Japan's Cabinet on Tuesday approved a bill to establish a "security clearance" system that marks important government information related to economic matters as classified to prevent critical data from being leaked to overseas entities.

Under the envisaged legislation, the government of Prime Minister Fumio Kishida would be able to designate data deemed crucial as confidential, based on its judgment that the potential leakage of such information could undermine Japan's national and economic security.

Data related to cutting-edge technologies, critical infrastructure, or the prevention of cyberattacks is expected to be treated as important on economic security grounds, the government said.

The designation of such information as classified will initially span a five-year period, but with an option to extend it for up to 30 years, the government said, adding that further extensions will be possible with approval by the Cabinet.

The envisioned law will criminalize the leakage of confidential information, with a maximum penalty of five years in prison or a fine of up to 5 million yen ($33,000). Private firms could face fines if their employees violate it in connection with their businesses.

Kishida's government aims to enact the legislation by the end of the ongoing parliamentary session through June, believing that the move would help bolster Japan's economic security in cooperation with other democratic nations, lawmakers said.

Japanese Prime Minister Fumio Kishida raises his hand to speak at a House of Representatives budget committee session in Tokyo on Feb. 26, 2024. (Kyodo) ==Kyodo

Other significant areas such as defense and diplomacy, as well as espionage and terrorism prevention, have been covered by a separate secrecy law designed to prevent the disclosure of state secrets, and was implemented in 2013.

Japan has been seeking to work together with other democratic countries that have introduced similar systems to facilitate information sharing with them, as well as international joint projects in the private sector, the government said.

Government officials and employees at private companies subject to the security clearance system could undergo vetting that would involve personal information, such as criminal records, alcohol habits and the nationality of their spouses, being scrutinized, with their consent.

While opposition lawmakers have voiced concerns about people's privacy being invaded during the vetting process, Chief Cabinet Secretary Yoshimasa Hayashi said the government will safeguard personal data by compiling guidelines for the legislation.

Related coverage:

Classified Japanese diplomatic info leaked after Chinese cyberattacks

Japan's $290 billion defense spending plan still insufficient: experts