforts towardinternational standardizationcentering on Japan-Germanycooperation

2. International standardization and cyber security

1. Maximize data utilization

In order to maximize the strength of high-quality real data, the workinggroup is establishing a mechanism that can maximize the utilization ofdata by connecting platforms of private companies with crosslinks.

・ Efforts by DMG Mori Seiki,Hitachi , Fanuc, MitsubishiElectri, etc. to establish inter-platform cooperation formanufacturing data

→ In cooperation with Germanyand US

・ Setup of working groups tobuild mechanisms for layersof edges and fog

16

[WG] Plant/Infrastructure Safety Management

[Major Projects and Future Directions]

Plant and Infrastructure Safety Sub-committeeIt was discussed in "Plant Data Utilization Promotion Council"

[Major participating companies and organizations]Petroleum Association, Petrochemical Industry Association, Japan Petrochemical Industry Association, Engineering Association, AIST, Okayama Univ, Yokohama National Univ, Electro-Communications Univ, Petroleum Energy Technology Center, Asahi Kasei, Chiyoda Kako, etc.

・METI signed memorandum of

c o o p e r a t i o n ( M O C ) w i t hMinistry of Industry of Thailand

→ Improving safety and efficiencyin Thailand through the use ofJapan's smart security tech

2 Overseas expansion1 Maximize data utilization

・ 7 companies of the PetroleumAssociation of Japan a nd 1 3companies of the PetrochemicalIndustry Association j o i n t l ydeveloped prediction modelsfor in te rna l and externa lcorrosion

・ S h a r i n g p l a n t d a t a andVerification of effects throughanalysis model collaboration

Solving common issues related to data sharing in the oil refining andpetrochemical industries, exporting smart security technologies, etc.

17

Sharing and Utilization of “Real-Data”

Environmental improvement for Data Utilization

R&D, human resource development and cyber security

Further expansion of initiativesGlobal, venture and local companies

and SMEs

Establishing a new system for certifying data-sharing-businesses and introducing new tax-break programs.

Supporting measures for developing AI systems through collaboration between large/medium companies, which hold “real-data”, and AI venture businesses

Creating advanced models and then developing rules based on demonstration programs

Revising the Contract Guidelines on Data Utilization Rights

Promoting development of innovative AI chips Enhancing efforts for human resource

development in the field of data. (e.g., hybrid-type in both virtual and physical systems, and in AI technologies)

Building a framework to attract outstanding human resources from around the world

Enhancing cybersecurity measures

Enhancing worldwide cooperation especially with EU and Asian countries

Promoting exports of Japan’s systems through the International Collaboration Working Group

Further improving the quality and quantity of human resources related to international standardization efforts

Building Japanese venture ecosystems Enhancing support measures for local companies

and SMEs by providing programs for developing or dispatching experts

Enhancing support measures placing “real-data”, as its core.

Cross-sectoral Policies under the “Connected Industries”

18

Government & Industrial support: Subsidies and capital investment on projects for sharing data

SUBSIDY for sharing data project

Energy, Machinery, Logistics etc

Company A

DATA DATACompany B

Company C

Company X

Company Y

Company Z

19

Industrial data sharing project In order to further utilize the data held by business operators in

cooperative areas, 25 projects are under way to construct a basic system.

Project (example)

Ship Data CenterTo create an environment in which the use of navigation data is promoted by establishing and managing a data base related to ships, including the collection and accumulation of navigation data.

Petroleum Energy Technology CenterAdapted to refinery safety by sharing various data and analytical models on the platform. Collect a lot of data from other industries and apply analytical models.

Dynamic Map Platform(Smart Drive)

A project to share high-precision three-dimensional map data. Contributing to efficient map maintenance and use in automated driving and safe driving support systems.

Industrial Value Chain Initiative(DMG Mori Seiki, Hitachi, Fanuc and Mitsubishi Electric)

To establish a common dictionary system for cross-company use and collaboration with the aim of connecting individual manufacturing platforms in a common framework.

Universal Materials Incubator(Chemical E Data Development)

By classifying and analyzing the diverse technologies and peripheral information of the dispersed materials and chemical industry by business and project, it can be utilized as new business information.

Yokogawa Solution Service(Hmcomm, Nippon Zeon Co., Ltd.)

The system collects voices generated in production process lines, including pipelines, and uses AI analysis to predict and process abnormalities such as "I mean," of pipes.

