S. KOREA'S GDP TO SURPASS JAPAN

[Anchor Lead]

A Japanese research institute projected that Korea would overtake Japan in gross domestic product by 2027. Japan’s decline is blamed on diminished labor productivity caused by slow digital transformation.

[Pkg]

At this fisheries business in Tokyo the company warehouse is filled with the receipt slips piled up over some ten years. The employees also have to use a seal on many of the documents and books. The company plans to digitalize its work system soon but concerns still linger.

[Soundbite] Ishida(General Affairs Department Head) : "It is good that we are going ‘paperless’. But even if we go digital, there are many more employees who are used to analogue ways."

Japanese companies are slow to adopt digitalization as 25% of local businesses still haven’t digitalized signatures for contracts. The slow digital transformation has hindered the Japanese economy. The Japan Center for Economic Research projected the country’s per capita gross domestic product growth would stand at a mere 2% annually until 2025 in contrast to South Korea’s 6% yearly growth. At this rate, Japan’s per capita nominal GDP would be overtaken by Korea and Taiwan by 2027, according to the JCER report. It was noted in the report that unlike Korea where administrative services have been digitalized, Japan still insists on analogue practices, such as using personal seals to carry out business deals.

[Soundbite] Atsushi Tomiyama(Head Researcher, Japan Center for Economic Research) : "IT-savvy workers have to accommodate those who are not used to IT work. That undermines digitalization and forces workers to keep using seals and faxes."

The report also warned that if Japan doesn't shift to digital mode soon, the country’s economy in the 2030s could be mired in chronic negative growth. Realizing the gravity of the issue, Japan launched a government agency devoted to digitalization three months ago and decided to invest more than four trillion won in grooming IT-savvy manpower.