Introduction

Japan sees artificial intelligence (AI) as critical for boosting its industrial competitiveness and productivity by fostering innovation and overcoming social issues. Japan’s decentralized and whole-of-government approach to AI governance aims to make Japan the “world’s most AI-friendly country.” It is doing this by taking a multistakeholder and human-centred approach to AI that supports and guides research, innovation, commercialization and utilization that remains ethical and addresses real societal needs. Japan sees international leadership and collaboration on AI as essential for meeting its own domestic goals, addressing global challenges like climate change and health, and mitigating against potential negative aspects of AI like misinformation, disinformation, and escalation of war or geopolitical tensions.

AI governance in Japan

Japan’s national approach to artificial intelligence could be summed up as trying to address security and safety issues while promoting AI innovation and utilization. Behind-the-scenes drivers for Japan’s approach to AI include acute awareness of businesses needing to boost innovation and efficiencies to maintain competitiveness and the urgent need to develop and adopt digital tools to meet specific needs related to Japan’s rapidly shrinking and aging population and related demographic challenges.

Unlike in the EU, Japan is not taking a centralized approach to AI regulation and policy. The responsibility for developing AI-related regulations and guidelines falls on several government bodies (see table) that each focus on a specific aspect of AI but also work in concert to shape Japan’s approach to AI governance and regulation. 

For example, the Cabinet Office provides overall AI policy coordination across ministries and agencies and oversees the “Society 5.0” initiative that aims to create a “Super Smart Society” through a new industrial revolution aiming to highly integrate cyber and physical spaces.[1] The government has been increasingly making AI a cornerstone of this plan since its inception in 2016. Meanwhile, the Ministry of Economy, Trade and Industry leads the promotion of industrial applications of AI, the development of guidelines for AI in business and the facilitation of international partnerships and dialogues on AI. Most recently, it released the AI Guidelines for Business Version 1.0 in April 2024.[2] These guidelines are geared toward fostering voluntary compliance by developers, businesses and public institutions, including municipalities, to use AI while mitigating risks. In addition, the Ministry of Defence is working to integrate AI technologies into national defence and security applications.

Japan's decentralized AI governance allows various stakeholders to adapt to the evolving technological landscape quickly.

Japan promotes AI commercialization

Japan actively supports the commercialization of AI through a blend of government initiatives, private-sector collaboration, and academic research. The Japanese government acknowledges AI as a crucial driver of economic growth and technological innovation, integrating it into various national digital transformation strategies. The rapid pace of commercialization is underscored by Japan’s global ranking in AI commercialization, as noted by the Global AI Index, which rose from 23 in 2023 to 14 in 2024.[3] This trend is expected to persist. The Ministry of Internal Affairs and Communications predicts that Japan's AI market will expand at an annual rate of 23.2 per cent, reaching C$10.1 billion (1.1 trillion yen) by 2027.[4]

Japan fosters AI commercialization through substantial funding, policy support, and allocating significant resources to AI research and development, focusing on practical applications that can be brought to market. This includes initiatives like the Cabinet’s Society 5.0, which helps facilitate public-private partnerships, investment in AI infrastructure, sector-specific initiatives and reduces financial barriers to AI commercialization, especially for startups and small and medium-sized enterprises. In 2024, Japan introduced an “Innovation Box Tax” policy, offering up to a 30 per cent corporate tax deduction for AI software companies that commercialize intellectual property and software using AI. 

Collaboration between industry and academia is crucial to Japan's AI commercialization efforts. In 2018, Japan established a regulatory sandbox to allow companies to test innovative AI technologies with fewer regulatory barriers in real-world settings.[5] Additionally, Japan has set up several AI research centres and innovation hubs, including the Artificial Intelligence Research Centre and the RIKEN Centre for Advanced Intelligence Project, which bring together researchers, businesses, and entrepreneurs. These collaborative environments foster knowledge transfer and accelerate the development of AI solutions that address real-world challenges.[6]

Japan is also concentrating on developing AI talent to bolster its commercialization objectives.[7] The government has launched educational programs and training initiatives to nurture a workforce proficient in AI technologies. This includes incorporating AI and data science courses into university curricula and offering upskilling opportunities for professionals across various industries.

