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June 9, 2006
ECOM News No.14

ECOM Forum 2006 Held!!
Suvey Results on the Response to the Act on the Protection of Personal Information
Press Release
Activities Start Toward the Standardization of the Long-Term Digital Signature Format
   Profile


“ECOM Forum 2006” Held!!

 

    On May 24 (Wednesday), 2006, “ECOM Forum 2006” was held at Toshi Center Hotel (Hirakawacho 2-4-1, Chiyoda-ku, Tokyo). On the day, approximately 400 participants including corporate members attended the forum.

    In the morning session, Mr. Yukiharu Kodama, Adviser of ECOM / President of JIPDEC made an address on behalf of the organizer, and a guest, Mr. Yoichi Kato, Director, Information Technology & Economy Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry (METI) gave a greeting. Following the greetings, Mr. Nagaaki Ohyama, Professor of Tokyo Institute of Technology, and Mr. Toshiro Kawamura, Senior Executive Vice President and Member of the Board, NEC Corporation gave lectures on the base point of ECOM activities in the future. In the afternoon session, Chairs of working groups (WG) and Research Directors of ECOM made reports on the activity results in FY2005.

    Furthermore, brochures of EC-related products offered from ECOM corporate members were displayed and distributed. As a special event, photos of RFID Tag Pilot Projects by METI in FY2005 were also displayed.

The following is the outline of lectures.


(The lecture materials will be available on ECOM’s website for members)
 
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Greeting from the Organizer
Mr. Yukiharu Kodama, Adviser of ECOM / President of JIPDEC

Mr. Yukiharu Kodama, Adviser of ECOM / President of JIPDEC


    One year has passed since the Next Generation ECOM, the current organization, was established and exactly ten years have passed since the first ECOM was inaugurated. The first ECOM implemented activities to create a common EC infrastructure through demonstration experiments, integrated EC-related organizations and further examined issues toward the expansion of use of EC. Based on the accumulated achievements, the Next Generation ECOM has been promoting activities to establish EC in response to new technologies, including RFID tags.

    The Japanese government publicly announced the “New IT Reform Strategy” in January, 2006. With the aim of making Japan one of the front runners leading the global IT revolution, the strategy poses all kinds of targets to be achieved by 2010. One of the targets is the “strengthening of inter-department and inter-company cooperation based on IT,” which is exactly the promotion of EC in a broad sense.

    Based on the needs of corporate members and in line with the targets of the New IT Reform Strategy, the Next Generation ECOM will make efforts to expand the use of RFID tags, to achieve the safety and security of EC, and to examine both problems and basic technologies in relation to the use of EC.


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 Greeting from the Guest

Mr. Yoichi Kato, Director, Information Technology & Economy Division, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry (METI)


Mr. Yoichi Kato, Director, Information Technology & Economy Division, METI

    Judging from the comparison of market sizes of EC (B2B in a broad sense) between Japan (190 trillion yen) and the United States (185 trillion yen) in 2004, it can be said that electronic commerce (EC) in Japan has exceeded EC in the United States in absolute amounts. As for the diffusion and promotion of electronic commerce, the main emphasis has shifted from quantitative growth to qualitative growth. In the New Economic Growth Strategy, “the manufacturing industry and the service industry” are considered as “twin-engine for growth.” For the purpose of getting great performance out of the two-engine, it is important to combine IT and services as well as IT and management, and to appropriately fuse the two combinations.

    RFID tags are based on a technology that constitutes the cores of solutions for all kinds of social problems. We have already achieved significant results in diffusion and promotion activities, but it is also necessary to pursue progress simultaneously in the following three phases: expansion of use, improvement in cutting-edge technologies and deepening of practical aspects. The significance of the existence of ECOM lies in its activities with emphasis not on vendors but on users. For the purpose of promoting policies toward world-leading IT management and improved productivity based on IT, we definitely need the support and cooperation of ECOM members.

