From left to right: Narumi Teizo, CEO of glafit, Okai Daiki, CEO of Luup, Hyuga Ryo, CEO of mobby ride.
When the glafit E-bike was introduced in 2017, it offered a new experience on Japanese roads: a ride on a lightweight two-wheeler that could switch between motor mode, pedal mode and hybrid mode and then easily collapse and fold up for storage.
But the E-bike came with a challenge: How should the use of E-bikes be regulated? Japanese traffic laws covered bikes, scooters and motorcycles, but it was unclear just where and how this hybrid innovation should operate in all its different modes.
Regulatory review threatened to slow the passage of new rules that would allow the E-bike onto bike lanes or other off-highway paths – crucial to its use when riders want to switch to pedaling in crowded cities or rural settings.
But under the Japanese government’s new “sandbox” program, glafit entered a demonstration program with Wakayama City so the E-bike can operate in multiple settings while the city and company collect use and safety data that can be used to create new regulations.
Wakayama City Hall official Kobayashi Kenta, Section Chief of the Industrial Policy Division, said the experiment will both support a hometown startup – glafit is based in Wakayama – and encourage the use of hybrids, which could help the environment and the local community.
“We decided by supporting glafit, we have the possibility also of solving social issues,” he said. “We have a shortage of transportation in our rural areas, and we need to diversify affordable transportation methods for elders. Inside the city, we think pushing [forward] with the usage of these bikes will also relieve traffic congestion and reduce the environmental footprint of vehicles.”
The Government of Japan introduced the sandbox framework in 2018 as one mechanism for regulatory reform to support the development of innovative technologies and business models in Japan. The framework does not limit the area of regulations, but currently covers those in financial services, the health care industry, mobility and transportation.
Any company, including overseas companies, can apply to conduct demonstrations under this new framework and test the possibilities of innovative technologies such as AI, IoT or blockchain for future business, especially if they cannot start new businesses using these technologies due to existing Japanese regulations. The projects are monitored, so the government can review the social and economic viability of the technology, how the technology fits in with current regulations, and what changes need to be made.
Japanese experiments in innovation with blockchain and fintech have garnered attention for the sandbox framework. But the program has attracted a wide range of applications that are taking on social challenges as well as creating economic growth in Japan, said Deputy Director-General Kazeki Jun of Japan’s Economic Revitalization Bureau.
The 129 companies that currently operate under the sandbox framework are exploring a wide range of projects, from finance and insurance to domestic recycling, health care services and transportation experiments.
“We have an aging population and a shrinking labor market, but with technology we can develop new approaches,” Kazeki said. “We want to create a broad range of projects with flexibility to experiment quickly.”
Speeding up the approval cycle for projects will increase investment and economic returns, he added.
“In the past it has been difficult – particularly for startups – to do business, and the path to approval was not clear,” he said. “Investors were not sure they should invest in these companies. It took a long time – and time is money. Now we can move quickly, and if a company is approved for a project, the investors know this startup can obtain results.”
The sandbox has attracted a number of companies in the transportation space. mobby ride, for instance, has introduced an electric kickboard scooter that integrates GPS and IoT sensor technology to operate in a controlled area, so that “share service” scooters could easily be set up in a defined urban area. Speed limitation in a specific area is also possible.
In Fukuoka City, which has become a national strategic special zone for scooter use, sandbox regulations allow city leaders to learn whether the vehicles can help solve traffic and parking problems in a compact town center where subway stations are few, bus routes are sometimes complicated and it can be difficult for tourists to navigate. The company is also running a demonstration project at Kyushu University Ito campus to collect data about the scooters on different types of roads.
“There are many opinions about the electric scooter, whether it is dangerous and just how safe it is, because it is a new vehicle,” said Atake Shuichi, who is in charge of mobby ride’s business development and public relations. “Now we can obtain quantitative data, such as how many accidents occur (of course, zero is preferable), and use it as negotiation data for future system reforms.”
Another mobility company, Luup, also is running an experiment with shared services vehicles, as well as a sandbox experiment program on a college campus that can evaluate the safety of several types of vehicles for both young users and the elderly.
“Considering safety aspects for the elderly is important because Japan is an aging society,” said Matsumoto Misato, Public Relations Manager of Luup. “Aspects such as speed and the balance of the vehicle are important. The university campus was a good testing ground because it contains both walk paths and car roads.”
For startups, whether in transportation or other industries, the sandbox is an opportunity to introduce new ideas and technologies and speed up regulatory reform, said CEO Narumi Teizo of glafit.
“Thanks to the approval of the regulatory sandbox framework, it is now possible for us to demonstrate the ride on lanes other than car lanes in our customers’ everyday use,” he said. “In addition, the approval under the sandbox framework makes our problems widely recognized and understood by stakeholders, including policymakers in Tokyo, the mayor of Wakayama, police departments, media, and current and future customers.”
“Without the sandbox framework, nobody would know about the regulation problem and the challenges we have faced for so long. We hope that this demo leads to regulatory reform in the near future.”
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Note: All Japanese names in this article are given in the traditional Japanese order, with surname first.
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