Supporting Industrial Data Sharing Promotion Project(A total of 25 proposals were adopted in June and July.) 20

Increasing awareness of Data Ownership

It is important for METI to provide the guidance that would help industrial players take care of legal issues about “data contracts” so that they can think about their business using and might share data with variety of players.

METI also includes some points of notes in order to achieve win-win, fair, and proper share of data among stakeholders.

We would like to emphasize that this guidance does not either conflict with the freedom of contract or affect contents of each contract since it aims to offer the basis of ideas of how to deal with legal issues related to AI and data contracts for the reduction of transaction costs.

The number of data is dramatically increasing based on IoT, AI, or big data.

As data becomes the critical resource of value, industrial players expect innovation through “data cooperation” across companies, industries, and countries.

Data is not the object of property right based on Civil Code in Japan. Therefore, it is natural to identify the “ownership” by contract in private sector except for patent or trade secret.

However, practice of identifying ownership of big data and AI as a product by contract is still premature. In addition, it is also difficult to identify it in the way of win-win, fair, and properly.

21

Contract Guidance on Utilization of AI and Data (June 2018)

Created based on specific enterprise use cases. (Case of IoT data information linking platform for ships, case of data holder providing data to vendors to develop and reuse learned models, etc.)

In addition to significantly expanding the use cases for each type and field of data transactions from the old guidelines, we also developed contract models for the development and use of AI.

Contract Guidelines on Data Utilization Rights ver. 1.0

(2017.5)

a contract of "data creation type"Type of data acquisition

a contract of "data provision type"Type of providing retained data to the other party

a contract of "data sharing type"Type of sharing data using platforms

old data contract guidelines

New Contract Guidelines" Contract Guidance on Utilization of AI and Data"

a contract of "AI development"A detailed explanation of the technical characteristics and

development methods of AI

a contract of "AI utilization"

<points of revision>New contract practices for AI development

and utilization Illustrates a wide range of options and model

articles in the contract Including many specific use cases

(2 cases in old GL ⇒ 10 cases in new GL)

Including measures to deal with international transactions, such as overseas data transfer regulations

(Cyber Law in China, GDPR in Europe).

Additional

Expanded

22

Solution Ideas for Security and Safety Japanese government and private sectors, in particular ICT companies, have

compiled Japanese security and safety solutions.

These solutions provide images with those who are responsible for safety management, how security and safety technologies are used in various concrete scenes.

23

（Ref）Law Enforcement

24

3. Policy for Realizing Our Future

(1) Transforming to Digital Society

Digital First

IT governance

Platform

Service design

One stop

Once only

Law

Support program

Procurement

Digital master data From paper to digital

Online application No rewrite

Innovation teamCreate new public services

Web reform(UX) User-friendly service

Use digital Tech

Workstyle reform

Enterprises

Data reference model Code

APIs

Mush up the data from industries

Trigger new services

Our Goal for digital government

Integrated portal Seamless service

Citizens

Concepts for Digital Services

Decrease inconvenient services for both public and private sectors

Enhance service quality and effectiveness of policies

Collaborate with businesses and citizens to create innovative services

26

ApplicationSystem A

ApplicationSystem B

ApplicationSystem C ・・・

ApplicationSystem D

APIAPI

Corporation Identity federation

APIAPI API

apply

Citizen/businessaccess

Business

Corporation Information

Website

APIAPI

Open data

Data exchange infrastructure

Corporation Informationin government(Open data)

Digital platform project in METI

Digital public service systems

②Expanding digitalizationto the whole government

① Digitalize administrative procedures for corporations in METI.

From METI to the whole government

To transform data-driven organization and enhance efficiency and service quality to businesses, METI has started its project to create a digital platform since FY2017.

METI plans to digitalize government procedures for businesses and introduce digital marketing and personalized services into policy area.

It also aims to expand its business model to the whole government.

27

2017

2018

2019

2020

gBizID (Corporation Identity federation)

In 2018, Corporation Identity Federation System For Corporations is being developed so that companies can apply for multiple applications online with one ID/password. It will reduce the time and effort required for administrative procedures.

