Originally created 08/04/98

Japan quietly preparing for year 2000 computer glitches



TOKYO -- While much of the industrialized world frets over the "millennium bug" and warns of computers going berserk come the year 2000, Japan is an island of tranquility.

Government officials and business executives insist programs for handling the software glitch are quietly under way.

Too quietly, critics say.

"There is no sense of crisis," said Takafumi Hamaguchi, chief researcher at Tokio Marine Risk Consulting Co. "I am pessimistic. I think people will just begin to realize it's too late when the day comes."

The bug is nothing to shrug at: To economize, early software engineers expressed years with just the final two digits. So when 1999 draws to a close, unfixed computers and embedded circuits in machines won't know if it's 2000 or 1900, and they could garble date-sensitive data or even shut down.

A vulnerable Japan could become a major global headache. One of the world's most computerized countries, Japan also is home to the second-largest economy, so a computer crisis here could have painful repercussions elsewhere.

Still, the millennium bug doesn't seem to have set off any alarms in Japan.

A key industry with important links to the rest of the world -- banking -- is confident that everything is on track, with repair work on computers due to be completed by year's end and ready for test runs by the Bank of Japan starting in December.

"Preparations have been going well and on schedule," said Katsumi Tsuiji, spokesman for the Bank of Tokyo-Mitsubishi. He and others said millions of dollars have been spent to get ready for the switch.

Some in the industry say they got a head start when Emperor Hirohito died in 1989, forcing major banks to overhaul their computer systems to accommodate the change in the Japanese calendar, which is based on the years of an emperor's reign.

Others point out, however, that international banking transactions are not carried out on the Japanese imperial calendar.

Bankers are not alone in thinking they have the millennium bug beat.

Tokyo Electric Power, Japan's largest private electricity company, said it doesn't foresee any major disruption in 2000. Its software repair project, begun in 1996, is expected to be in place by the end of this year.

Kazuyoshi Takahashi, a company spokesman, said the computer change pales next to the problems posed by natural disasters, which strike without warning.

"It is unrealistic to think that your electricity will be cut off" because of the 2000 problem, Takahashi said.

Still, not everyone is convinced Japan recognizes how serious the millennium bug can be.

According to a report by Merrill Lynch Japan, allocations by Japanese banks for repair efforts range between $29 million and $71 million -- much less than the $600 million and $380 million being spent, respectively, by American banks Citicorp and BankAmerica.

The bureaucracy also might not be moving as quickly as it should: A government report released in April found that of 395 essential computer systems used by public agencies, 141 -- or 36 percent -- won't complete the modification and test runs until sometime in 1999, perilously close to the deadline. The laggards include systems used for air traffic control and immigration.

Businesses might not be doing much better.

Hamaguchi of Tokio Marine said top corporate managers are often unaware how imminent the problem is and tend to treat the millennium bug merely as the responsibility of a company's information system section.

"I don't think companies are doing enough about the problem," he said. "But they won't say so because they are not obligated to disclose information."

In fact, only the financial industry is required to disclose 2000 switch-over plans. The newly launched Financial Supervisory Agency will review banks' projects and order those found behind schedule to submit progress reports.

Part of the problem is economic. With Japan in its worst recession since World War II and bankruptcies claiming more companies all the time, spending money to deal with an abstract computer problem more than a year down the road is not very appealing.

"For small and mid-sized companies in Japan, there is a more imminent issue: whether they can survive into the next century," said Mahendra Negi, a senior analyst with Merrill Lynch. "They are having a hard time finding money just to run their companies."