Copyright 1998 Asia Pulse Pte Limited

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ASIA PULSE

July 28, 1998

SECTION: Nationwide Financial News

LENGTH: 408 words

HEADLINE: ANALYSIS - JAPAN WALKING INTO YEAR 2000 HORNET'S NEST

DATELINE: TOKYO, July 28

BODY: The year 2000 is fast approaching, and with it the real threat of a digital meltdown.

In the U.S., the recognized danger of the problem is so prominent that President Clinton has created a special Council on the Year 2000 Conversion to coordinate activities among government agencies and between the public and private sector. But in Japan, with a leadership vacuum at the center, the private sector has been left to fend for itself, and there is a good chance of many getting stung by the millennium bug.

A quick review of the types of measures being implemented in the U.S. shows what can be done to help a nation cross the millennial divide unscathed. America's leading stock exchanges and financial institutions recently got together to conduct a large-scale mock trial of what trading will be like on the first day of the year 2000. Clinton, in addition to forming a council to deal with the Y2K problem, has set a time limit of March of 1999 for all government agencies to fix their Y2K bugs. The Internal Revenue Service is helping the private sector with tax breaks. The Justice Department has announced that companies can share information on how to solve Y2K problems without violating anti-trust laws.

And the Labor Department is running a program seeking retired software engineers to help fill the present shortage.

Unfortunately, there is no real unified effort of this sort among government agencies in Japan. MITI plans some tax relief for smaller companies, but the budget is small in scope, and many companies do not even know the help is available. And Japan's financial institutions will not run their first test on their interconnected computer systems until December.

Meanwhile, the question of legal responsibility among makers of information equipment and software has begun to surface in the U.S., and Japanese firms are getting sucked into the fray. For example, a grocery store in Michigan State is suing Tec-America Corp., the local sales arm of Japan's TEC Corp., over a malfunctioning computer system that cannot handle credit cards which expire in or after 2000.

Legal troubles of this sort have not yet emerged in Japan, but a storm is brewing, since the companies that make and market office computers to smaller firms cannot do enough to fix the problems, and the software companies see no profit in working to fix older software that is already installed.