Demonstration will start in 2019 in METI, aiming to expand the service to other ministries in 2020

<Schedule><Account>

・Study of Specification of Corporation Identity federation system

・Development of Corporation Identity federation System

・Demonstration Identity federation for some application System in METI

・Full-scale release and expand to application systems of other ministries

①Self ID ID will be issued only with the confirmation of the existence of the corporate number and the arrival confirmation of the e-mail⇒ Unnecessary procedures for identity verification

②Verified ID

ID that confirms that applicant is a corporate representative⇒ Procedures for identity verification⇒ using once-only with corporation information website

28

Corporate Information website

Government launched Corporation ID number program on Jan. 2016.– 4million Legal entities have unique ID.

Government has great numbers of Corporate Information.– Applications, Awards, Contracts and Certifications

Corporation ID numberCorporation Name

Corporation Type

Area

Amount of CapitalNumber of employeesThe day of foundation

Business domainCertification level

• Check business partners’ background

• Enrich companies’ database through APIs

• Create and release new services with the APIs

*APIs are provided in the form of SOAP and REST

Use cases of open dataCorporate Info search

29

“Mirasapo”, Portal site for supporting SMEs

Since 2011, METI has provided business information to SMEs from Business portal site “Mirasapo”.

METI will evolve this site for better customer experiences and integrated digital services. It will be launched from FY2020.

• Personalized service• Improved UX• Integrated services

• Business cases• Events• Procurement• Reports

• Grants• Support programs• Certifications

Business Info Applications for Government supports

Mirasapo(Present)

Mirasapo Plus (From FY2020)

Complex design, Difficult to find info

30

3. Policy for Realizing Our Future

(2) Capacity Building

Mutual recognition in Asia

India, Singapore, South Korea, China, Taiwan

ITEE in Asia

Countries where there was an original IT national exam at that time:

Philippines, Thailand, Vietnam, Myanmar, Malaysia, Mongolia, Bangladesh

Countries to which Japan supported to found a IT national exam at that time:

Preferential Immigration TreatmentBased on the MRA, preferential immigration treatment of Japan is applied to

the passers of the examinations or the holders of the qualifications recognized mutually as equivalent to FE exam or higher levels of ITEE in Japan.

In October 2000, the “Asian Common IT Skill Standards Initiative” was proposed from Japan and adopted at the ASEAN + 3 (Japan, China and South Korea) Economic Ministers Meeting.

Based on the initiative, IPA has so far concluded a Mutual Recognition Agreement (MRA) with 12 countries.

32

Preferential Immigration Treatment

Requirements for the working visa of Japan as Engineer/ Specialist inHumanities/International Services

(1) The applicant must meet one of the following 3 conditions regarding skill and/or knowledge.A) The applicant shall have graduated from university, having majored in a subject relating to such

skills or knowledge, or shall have acquired an education equivalent thereto.B) The applicant shall have completed a specialized course of study at a vocational school in Japan,

majoring in a subject relating to the skills or knowledge (limited to cases where he/she has fulfilled the requirements designated in a public notice by the Minister of Justice relating to such completion).

C) The applicant shall have at least 10 years' practical experience (including the period during which he/she majored in a subject relating to such skills or knowledge at a university, college of technology, high school, the latter course of a secondary educational school or a specialized course of study at a vocational school).

(2) The applicant shall receive no less remuneration than would a Japanese national for comparable work.

For the passers of the examinations or the holders of the qualifications, the requirement under item (1) is exempt.

Easier to get the working visa of Japan by using the examinations across Asia

Based on the MRA, preferential immigration treatment of Japan is applied to the passers of the examinations or the holders of the qualifications recognized mutually as equivalent to FE exam or higher levels of ITEE in Japan.

33

The result of the Examinationin October 2018

Total

FE

Applicants 313 32 127 478 40 622 1,612

Examinees 295 26 108 439 39 356 1,263

Passers 39 1 48 70 1 23 182

Passing rate 13.2 % 3.8 % 44.4 % 15.9 % 2.6 % 6.5 % 14.4 %

IP

Applicants 1,670 914 64 479 44 228 3,399

Examinees 1,640 832 58 460 40 84 3,114

Passers 151 126 19 269 12 16 593

Passing rate 9.2 % 15.1 % 32.8 % 58.5 % 30.0 % 19.0 % 19.0 %

AP

Applicants 38 5 8 47 10 - 108

Examinees 35 3 8 44 9 - 99

Passers 11 1 0 3 1 - 16

Passing rate 31.4 % 33.3 % 0% 6.8 % 11.1 % - 16.2%

FE：Fundamental Information Technology Engineers Examination IP：Information Technology Passport Examination AP：Applied Information Technology Engineers Examination

