Copyright 1998 Agence France Presse

Agence France Presse

August 21, 1998 IT-Japan-bug 2ndlead 10:27 GMT

SECTION: International news

LENGTH: 570 words

HEADLINE: Japan's premier steps up fight against millennium bug

DATELINE: (ADDS premier's quotes)

BODY:

By Shingo Ito

 

TOKYO, Aug 21 (AFP) - Japanese Prime Minister Keizo Obuchi Friday ordered accelerated preparations to beat the millennium bug threatening to unleash computer mayhem at the dawn of 2000, officials said.

 

Obuchi met his ministers early in the day and ordered an action plan to be drawn up next month, government officials said, countering criticism that Japan was not doing enough to forestall the impending computer chaos.

 

Millions of computers are incapable of "reading" more than the two last digits of the year. When they mark the passing of the millennium, they are predicted to crash or produce erroneous data.

 

In theory, this may paralyze electronic transactions for numerous banks, stock brokerages, other credit institutions and businesses across the board, affecting interbank settlements the world over.

 

"This is an enormous and urgent problem," Obuchi said in a statement.

 

"It may shake confidence in the establishment of highly-advanced information and telecommunication infrastructures in the 21st century and must be dealt with by a definite deadline."

 

Japan's plan calls on both local governments and the private sector to confront the millennium bug, the officials said, and for state finance to help small firms in the battle.

 

"There is no time to spare," a government official said.

 

"We have to be fully prepared for the problem. Otherwise we will face unrecoverable chaos."

 

Final arrangements would be announced mid-September, when the government sets up a millennium bug headquarters under the prime minister, the official said.

 

The international trade and industry ministry is already considering expanding loans to small- and medium-sized companies to help them deal with the problem, officials said.

 

According to a ministry survey, 15-to-20 percent of small- and medium-sized companies have yet to take measures.

 

"We have heard some analysts and experts say Japanese measures against the 2000 problem are too slow," said the government official.

 

"It is true that we are behind the United States, but the United States is leading the field. It is very difficult to gauge progress differences, but it is fair to say Japan is not so far behind compared to many other countries."

 

The ministry planned to extend loans at an annual interest rate of 1.9 percent to small firms through the state-owned Japan Finance Corp. for Small Business.

 

It was also considering enabling small companies to borrow computer programs from software developers at low cost, government officials said.

 

Many experts warn a failure by Japan to prevent the problem could paralyse the world's second largest economy.

 

The Tokyo Stock Excange is reportedly to conduct tests next year to check whether its 124 member securities companies are ready for the bug, asking them to reset their computers to simulate the day of the new millenium.

 

The US-based Moody's Investors Service has said it is doubtful of Japan's readiness to confront the bug.

 

"Moody's is concerned that the Japanese bank executives do not appear to be taking the potential problems as seriously as the managements of other global institutions," it said in a report issued earlier this year.

 

"Unlike other global banks, the Japanese say they do not have any major problems and how they achieved that happy state of affairs is something of a mystery," the credit ratings agency said.