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Keynote Speech 1
“IT New Reform Strategy” and the Need for New Authentication Services
Mr. Nagaaki Ohyama, Professor of Tokyo Institute of Technology / Intellectual Member of Advanced Information and Telecommunications Society Promotion Headquarters

Mr. Nagaaki Ohyama,
Professor of Tokyo Institute of Technology / Intellectual Member of Advanced Information and Telecommunications Society Promotion Headquarters

     The New IT Reform Strategy as a target toward 2010 was adopted and announced on January 19, 2006. Its basic philosophy is “significant advancement through structural reforms,” and the way of eliminating a social dilemma is a big issue to be solved. One of the objectives is to achieve a balance between safety and convenience, which has not been realized yet, by placing emphasis on users and citizens. It is also important to create an environment that will enable the people of this country to take the initiative in solving social problems.
 
    In the short term, the basic concept of the New IT Reform Strategy is to promote BPR based on ICT for solving social problems, but the strategy aims to realize a self-thinking intellectual society in five years ahead. In particular, key factors in the areas of electronic governments and medical services are to shift from the current opaque and confusing system to an easy-to-understand, simple and transparent system and to formulate a grand design for total optimization. Common issues in these areas are as follows: (1) shift from disclosure of information to disclosure of personal information to identical persons, (2) shift from identified optimization to total optimization, and (3) improvement in the utilization ratio and reduction in office expenses. With regard to electronic governments, the strategy aims to realize the utilization ratio of 50% or a higher ratio by 2010. On the other hand, in the area of medical services, it aims to achieve HPKI (Health PKI) and proposes the use of Dynamic On-demand VPN as a safe network that 200,000 medical institutions can use.

    For the purpose of making these efforts successful, it is important to identify individuals. In particular, with regard to medical information, safe and secure identity verification is indispensable because personal information is promptly disclosed. For this purpose, proposals are made on the introduction of (face-to-face) identity verification in the real space, signatures in the electronic space (networks) based on public user authentication services called JPKI and other similar services, and electronic ID (eID) that enables online authentication.

    With regard to new authentication services toward safe, secure and convenient networks, it is necessary to create an environment that will enable rightful persons to access correct information by using safe devices and to develop platforms for this purpose. Players in the electronic space are individuals, electronic devices and messages (contents), and they should be authenticated. For example, for the purpose of remotely controlling electronic devices that are connected to the Internet, it is indispensable to authenticate the devices. With IPv6 IP address and device ID, we can not completely deny falsification or spoofing. End-to-end mutual authentication and cipher communication are still desirable.

Photos of the Eight RFID Tag Pilot Projects by METI


    Since 1994, I have been participating in governmental activities for formulating IT strategies. I have also joined ECOM activities to deliberate authentications. I would like to make efforts to improve an environment for authenticating persons, devices and contents, in the areas of electronic governments and medical services. However, it is not sufficient just to improve an environment; what is important is that the private sector appropriately uses the improved environment. For this purpose, I think that it is extremely important to formulate a guideline by reflecting the opinions of the private sector and to cooperate with ECOM and other similar private organizations toward the creation of a safer and more secure EC environment.

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Keynote Speech 2
The Progress of Ubiquitous Society and IT/Network Strategy
Mr. Toshiro Kawamura, Senior Executive Vice President and Member of the Board, NEC Corporation

Mr. Toshiro Kawamura,
Senior Executive Vice President and Member of the Board, NEC Corporation


     I would like to explain the progress of the ubiquitous society in Japan and its influences on corporate management and operational processes, and to present NEC’s efforts and solutions in relation to this issue.

    The diffusion of broadband in Japan has reached the world-leading level, and one of the characteristics of the Japanese ubiquitous society is the mobile evolution. I think that cellular phones will play a bigger role in the future, as is shown by new services such as “Osaifu Keitai (wallet cell-phone)” and “Mobile Suica.” Online electronic commerce itself has also evolved to meet all kinds of needs of consumers.