[Notes]

34

AMEICC Supplementary budget for HRD

METI’s contribution to HRD through AMEICC/AOTS

1 ) Endowed course

2 ) Capacity building for quality infrastructure

3 ) Training in ASEAN for industrial upgrading

- Three pillars -

Provide HRD programs in cooperation with

Japanese companies

What is AMEICC?- “AEM-METI (ASEAN Economic Ministerial Meeting - Ministry of Economy, Trade and Industry of Japan) Economic and Industrial Cooperation Committee“

AMEICC and AOTS (The Association for Overseas Technical Cooperation and Sustainable Partnerships)

- Under the agreement in the AMEICC Meeting in 1998, AOTS Bangkok Office took on roles as Secretariats of AMEICC. 35

Endowed course

In line with business needs & industrial structure, develop young human resources with practical sills.

Purpose

Implementation

Cooperation with Japanese companies

(e.g. job fair, internship ).

Financial support

( e.g. curriculum development, dispatching lecturer )

Increase job opportunity.

＜Actual results of Endowed course (as of the end of Nov 2018)>

University /Vocational School

Japanese companies

Dispatching lecturer

Job fair

Find job

Internship

＜Image＞

Approximately 1,300 students attended the courses in 2016

New Curriculum Lecture

Vietnam ：10 Universities 14 courses

Thailand ： 9 Universities 11 courses

Indonesia ： 5 Universities 5 courses

Myanmar ： 3 Universities 3 courses

Laos ： 1 Universities 3 courses

Philippines ： 1 University 1 course

Cambodia ： 1 University 1 course

Malaysia ： 1 University 1 course 36

Inclusion

Human Machines/Technology

Pictures from https://www.pakutaso.com/

WearableSensors

VUIUsable for everyone

Development of digital skills

Bridging the Digital Divide

Introduction of Human Machine Interface+

37

3. Policy for Realizing Our Future

(3) Supporting Start-ups

Aim: To create successful, cutting-edge Japanese startups in the global market

Select Go Global

Connect

Select Connect Go Global

About 10,000 Startups

Top VCs and Accelerators recommend startups with

great potential.

Build up support community.

Connect public/private support.

Support global challenge as national representative

startups.

Large Corporations,

VCs, Accelerators,

Government Organizations

About 100 companies

J-Startups

Overseas Expansion

（Conference etc.）

Successful startups are expected to bring new values to the world, and empower Japan’s startup ecosystem.

39

Top 1% of Startups are selected from different views.

About 100 companies

J-StartupRecommendation Members

Criterion

□ Mission

□ Originality

□ Growth Possibility

etc.

Scrutineers

Scholars, and

Experts.

About 10,000 active startups in Japan

Real tech., Platformer, SDGs

The recommendation members (consisting of top VCs, accelerators, and corporate VCs) choose startups from the view

of originali ty, potential and mission setting, in the f ields of real tech, platforms, and SDGs. The startups are then

endorsed by the review members (consist ing of scholars and experts), before being appointed by the government.

40

Inbound: J-Startup also aims to attract cutting edge entrepreneurs from around the world

Startup VISA

Certified local government will give support to

the foreign entrepreneurs starting their

business in Japan.

Current 6 months period entrepreneurs are

able to stay in Japan to prepare for launching,

is expanded to 1 year under the new program.

JETRO Global Acceleration HubConsultation staffs are allocated in major cities

around the world, will also support local startups

entering the Japanese market, by providing

market information, support for administrative

procedures etc.

New Program

6 months

12 months

National Strategic Special Zone Program

preparatory period

Current

preparatory period

41

Result of Global Connection 2018

40 overseas startups58 Japanese companies

=> 247 Matching

Matching: Providing matching opportunity with invited overseas startups and Japanese companies; member of the IoT Acceleration Lab (Global Connection in CEATEC)

Business Matching

Business meeting with overseas

startups and Japanese companies.

Pitching session

Presentation by overseas startups.

Exhibition Booth

Exhibition booth of overseas startups

in CEATEC Japan, one of the largest

IT/electronics Exhibition in Asia.

40 overseas startups had 2 days pitching in CEATEC Japan.

Mr. Hiroshige Seko, Minister of Economy, Trade and Industry, visited the overseas startups booth.

