Strategic Alignment

Constraints on the Defense Industrial Base

The maintenance and strengthening of the defense industrial base are critical to Japan’s security. Rising regional tension is reinforcing the need to modernize and innovate to build capacity. Yet despite major reforms in 2014 the Japanese defense market is declining, dependent on its sole customer the Ministry of Defense. Its failure to develop international markets and create economies of scale have led to low profitability for manufacturers and increased equipment purchases from foreign sources, mostly the U.S.

For the first time since 2013, the government is set to revise all three of the country’s key foreign and national security policy documents: the National Defense Program Guidelines (NDPG); the Mid-Term Defense Program (MTDP); and the National Security Strategy (NSS) by the end of 2022. Underpinning these revisions is possible legislation on economic security to be considered in the next ordinary Diet session. Under this bill, the ruling LDP members are discussing about the ways to promote defense technological collaboration and equipment export with allied partners, and to revitalize the domestic defense supply chain.

Part of the government’s effort is to increase defense spending. In the budget request of Japan for fiscal 2022 published by the Ministry of Defense last August, reinforcement of the defense industry is specified in the first provision. Subsequently, that defense budget, approved by the Kishida cabinet last month, marked all time high number with 5.4 trillion yen (47 billion USD). Of that, 2.2 billion yen ($20 million USD) is earmarked for purpose of strengthening defense industry. Yet, such numbers are still insufficient given the industry’s state and the magnitude of the regional threats looming over Japan.

This year 2022 could prove to be pivotal. Considering the needs for industrial cooperation, institutional barriers and public opinion, this webinar will discuss ways to create an internationally competitive defense industry.

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