    Thus, in the situation in which the arrival of the ubiquitous society is drastically changing consumer behaviors, it is important for companies to be armed with IT. In the ubiquitous society, the networked processing of all kinds of “goods” will further accelerate the real-time money flow, commercial and physical distribution and information sharing across the borders and boundaries of countries, institutions and companies, and market and business circumstances will be drastically changed. Under such circumstances, it is indispensable for companies not only to fulfill their social responsibilities, but also to grasp the current status of managerial resources and continue to optimally maintain, manage and make use of the resources. In other words, the following three perspectives are necessary for corporate management in the ubiquitous society: quick decision-making and flexible response to changes (real-time management), continuous promotion of the optimization of total managerial resources (life cycle management), and response to increasing risks and compliance (risk management). What is also important is the concept of “management cockpit,” which is helpful for us to immediately understand the information that is brought about from the three management perspectives and to quickly and accurately solve problems and make decisions.

Participants listening to lectures earnestly


    As an example of real-time management, NEC has constructed a global supply chain management (SCM) system in the PC business, including customers, in-company plants, and domestic and overseas suppliers, to immediately feed back market trends and daily sales to production. This system has achieved great results: it has reduced lead time from production order to shipping by half and has improved productivity by more than 10% compared with before.

    In this way, for the purpose of creating a business environment to respond to market changes in real time, NEC will make continued efforts to develop solutions in line with the three management perspectives and to further strengthen platforms to support the solutions.

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FY2005 ECOM Activity Results
Chairs and Members of WGs/ ECOM Research Directors


RFID Tag International Standardization Topics and ISO Standard Proposal Activities
Mr. Kazuhiko Wakaizumi, ECOM Research Director

    Amid industrial and economic globalization, RFID tags attached to products, packages and containers travel across borders. It would cause problems to business operations if RFID tags attached to Japanese products were unreadable overseas and RFID tags attached to foreign products were unreadable in Japan. That would trouble not only users, but also manufacturers of RFID tags. Therefore, we are promoting the international standardization (ISO) of RFID tags. As one of the standardization activities in FY2005, an identifier (ISO/IEC15459-6) was proposed to the world in order to secure the traceability of products. Other member countries have recognized its necessity and deliberation has commenced. In an environment of several types of RFID tags coexisting at sites, “middleware” is necessary to fill the gaps in RFID tag hardware and to ease the burden of application programs. As one of the activities for FY2006, Japan will propose modification of the specifications to make it easy to understand and implement in regard to the revision of the key standard, ISO/IEC 15961/15962.


FY2005 METI RFID Tag Pilot Project Liaison Meeting
– Based on the Results of the FY2004 Pilot Project –
Mr. Masatomo Takemoto, ECOM Research Director


    As pilot projects conducted by the Ministry of Economy, Trade and Industry (METI), there were projects using different types of RFID tags across four industries in FY2003, the promotion of RFID tag utilization across seven industries in FY2004 and eight projects under four themes in FY2005. The smooth implementation of the pilot projects was promoted in the ECOM (JIPDEC/ECPC) RFID Tag Pilot Project Liaison Meeting in FY2005. The RFID Tag/Traceability Promotion WG undertook a cross-sectional analysis of the METI RFID Pilot Project in FY2004 and compiled a report on the background/objectives of RFID tag introduction, specifications/usages of RFID tags and the issues/effects of their introduction and implementation. In the RFID Tag Pilot Project Liaison Meeting of FY2005, information exchanges were encouraged regarding activities for each pilot project to improve reliability and for the parallel usage of RFID tags at multiple frequencies. The market size of RFID tags this year is predicted to expand seventeen times, to 1 million tags and three times larger in terms of cost. Please refer to the introductory models of the pilot projects when adopting RFID tags in the future.

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Privacy Protection to Guarantee RFID Tag Diffusion
Mr. Eijiro Aihara, Manager, Matsushita Electric Industrial Co., Ltd.
<Chair of the Diffusion Promotion and Social Acceptability Studies WG>

    In order to broadly develop the utilization of RFID tags, it is crucial to gather the threads of “Consumer Privacy Protection” prior to the tags becoming widely diffused. As shown by overseas examples of consumer troubles, consumers’ reasons for objecting to RFID tags relate to fears that information is possibly being procured without them noticing, used for unknown purposes, etc. On the other hand, there has been a lack of consideration among companies for pre-notification, limited use and the explanation of consumer advantages, etc. As one of the RFID tag guidelines on consumer protection, the RFID tag privacy guideline under the co-jurisdiction of the Ministry of Economy, Trade and Industry and the Ministry of Internal Affairs and Communications is being developed. As part of the activities of the WG in FY2005, we categorized usage scenarios and privacy protection technologies applicable to the current situation, and created flow charts to protect privacy in shops and roadmaps for the categorization and application of protection methods. ECOM is proposing to display the locations of RFID tag readers and to disclose written data elements, etc. In regard to privacy protection, it is necessary to take time in building a nation-wide consensus and we will continue working toward it.