Japan fosters AI innovation and application

The Japanese government plays a vital role in fostering AI innovation by implementing a regulatory framework and funding that balances growth with societal benefits. The government’s AI White Paper 2024 and the AI Strategy 2022 outline the ambition of making Japan the “world’s most AI-friendly country.” Policy discussions during the Cabinet’s eleven AI Strategy Meetings held from May 2023 to August 2024, including actions like granting AI developers access to government-held data for generative AI learning, reflect this supportive approach. Additionally,[8] the government has initiated programs like the Integrated Innovation Strategy 2024 to advance AI research, development, and adoption across various sectors.[9]

Japan is investing heavily in developing AI talent and improving digital infrastructure to ensure widespread AI utilization. The country has implemented educational reforms to integrate AI and data science into curricula at various levels, from primary education to university programs. 

On the infrastructure front, the government is supporting the development of high-performance computing facilities, expanding 5G networks, and promoting cloud computing adoption to create a robust foundation for advanced AI applications across industries. Japan’s largest business association, Keidanren, has a taskforce dedicated to encouraging Japanese companies to become AI-ready.[10]

The government is also providing subsidies to companies, particularly SMEs, to alleviate the burden of digital infrastructure costs. Large corporations likewise benefit from government subsidies when AI technology is considered essential for national competitiveness and economic security. For instance, SoftBank received C$48.7 million (5.3 billion yen) from the Ministry of Economy, Trade and Industry (METI) to purchase the supercomputers necessary for generative AI development. This is part of a C$1 billion (¥114.6 billion) funding package from METI to support AI computing infrastructure and its[11]

Companies across various sectors are forming new strategic partnerships and harnessing AI technology to reimagine their operations and services. For example, the collaboration between Tokio Marine and Nichido Fire Insurance and Microsoft Japan aims to revolutionize the insurance industry by employing interactive AI to streamline workflows and decision-making processes. At the time of writing, full implementation was set for the end of 2024.[12]

Japanese telecommunications companies are expected to advance generative AI services. In March 2024, NTT, one of Japan’s major telecommunications companies, launched its proprietary large language model (LLM) service, Tsuzumi. NTT claims that Tsuzumi is among the world’s highest-performing models for Japanese language processing, boasting compact yet powerful capabilities, with two models developed to optimize energy use.[13]  NTT is also collaborating with prefectural police on fraud detection.[14] Tech giant Fujitsu is partnering with the Tokyo Institute of Technology to develop large-scale LLMs to boost both local and global competitiveness, and SoftBank is utilizing NVIDIA's GPUs to build Japan's largest generative AI service, which it plans to launch later this year.[15] 

AI is also being deployed in the transportation and retail sectors. Japan Rail Kyushu’s trials of AI-powered station attendants highlight efforts to enhance customer experiences, while 7-Eleven Japan’s adoption of generative AI for product planning exemplifies the shift toward data-driven strategies.[16] In logistics, companies such as Procter & Gamble Japan are employing AI to optimize demand forecasting and streamline supply chains.[17]

In the manufacturing sector, major companies like Toyota, Honda, Mitsubishi Electric, and Panasonic are leveraging AI to drive product development and process innovation.[18] The construction and logistics industries are actively deploying AI technologies to enhance operational efficiency. For example, KAO has introduced a smart logistics system powered by AI and automated guided vehicles to automate warehousing operations, resulting in significant productivity gains. Companies like Kajima are deploying autonomous heavy equipment, such as dump trucks and bulldozers, equipped with AI to operate machinery remotely.[19] This is particularly beneficial for addressing labour shortages and restrictions on working hours.

According to the 2024 “Corporate IT Usage Trends Survey” conducted by the Japan Information Economy Society (JIPDEC) and ITR, 69.5 per cent of responding companies reported either using generative AI for business purposes or planning to adopt it. This indicates a growing interest in and utilization of AI compared to previous years, with only 13.8 per cent of companies reporting no use or unfamiliarity with the technology. JIPDEC officials anticipate that the adoption of generative AI among private companies will accelerate significantly in the coming years.[20]

Japan’s central government’s approach to AI also allows other levels of government to explore options for using, not using, or even banning AI in administration tasks. For example, Yokosuka City became Japan’s first city to integrate AI into government functions following a trial conducted in April 2023. Yokosuka City slowly increased access to ChatGPT for all city employees and created an English-speaking avatar of the mayor. [21] Yokosuka also spearheaded the creation of a network of over 20 local governments to share best practices in using ChatGPT in government work.[22] Similarly, the Institute of Administrative Management created a consortium on municipal AI governance comprised of tech giants like Google, Microsoft and Amazon, and city governments to set guidelines for the use of AI in government services.[23] However, not all cities are keen on experimenting with AI in government services. In April 2023, the Tottori Prefectural government banned the use of ChatGPT in prefectural office duties, and the Hokkaido Prefectural government said “it needs to be handled with caution.”[24]

