Japan's government is moving to establish a new corporation aimed at supporting arms exports and increasing military supplies in times of crisis, ahead of revisions to three key security documents by the end of the year. This initiative marks a significant shift for Japan, which has historically imposed strict limits on arms exports, as the government seeks to foster the defense industry and link investments in national defense to economic growth.
According to the Asahi Shimbun on October 28, the government proposed the establishment of a joint defense industry support corporation during an expert meeting held at the Prime Minister's Office the previous day. The new corporation aims to strengthen production capabilities, support arms exports, and facilitate research and development, with plans to create a 'Defense Industry Foundation Strategy' by the end of the year to promote industry growth at a government-wide level. The government explained that this initiative would create a 'virtuous cycle' between defense and the economy. Asahi noted that this represents a shift in post-war defense policy, as the Ministry of Defense will directly engage in industrial promotion and expand arms exports as part of industrial policy.
The new corporation is expected to be a public-private partnership. The government plans to submit related legislation to the regular Diet session next year, aiming for the corporation to launch in October 2027. Initially, it will employ 300 people, with plans to expand to 600 in the long term.
The corporation will support increased production of military supplies in times of crisis and assist companies entering the defense sector with facility introductions. It will also handle investments aimed at restructuring the defense industry. There are plans to directly acquire and operate production facilities, such as ammunition factories, while outsourcing operations to the private sector. A government official stated that establishing a separate corporation allows for quicker and more flexible project execution than if the state were to manage it directly.
In the export sector, the corporation will assist with market development, specification adjustments for exported equipment, contracts, and oversight and inspections. In April, the government revised its operational guidelines for the three principles of defense equipment transfers, fully allowing the export of lethal weapons. As export activities have increased, there have been calls for the new corporation to take on related tasks, as the Defense Equipment Agency cannot manage the workload alone.
The plan aims to establish a system that simultaneously expands production capabilities and supports exports, ensuring a steady supply of military supplies in times of crisis. According to government officials, there are considerations to export ammunition, missiles, and escort ships during peacetime while supplying them domestically in times of crisis. There are also plans to supply civilian products, such as drones, to the private sector during peacetime and utilize them for military purposes in emergencies.
This strengthening of the defense industry aligns with Japan's ongoing efforts to revise its defense strategy. According to the Yomiuri Shimbun, the government is coordinating to include 'deterrence' as a core concept in the revised security documents, which are expected to be finalized by the end of the year. The strategy focuses on expanding the development and deployment of long-range missiles and drones, ensuring the capability to produce ammunition and missiles continuously for prolonged conflict. The goal is to instill a perception in adversaries that attacking Japan would not achieve their objectives, thereby deterring invasion.
The new corporation will also support research and development and invest in startups and venture capital to foster technological innovation. During the expert meeting, Yutaka Matsuo, an AI expert and professor at the University of Tokyo, highlighted the reality that advanced technology companies often incur losses while investing in research and development. He emphasized the importance of the defense sector becoming a major customer for these companies.
The Japanese government is expected to significantly increase defense spending in the upcoming revisions to the security documents. Within the government, there is a strategy to present a vision that the growth of the defense industry will lead to economic growth, aiming to gain public understanding for the budget increase. However, questions remain regarding the effectiveness of this growth. A Defense Ministry official remarked, 'Making the defense industry a growth sector is challenging. Is this vision merely a pipe dream?' Meanwhile, a Finance Ministry official questioned whether only a few defense companies would benefit financially.
The expert meeting plans to prepare a report for submission to the government as early as December. Separately, the ruling Liberal Democratic Party and the Japan Innovation Party will begin discussions in November to address remaining key issues, including the scale of defense spending.
* This article has been translated by AI.
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