42

Ref: Selected overseas startups for CEATEC 2018Startup Name Project Title HQ

１ Aerodyne Group Drone-based IoT Integrated Solutions MY

２ AISA DIGITAL PTE LTDAI+HUMAN HYBRID MASSIVE LOCALIZATION SOLUTION FOR E-COMMERCE IN ASEAN LANGUAGES SG

３ Blinkware Technology Sdn Bhd AIRRE Inspect MY

４ Glueck Technologies Intelligent Video Analytics MY

５ TAG LA TECHNOLOGY SDN BHD TAG La - IoT solution MY

６ CIMS HOLDING Co.,Ltd IoT Sleep Monitoring TH

７ Blue Frog Robotics BUDDY, THE ENTERTAINMENT & ASSISTANT ROBOT FR

８ Impressive ApplicationsWi Energie - Wireless Power & Data Transmission for IoT GB

９ IRONOVA Ankkoro smartband FR

１０ TG0 TG0 - Ergonomic touch sensor GB

１１ Trackener 24/7 horse monitoring technology GB

１２ UWINLOC Indoor location solution with battery-less tags FR

１３ Augumenta Industrial AR and IoT for Digital Factories FI

１４ BLOCKDOX Limited BlockDox - We Make Spaces Smarter GB

１５ Hoomano SAS Hoomano Social Brain FR

１６ Artivatic.ai Artivatic.ai - Mental science, neuroscience FR

１７ GetParking Smart Parking Ecosystem IN

１８ Intangles Lab Pvt. Ltd.Digital Twin Company for Vehicle Life Cycle Management IN

１９ iSenses Incorporation Private Limited Machine Vision (MV) platform for IN

２０ Matisoft Cyber Security Labs World's 1st AI based cyber antivirus software IN

Startup Name Project Title HQ

２１ NimRay-SolarDecentralized Electricity Network Based on Solar Energy using Blockchain IN

２２ Pilmatis Innovations LLP OCEO WATER - New access to Safe Drinking Water IN

２３ SenSight Technologies Private Limited AutoWiz: Vehicle Data Analytics Platform IN

２４ TenPi Technologies Private Limited AI camera IN

２５ WeDoSky Drone Data Analytics IN

２６ CardiacSenseA medical watch for Heart Arrhythmia detection & Blood Pressure measurement Medical Health IL

２７ Cogniteam Artificial Brains for Artifical Bodies IL

２８ CorAlert Non-invasive Heart Failure real-time monitoring IL

２９ EchoCare Technologies Ltd. Non-Wearable elderly-care home monitoring system IL

３０ The Elegant Monkeys Ltd – Kenko Kenko Tech IL

３１ eyeSight Technologies Embedded Computer Vision for Smart Home IoT IL

３２ IntraPositionHigh accuracy, indoor positioning and navigation solution, enabling location based services and shopper navigation in supermarket

IL

３３ Keepgo IoT/M2M Connection IL

３４ Neteera TechnologiesReimagining sensing for innumerable markets, delivering a range of metrics, via flexible, safe and cost-effective high-frequency radar-on a chip

IL

３５ Newsight Imaging Ltd Newsight Imaging - CMOS image sensor IL

３６ Sol Chip Ltd. Autonomous Power and Communication products IL

３７ NETBYTE BEESONSORーSolutions for bee farmers RU

３８ Texel Inc Full Body and Colour 3D scanners RU

３９ VRTech Group VR Industrial applications RU

４０ NeuroChatNeuroChat-Specialized interface allows to communicate over the Internet without any speech or movements RU

43

3. Policy for Realizing Our Future

(4) Cyber Security

Cybersecurity policy priorities

1. Policy deploymentlinked with

industrial policies

2. International harmonization

① Enhancing measures for CIIP－Improvement of information sharing system, etc.

② Strengthening measures for supply chain (industry by industry) based on progress of IoT

③ Strengthening measures for SMEs

① Building mutual recognition systems among Japan, the US and Europe

② Preventing spread of unique rules which

distort private entities’ activities

3. Support for creation of

cybersecurity business

4. Development offundamentals

① Cultivating oversea markets of ICS security

② Introducing a service qualification system

① awareness of management class in enterprises

② Developing HR (ICSCoE, etc.)45

Fusion of cyber / physical spaces⇒Cyber attack

reaching physical space

Transforming Society through Cyber/Physical Fusion

A new society, “Society 5.0”, where cyber and physical spaces will be highly integrated, is coming.