Japan is leading global governance, norms, and cooperation

Japan is keenly aware that AI development, regulation, and deployment are done in tandem with developments in the international community. Therefore, it is positioning itself as a leader in shaping global AI governance and norms by leveraging its technological expertise and diplomatic influence. It does this through various multilateral and bilateral for a, such as the G7 and the UN, and partnerships with other countries and regional blocs. Japan's global engagement on AI is characterized by its emphasis on inclusive, collaborative and multi-stakeholder policymaking that is human-centric and balances risks with societal benefits.

The Hiroshima AI Process, launched during Japan's G7 presidency in 2023, is at the forefront of Japan's international AI strategy.[25] It aims to ensure “safe, secure, and trustworthy advanced AI systems” by establishing a framework for international AI governance co-operation, emphasizing fairness, accountability, transparency, and ethics. By spearheading this process, Japan seeks to bridge the gap between different national approaches to AI regulation, particularly between the more stringent EU model and the more market-driven US approach.

Recognizing the need for broader global engagement, Japan expanded the Hiroshima AI Process beyond the G7 members by launching the Hiroshima AI Process Friends Group at the OECD in 2024.[26] The initiative now has 54 member countries. This expansion serves multiple purposes: it enhances the legitimacy of the process by including a more diverse range of perspectives, particularly from emerging economies; it aligns the initiative with the OECD's existing work on AI governance, including its AI Principles and the Global Partnership on AI; and it provides a platform for countries to share best practices and collaborate on developing international standards for AI.[27] The Friends Group focuses on fostering responsible AI development, addressing potential risks, and promoting AI for social good.

Additionally, Japan actively promotes bilateral and multilateral cooperation on AI research and development, as seen in its partnerships with ASEAN, Canada, the EU, the U.S., and India.[28] These collaborations often emphasize shared values and principles, aiming to create a coalition of like-minded nations to influence global AI norms.

Japan-Canada collaboration in AI

There are two main implications for Japan-Canada collaboration in AI. The first is the potential to boost innovation, development, and commercialization by building on Japan’s leadership in technology, robotics, AI-friendly infrastructure and Canada’s strengths in AI research, development, machine learning, commercialization, and safety. The two countries are already collaborating on areas where breakthroughs could be made, notably in AI-based solutions for health technologies and aging societies, and emerging AI technologies in the defence sector.[29] Meanwhile, the strategic partnership between Japanese semiconductor producer Rapidus and Canada’s chip unicorn Tenstorrent could help accelerate advancements in designing AI semiconductor designs and AI applications in areas such as autonomous driving systems.[30]

 Secondly, Japan-Canada collaboration in AI has implications for shaping global AI governance and norms. Both countries are aligned on issues such as ensuring AI development and application is human-centric, promoting ethical AI development, mitigating potential risks, addressing privacy concerns and collaborating with the global community on AI research, development and governance. The two countries are expanding their collaboration in various international fora on these issues. For example, the two countries have committed to further supporting and expanding the efforts of the Hiroshima AI Process Friends Group at the G7 and ensuring that discussion about AI risks and opportunities remains central in the G7 agenda.

Japan and Canada are founding members of the GPAI, founded in 2020, which aims to foster exchange between policymakers and AI experts to “bridge the gap between theory and practice on AI policy” in collaboration with the OECD. Closer co-operation between the International Centre of Expertise in Montréal for the Advancement of Artificial Intelligence and its equivalent in Japan, the GPAI Tokyo Expert Support Center (established in 2023), could help promote global partnerships in AI focused on the Hiroshima AI Process. There will also be room for collaboration between each country’s AI Safety Institute as soon as Canada launches its own. Japan-Canada joint efforts could further influence the development of global standards, lead to the creation of more comprehensive frameworks for addressing critical issues such as data privacy, algorithmic transparency, and the societal impacts of AI and encourage a more inclusive and collaborative approach to AI development and application.

[1] Cabinet Office, “Society 5.0,” https://www8.cao.go.jp/cstp/english/society5_0/index.html. 

[2] Ministry of Internal Affairs and Communications Ministry of Economy, Trade and Industry, “AI Guidelines for Business Ver1.0,” https://www.soumu.go.jp/main_content/000943087.pdf. 