EDI in the Internet Age
Mr. Hidenori Okubo, Instructor of Musashi Institute of Technology
<Chair of the Information Sharing Technology Promotion WG>


    As interoperability improves, Electronic Data Interchange (EDI) among companies has become widely diffused, even though many standards are becoming intermingled due to gaps in development levels when each standard was created. However, as internet EDI expands, more companies are introducing it in their own way which is preventing EDI from spreading among business interfaces and medium and small companies. The ebXML made a remarkable debut as the next generation EDI standard in 2000 and with consistent descriptive methods for process and data models and transmission features being improved compared to the legacy EDI, the ebXML is believed to be the next generation EDI standard. Presently, the ebXML standard has been developed to a practical level with easy-to use and simple tools for medium and small companies. It is time for many industries to review fixed-length standards and, therefore, it is a chance to establish a common EDI standard among industries. One of the biggest obstacles for EDI standardization is that there are various viewpoints on EDI. To overcome this issue, we have been promoting the establishment of a common understanding by organizing implementation and introductory components for B2B-EC which identifies target areas. We have also conducted tests with ebMS tools.

    In the IT New Reform Strategy, a goal to increase the electronic commerce implementation rate to more than 50% has been set and I would like to ask for your further cooperation in spreading EDI.

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Three-Year ADR (Alternative Dispute Resolution) Activities at ECOM and Future Plans
Ms. Toshiko Sawada, Director of EC Network
<FY2005 ECOM Research Director>


    In the three-year Internet-related ADR Demonstration Experiment, we received 4,985 enquiries. Judging from those enquiries, it can be said that the number of troubles regarding mail orders is on the decline and the market is maturing. On the other hand, in regard to auctions, we constantly received enquiries. Since there are new types of fraud and many problems with cell phone websites, we should keep eye on auctions for some time to come. In addition, we are receiving more enquiries from sellers (internet shops, auction sellers, etc.) each year, even though there were more enquiries from buyers overall. I think companies are struggling to find how to deal with customers. Another thing I would like to point out is that 10 to15% of the enquiries are about international transactions. There is a need to address this kind of issue.

    One of the biggest results of the demonstration experiment was the accumulation of trouble cases and know-how to solve the problems. EC Network will take over the know-how and offer it to sellers in conjunction with a problem-solving function and return it to the market as a whole.

Enforcement of Personal Information Protection Law and Contemporary Issues
Mr. Masahiro Eguchi, ECOM Research Director


    Various incidents have been occurring since the enforcement of the “Act on the Protection of Personal Information” in April, 2005. Price-comparison sites and the shopping sites of major apparel companies have been attacked and a large amount of personal information has been illegally procured by unidentified persons. The companies have been heavily involved in apologizing to people and tightening security measures on their websites. New types of trouble are also emerging such as phishing fraud, personal information and billing fraud by spyware, etc. In these circumstances, companies with personal information should not be satisfied with the current situation and should make continuing efforts toward the enhancement of protection systems. In February, 2006, the Ministry of Economy, Trade and Industry reminded companies to carry out checks on the following three points: (1) eradicating illegal access to databases (SQL, injection measures, etc.); (2) taking measures to avoid personal data leakage through virus infections; (3) taking measures to avoid personal data leakage through lost and stolen personal computers. Not only ensuring the full implementation of these three items, but the taking of aggressive measures such as enhancing the encryption of personal data and disclosing the sources and methods of obtaining personal information is necessary in further boosting consumer trust.