Products, services and data will be connected flexibly and complexly.

Supply Chain is transforming from linear/fixed style to non-linear/flexible style.

Cyber threat is also expanding according to this structural change.

OEM

Driving

information

control

Service

ProviderSupplier

Utility

Data

creation

Data

collection/analysis

Electric order

& control

Power supply

control

Exchanging products

and services

Big & flexible data circulation

in cyber space Data

collection/analysis

Data

creation

Electric order

& control

Service

Provider

Service

Provider

Service

Provider

Service

Provider

Service

ProviderSupplier Supplier

Supplier Supplier Supplier

Supplier Supplier

Cyber Space

Physical Space

Big data circulation⇒Importance of data control

Complex Supply Chain

⇒Expansion of attacking points

46

• “The Cyber/Physical Security Framework” grasps the

industrial society where value is created as Three Layers

composed of Six Elements, which comprehensively washout

the risk points and the corresponding security measures

◆Three Layers

3rd layer: Connection in cyber space

2nd layer: Connection between physical space and cyber space

1st layer: Connection between companies (conventional supply chain)

◆Six Elements

- Organization, people, component, data, procedure, system

The Cyber/Physical Security Framework～for the Value Creation Process in Society5.0’s supply chain ～

Conceptual diagram

3rd

layer

2nd

layer

1st

layer

In “Society 5.0” which is realized by IoT and AI, supply chain is transforming from traditional linear style to non-linear style where various kinds of connections exist.

We defined this Society 5.0’s new supply chain as “value creation process”.

We are developing “The Cyber/Physical Security Framework” to show the security guidance which corresponds to the extended concept of supply chain.

47

Purpose of Three Layers’ Approach

Layers’ approach would be good to articulate and control complicated risks of the new supply chain, “Value Creation Process”.

Each layer has a unique role to protect specific values for trustworthiness.

The First Layer(Relationship among Organizations)

•Trustworthiness of each organization based on appropriate management

The Third Layer(Data circulation)

•Trustworthiness of data that freely circulate and are processed or created to produce services

The Second Layer(Cyber to physical/Physical to cyber)

•Trustworthiness of function for “correct transcription” from cyber to physical / from physical to cyber form

Organization B

Organization COrganization A

Data

Data

Data

Data

Data

Data

DataDataData

DataData

Component

Component

Component

Cyber Space

Physical Space

correct transcription correct

transcription

correct transcription

48

In April 2017, ICSCoE was established under IPA as a world class center withexpertise of IT/OT security.

ICSCoE provides a practical cybersecurity training utilizing actual IndustrialControl System (ICS) facilities.

〇 Education for both IT and OT security

〇 Assess the security and reliability of the ICSs and plan measures by utilizing mock-up plants

〇 Investigate and analyze cyber attacks

Industrial Cyber Security Center of Excellence (ICSCoE)

Cultivate leaders of industrial cybersecurityUtility facility

Manufacturing facility

Mock-up plants

49

Japan & US Joint Training for ICS Cybersecurity

ICSCoE and DHS/NCCIC-ICS (formerly known as ICS-CERT) cooperatively conducted a joint training for Industrial Control Systems (ICS) cybersecurity for improving the capability of nearby countries to secure the global supply-chain.

■Date: Sep. 10 – 14, 2018 (will be held annually)

■Location: Tokyo

■Contents: 5 days training for ICS cybersecurity

■Participants: ASEAN10 countries, Australia, India, NZ, South Korea, Taiwan 36 students

IPA ICSCoE Core HR development program 83 students

DHS/NCCIC 5 lecturers, and etc.

■Opening speeches:

Yoji Muto, Former State Minister of Economy, Trade and Industry

William F. “Bill” Hagerty IV, U.S. Ambassador to Japan.

Tatsuo Tomita, Chairman of IPA

<Participated Countries>

Speech of Yoji Muto (Fuji TV) Speech of Ambassador Hagerty (Twitter) 50

■Sep. 12-14, 2018

Lecture with mock-up plants(ICSCoE)

■Sep. 10-11, 2018

Practice sharing, etc.(DHS/METI/US & JP Enterprises)

Fundamentals of OT security101, 201 Training (NCCIC)

Hands-on training with ICSJ202 Training (ICSCoE)

Japan & US Joint Training for ICS Cybersecurity

Japan & US provided lectures and hands-on training for 5 days.