[3] Tortois, “Global AI Index,” https://www.tortoisemedia.com/data/global-ai#rankings. 

[4] Ministry of Internal Affairs and Communications, “Information and Communication sin Japan: White Paper 2024,” https://www.soumu.go.jp/johotsusintokei/whitepaper/eng/WP2023/pdf/01-chap4_sec9.pdf. 

[5] Cabinet Secretariate, “Regulatory Sandbox,” https://www.cas.go.jp/jp/seisaku/s-portal/regulatorysandbox_e.html. 

[6] AIRC, https://www.airc.aist.go.jp/en/intro/; RIKEN Center for Advanced Intelligence Project (AIP), https://www.riken.jp/en/research/labs/aip/.

[7] Asia Education Review, “US, Japan to Invest $110 Million, Fostering AI Talent,” May 8, 2024, https://www.asiaeducationreview.com/technology/news/us-japan-to-invest-110-million-fostering-ai-talent-nwid-1737.html. 

[8] Naikakufu, “AI senryaku kaigi,” http://xn--www8-9w8fj70en71g.cao.go.jp/cstp/ai/ai_senryaku/ai_senryaku.html. 

[9] “Integrated Innovation Streategy 2024,” June 4, 2024, https://www8.cao.go.jp/cstp/tougosenryaku/togo2024_honbun_eiyaku.pdf. 

[10] Keidanren, “Using AI to Realize Society 5.0 for SDGs,” June 9, 2023, https://www.keidanren.or.jp/en/policy/2023/041.html 

[11] Kēzai sangyōshō, “Seisan kēzai sangyō daijin no kakugi kōgiasha kaiken no gaiyou,” July 7, 2023, https://www.meti.go.jp/speeches/kaiken/2023/20230707001.html. 

[12] Norbert Gehrke, “Japan Ai: PKSHA technology,” Medium, April 20, 2023, https://medium.com/tokyo-fintech/japan-ai-pksha-technology-ca94fabfe922.  

[13] Naoyuki Shibuya et al.  “Commercialization of NTT’s LLM ‘Tsuzumi,’” NTT Technical Review Vol. 22, No. 8 (August 2024): 31-37. https://ntt-review.jp/archive/ntttechnical.php?contents=ntr202408fa3.html. 

[14] AI Expert Network, “Case Study: NTT’s Pioneering AI Initiatives,” February 24, 2024, https://aiexpert.network/case-study-ntts-pioneering-ai-initiatives/. 

[15] Kyoko Hariya, “Fujitsu Invests in Open AI Rival Cohere, Eyeing Japanese Language Model,” Nikkei Asia, July 17, 2024, https://asia.nikkei.com/Business/Technology/Artificial-intelligence/Fujitsu-invests-in-OpenAI-rival-Cohere-eyeing-Japanese-language-model. 

[16] “AI ekiin o 10gatsu kara jitsushō jikken JRKyūshū, tagengo de anai taiō,” Mainchii shinbun, September 26, 2023,    https://mainichi.jp/articles/20230926/k00/00m/020/188000c; Yoshihiro Hara, 7-Eleven Japan to Use Generative AI to Speed Production Planning,” Nikkei Asia, November 4, 2024, https://asia.nikkei.com/Business/Retail/7-Eleven-Japan-to-use-generative-AI-to-speed-production-planning. 

[17] Hiramoto Deguchi, “P&G Japan to Cut Delivery Trucks 30% Using AI Demand Forecast,” Nikkei Asia, March 14, 2024, https://asia.nikkei.com/Business/Transportation/P-G-Japan-to-cut-delivery-trucks-30-using-AI-demand-forecast. 

[18] Toyota, “Journey of innovation: Toyota's AI-powered drive,” November 27, 2023, https://www.toyota-europe.com/news/2023/journey-of-innovation;  Honda, “Honda Begins Joint Research on AI Technologies with the Indian Institutes of Technology in Delhi and Bombay to Further Advance Honda CI (Cooperative Intelligence),” September 11, 2024, https://global.honda/en/topics/2024/ct_2024-09-11eng.html; Mitsubishi Electric, Research, “Artificial Intelligence,” https://www.merl.com/research/artificial-intelligence; Panasopnic Group, “AI-Powered Panasonic,” https://tech-ai.panasonic.com/en/.  

[19] “Kajima Group uses AI to optimise construction scheduling,” AEC Magazine, March 11, 2022, https://aecmag.com/ai/kajima-group-uses-ai-to-optimise-construction-scheduling/. 