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Report on the Interoperability Plug Test of the Long-Term Digital Signature Format
Mr. Kazuya Miyazaki, Manager, Information Security Technology Department, Information Technology R&D Center, Mitsubishi Electric Corporation
<Member of the Security WG>


    Partly in response to the e-Document Law, the “Long-Term Digital Signature Format Profile (ECOM Profile)” - which compiles data structures and procedural requirements - was established to diffuse the long-term digital signature format based on standards such as the CAdES and XAdES in Japan. Plug tests were performed to check the compliance of each company’s product and the interoperability of data that the products generate with the participation of 13 companies and cooperation of two companies.

    The plug tests were divided into two types: a plug test where all participating companies verify each other’s data that the systems of participating companies generate (online matrix generation/validation test), and a plug test to verify validation functions with the expected values of “valid and invalid” using predetermined long-term digital signature data (offline validation test). As a result, all of the 13 participating companies passed the tests and we were also able to identify several issues with the profile specification. In the future, we will revise the ECOM profile based on the test results and make further efforts to diffuse and standardize the ECOM profile in Japan.

The Current Status of Company Administrative Procedures and Electronic Application Issues - Proposals to Diffuse Electronic Application-
Mr. Kazuo Adachi, Nihon Unisys, Ltd.
<FY2005 ECOM Research Director>


    In the e-Government Construction Program, 96% of government applications and notifications became available online in FY2005. However, the utilization rate of electronic applications is still less than 1%.

    In FY2005, we came to the conclusion that the demands for online administrative procedures from companies and individuals are both high, and online procedures are effective in reducing indirect costs for companies based on the results of verification according to two themes: “employee-related procedures” and “electronic tax filing”. We searched for the reasons for the low utilization rate in spite of the high demand for electronic applications and found that (1) insufficient understanding of user needs, (2) the provision of online systems according to service provider convenience, and (3) user-unfriendly services were the main factors.

    In order to promote electronic applications, we suggest that companies take the initiative in constructing models which reduce the burden of administrative procedures as they are the ones most heavily involved with them. Taking the 2007 issue as a turning point, streamlining a huge amount of administrative procedures is crucial in reducing immeasurable costs for companies and even for society.

    In FY2006, ECOM, in cooperation with NPOs, is planning to examine modeling which will lead to a reduction in the burden of administrative procedures.

Reception
Display of ECOM Corporate Member Brochures


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Flash Report
Suvey Results on the Response to the Act on the Protection of Personal Information

~ The View from Website Content
~


    As with last year, the Personal Information Protection WG (led by Research Director, Mr. Masahiro Eguchi) again conducted the abovementioned survey this year. The following is an outline of the survey compiled as a flash report

 

 1. Introduction


    It has been approximately one year since the enforcement of the “Act on the Protection of Personal Information (Protection Law)” and companies have been making efforts to establish their framework according to the guidelines of supervisory authorities. Since the Protection Law obliges the disclosure of the methods of handling personal data, including the purposes of using the data, many companies use their websites as the major communication media with information entities.

    ECOM looked at the websites of ECOM corporate members (162 companies) and internet sales companies (235 companies) with online shopping trust marks (OST), and examined (conducted in May, 2006) the prevailing situation. The following is an outline of the survey. It should be mentioned that most of the ECOM corporate members are large enterprises and about half of the internet sales companies which gained OST and were the targets of this survey are limited private companies, which means that most of them are small companies.

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 2. Survey Results


    Results of the major items of the survey are presented below, comparing ECOM corporate members and internet sales companies.

2-1. Is the company’s privacy policy stated on their website?


    96% of ECOM corporate members and 78% of internet sales companies state their privacy policies in some form on their websites. Since internet sales companies deal directly with consumers for internet mail order business, all companies are expected to provide their privacy policies.

2-2. What is stated as part of the privacy policies?



     There is not much difference between large enterprises and internet sales companies in the percentages for use purposes, the presence of offers to third parties and security, with the percentages for both types of company high. However, in regard to “Shared Use” and “Information on Children”, the percentages are comparatively low and the difference between large enterprises and internet sales companies is large. This is predominantly because of business scale and characteristics. Detailed indications of contact information and dates of issue are to be hoped for.

2-3. Are disclosure procedures for personal information stated on the website?