[Voice of oversees students]

・Really informative, comprehensive and relevant information sharing throughout the whole week training.

・I was convinced that OT was safe and secure, but after the training I understood that hacker can attack serial communication,PLC, protection relay, and etc.

・We are about to integrate IT & OT, so this is a right time to learn and prepare for it.

・I want to share and implement what I learned to my company and country.

[Voice of Japanese students (ICSCoE)]

・It was beneficial to know how U.S. understands and deals with ICS cybersecurity.

・There were so many contents, and it was very relevant and helpful.

・The networking session and the discussion with people from abroad was beneficial.51

3. Policy for Realizing Our Future

(5) Innovation & Emerging Technology

Promote R&D combining “field data”, “hardware”, and “AI”<①Social implementation, ②Application development,

③Fundamental research>

Set a target number of HR required by 2025Foster unprecedented number of HR from leading to

general IT HR

Consider measures to support Start-up companies to create innovation

Establish AI principles and guidelines (Launch a committee on “Principles of Human-centric AI society”)

Artificial Intelligence TechnologyStrategy (established in April 2017)

(1) R&D

(2) Fostering Human Resources

(Number of HR lacking / # of persons)Leading IT HR : 50,000 in 2020IT HR : 300,000 in 2020

(3) Establishing Sharing Environment of Data/Tools

owned by Industry, Academia, and Government

(4) Start-up Support

(5) Ethics and Rules for Development of AI Technology

Establishment of execution plan(released in June 2018)

Establish collaboration platform for cross-field data based on industry-academia-government collaboration

A new AI Strategy will be coming out in Early summer 2019

AI (Artificial Intelligence)

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Blockchain – Opportunities

By utilizing Blockchain, transaction cost could be reduced with thedecentralized structure.

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Blockchain – Impact and Possible Use Cases

Structural Reform by Blockchain

Local Currency, Point service

10 billion dollars 10 billion dollars

Real estate, Official certificate

Sharing Economy

130 billion dollars

Supply Chain

320 billion dollars

IoT, Energy

200 billion dollars

Blockchain will make an influence on existing industries.

The impacts of Japanese industries is estimated 600 Bill USD.

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4. Way Forward

“Governance Innovation”

Search possible governance structures that can rebuild “Trust” in the new environment of Society 5.0 while avoiding constraints on innovation

While regulatory system, which for instance protects privacy and safety, exists to ensure “Trust” from product/service users, conventional ways to verify “Trustworthiness” are designed based on the industry structure in or before Society 4.0.

With the structural changes brought by digital technologies, the conventional regulatory system might become ineffective to verify the “Trustworthiness”.

→ We need to factorize the “Trust,” and reform the ways to verify the “Trustworthiness.”

Society 4.0

Society 5.0

• Digitalized only inside cyber space

• Fully-digitalized world• Cyber-Physical integration• Development of AI• Real-time data-tracking and data storage

→ Pose both opportunities and threats

From Society 4.0 to Society 5.0

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Governance Issues towards Society 5.0

I. Vertical regulations based on industrial category might inhibit innovation including the emergence of cross-industrial product/service. (The conventional regulatory system might not be able to regulate cross-industrial product/service properly.)

II. Despite the fact that system architecture and code define functions of product/service enabled by digital technologies, the conventional regulation might not be able to oversee the system architecture and code.

III. As architecture/code evolve rapidly, there might be a limitation to regulate them only by hard laws. (E.g., substitute industry-led guideline plus system audit for a hard law)

IV. Conventional “horizontal” regulations might also need reforms based on the structural changes.

→ Based on the abovementioned issues, we need to factorize “Trustworthiness” into component elements, and rebuild the ways to check the each elements in accordance with the industrial structure in Society 5.0

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June 2019: G20 Japan

2020 Olympics & ParalympicsTOKYO

We are looking for partners towards G20 and beyond

Early summer 2019: AI Strategy Collaboration with startups in EU and other countries

Cooperation in AI research

Cooperation in creating privacy frameworks

Collaboration with G7 France

Collaboration with APEC and ASEAN countries

Ministerial Meeting on Trade and Digital EconomyJune 8-9 @ Tsukuba, Ibaraki

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Thank You!