[20] JIPDEC, “JIPDEC IT-Report 2024 Spring,” May 31, 2024, https://www.jipdec.or.jp/library/itreport/2024itreport_spring.html. 

[21] “Chatto GPT, Yokosukashi ga shiken dōnyū bunshō sakusei ya goji chekku ni,” Mainishi Shinbun, April 18, 2023, https://mainichi.jp/articles/20230418/k00/00m/010/195000c; Anika Osaki Exum, “Yokosuka Becomes Japan’s First City to Use CahtGPT for Administrative Tasks,” The Japan Times, April 20, 2023, https://www.japantimes.co.jp/news/2023/04/20/national/chatgpt-yokosuka-trial/. 

[22] OpenAI, “Introducing OpenAI Japan,” April 14, 2024, https://openai.com/index/introducing-openai-japan/. 

[23] Akira Oikawa, “Microsoft, Google Partner with Japanese Cities on AI Rules,” Nikkei Asia, April 30, 2024, https://asia.nikkei.com/Business/Technology/Microsoft-Google-partner-with-Japanese-cities-on-AI-rules. 

[24] Ōkubo Nao, “Tottori ken, gyōmude wa ChatGPT kinshi chiji `chanto jīmīchī',” Asahi Shinbun, April 20, 2023, https://www.asahi.com/articles/ASR4N4TS2R4NPUUB004.html; Kana Baba, “Japan to Test Waters For Using Generative AI to Streamline Bureaucracy,” Nikkei Asia, April 25, 2023, https://asia.nikkei.com/Business/Technology/Japan-to-test-waters-for-using-generative-AI-to-streamline-bureaucracy.

[25] Hiroshima AI Process, https://www.soumu.go.jp/hiroshimaaiprocess/index.html. 

[26] Hiroshima AI Process, “Supporters: Member Countries of the Hiroshima AI Process Friends Group (in Alphabetical order), as of December 2024,” https://www.soumu.go.jp/hiroshimaaiprocess/en/supporters.html. 

[27] OECD.AI, “OECD AI Principles Overview,” https://oecd.ai/en/ai-principles; METI, “GPAI(Global Partnership on Artificial Intelligence) Symposium to be Held,” January 11, 2022, https://www.meti.go.jp/english/press/2022/0111_001.html. 

[28] Fumika Sato, “Japan and ASEAN to Team on AI and Cybersecurity,” Nikkei Asia, December 14, 2023, https://asia.nikkei.com/Politics/International-relations/Japan-and-ASEAN-to-team-on-AI-and-cybersecurity; Government of Canada, “Canada-Japan 3+2 collaborative call for proposals on AI-based solutions for well-being, better living environments, and social connection for aging populations,” https://nrc.canada.ca/en/irap/about/international/?action=view&id=125; European Commission, “Press Release: EU and Japan Advance Joint Work on Digital Identity, Semiconductors, Artificial Intelligence,” April 29, 2024, https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2371; The White House, “Fact Sheet: Japan Offcial Visist with State Dinner to the United States,” April 10, 2024, https://web.archive.org/web/20250109040845/https://www.whitehouse.gov/briefing-room/statements-releases/2024/04/10/fact-sheet-japan-official-visit-with-state-dinner-to-the-united-states/; siliconindia, “India, Japan Collaborate for Safe and Trustworthy AI Development: Hiroshi Yoshida,” silionindia, July 3, 2024, https://www.siliconindia.com/news/general/india-japan-collaborate-for-safe-and-trustworthy-ai-development-hiroshi-yoshida-nid-230525-cid-1.html.

[29] Gabriel Dominguez, “Canada and Japan Aiming to Rapidly Expand Defense Ties,” The Japan Times, September, 13, 2024, https://www.japantimes.co.jp/news/2024/09/13/japan/japan-canada-defense-cooperation/. 

[30] Tenstorrent, “Rapidus and Tenstorrent Partner to Accelerate Development of AI Edge Device Domain Based on 2nm Logic,” November 16, 2023, https://tenstorrent.com/en/vision/rapidus-and-tenstorrent-partner-to-accelerate-development-of-ai-edge-device-domain-based-on-2nm-logi; Sugiyama Ayumu and Hiura Osamu, “Rapidasu, AI-muke handōtai no seisan jutaku Kanada no tensutorento to kyōgyō,” Asahi Shinbun, February 28, 2024, https://www.asahi.com/articles/ASS2X5TKPS2XIIPE007.html.