    We checked the presence of detailed indications of disclosure procedures on websites to evaluate efforts in accordance with the Act on the Protection of Personal Information. About half of large enterprises have clear indications of the procedures, while less than one sixth of internet sales companies have any, which is a remarkable difference. Generally, internet sales companies have restrictions on the number of personnel, so it is hard for them to respond to disclosure demands as large enterprises do with contact centers. Easy-to-understand guidance on websites is, therefore, very helpful.

2-4. Have you acquired the privacy mark?



    
     Due to the growing consciousness of the Act on the Protection of Personal Information, the acquisition of privacy marks has been increasing rapidly (it reached 4,000 companies as of May, 2006). There was also a big change evident in the target companies of this survey. Specifically, only 3% of the internet sales companies had privacy marks last year, but that figure increased to 11% this year. Considering the scale of the companies, this is a remarkable change. 77% of companies display their privacy marks on the top page of their websites (28% last year) which indicates their strong willingness to appeal to consumers on the basis of their acquisition of the mark.

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 3. Conclusion

  
     Along with the steady diffusion and improvement of consumer literacy, the volume of electronic commerce is growing consistently. According to the “Information Economy Outlook 2005” released by METI, the scale of the Japanese B2C EC market and EC rate is estimated to have been 5.6 trillion yen and 2.1%, respectively, in 2004. On the other hand, the scale of the American B2C EC market and EC rate is expected to be 174.6 billion dollars (19.7 trillion yen) and 4.7%, respectively, in 2005 (according to the survey by Forrester Research, Shop.org). This is still a huge gap, even after taking the economic scale disparity and the timing of the surveys into account. “Customer Security Remains Primary Goal” is also mentioned in the survey report which suggests that many buyers still doubt the safety of their personal information. The Japanese B2C EC market can be expected to keep expanding, but companies still need to make continuing efforts and appeals to consumers for further development.

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Press Release
Activities Start
Toward the Standardization of the Long-Term Digital Signature Format Profile
~Launching JIS Draft Preparation in Cooperation with the ETSI/ESI
~

(released on May 23, 2006)

Details:
Outline:
     This spring, we exchanged information on the establishment of the long-term digital signature format and the interoperability plug test with the ETSI/TC ESI, and established a cooperative relationship with them. Activities then began to make the industry standard, the ECOM profile of the long-term digital signature format, consistent with ETSI specifications and the Japanese Industrial Standard (JIS) in order to create an environment to be able to make use of long-term storage products for electronically signed documents with a greater sense of security. ECOM is planning to set up the “Standardization Sub-Working Group (SWG)” under the “Security/Long-Term Storage WG” and to widely seek opinions.

*1 ETSI/TC ESI: ETSI/Technical Committee of Electronic Signatures and Infrastructures
*2 ETSI: European Telecommunications Standards Institute


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From the Secretary-General


     Is the Kanto region about to enter the rainy season? On the way to the office, you can see hydrangeas near Kikai Shinko Kaikan. It is a yearly event, but I can’t help being impressed by them steadily getting ready to bloom around this time of year.

    Well, the “ECOM Forum 2006” was held at the Toshi Center Hotel on May 24 (Wednesday), and ended on a high note with approximately 400 participants and the need for temporary seating in one section. I would like to take this opportunity to thank those people who gave lectures and attended the forum.

    About 173 people and 44 companies in total (as of June 8) registered for the 13 WGs for FY2006, which we have been calling for since the latter half of May. Some of the WGs have already commenced their activities. The activities of WGs will be introduced through ECOM News and ECOM Seminars in the future.

    The first board of directors meeting in FY2006 was held on June 7 (Tuesday) and the FY2005 Activity Report, the settlement of accounts, the FY2006 Activity Plan and the budget balance were approved. Those reports will be made at the upcoming General Meeting on June 12 (Monday).

(Kataoka)

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ECOM News No. 14

Issue Date: June 9, 2006
Issuer: Next Generation Electronic Commerce Promotion Council of Japan
Kikai Shinko Kaikan Bldg 3F  
3-5-8, Shibakoen, Minato-ku Tokyo 105-0011, Japan
Tel: +81-3-3436-7500, Fax: +81-3-3436-7570


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