Deliberations have started in the Lower House on a bill for the government to provide more assistance to the defense industry.

The bill would allow the government to subsidize businesses that are authorized as manufacturers of “essential equipment” for the Self-Defense Forces by covering the expenses, among other things, for bolstering their supply chains for raw materials and spare parts and for strengthening their cybersecurity.

An institutional system would also be set up for allowing the government to acquire and nationalize munitions manufacturing facilities from a company having difficulties remaining in business and commissioning a separate company to administer and operate those facilities.

We understand the sense of alarm about successive withdrawals of Japanese businesses from the defense sector, which could undermine the foundation of national defense if nothing is done.

However, there is a concern over how effective similar government-led assistance measures could be. There are also concerns they could end up as protection measures for domestic industries that don’t take into account cost-effectiveness.

Japan’s defense industry is believed to be worth about 3 trillion yen ($23 billion) in market size. Thousands of subcontractors operate under the umbrella of industry leaders including Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd. and Mitsubishi Electric Corp.

Some 1,100 companies are involved in manufacturing fighter jets and some 8,300 companies in constructing escort vessels, Defense Ministry officials said.

The industry is not necessarily attractive for private businesses because the SDF is the only client and since many of the orders come in small lots, a mass production effect cannot be counted upon.

Specifications are sometimes changed after an agreement is signed, further adding to the costs.

More and more military gear has been imported from the United States in recent years. An endless succession of domestic businesses has withdrawn from the defense sector or handed over their defense arms.

It is certainly necessary to have an arrangement in Japan for allowing the stable procurement of defense equipment and enabling a quick response to requests for maintenance and repairs. It should, however, be questioned what is deemed “essential.”

Imported products may, in certain cases, prove better in performance and cost-effectiveness than their domestically manufactured parallels.

There have long been problems on the part of the Defense Ministry and the SDF, including in the way they procure munitions by repeatedly placing orders with original specifications in small lots and for multiple product types, and the manner in which they leave cost management entirely to the contractors.

The government should provide convincing explanations to the tax-paying public if it were ever to tap into limited budget resources to provide special protection for private businesses.

Some other provisions in the bill also require in-depth discussions in the Diet.

One concerns a mechanism for pushing the export of defense equipment.

The bill would have a new fund set up to subsidize expenses for modifying product specifications for customers abroad. The plan is intended to end the current structure, where the SDF is the only client, and expand the market overseas.

As things now stand, Japan’s arms exports are limited, among other things, to the domains of rescue, transportation, warning, surveillance and minesweeping under the country’s Three Principles on Transfer of Defense Equipment and Technology.

Some officials in the ruling Liberal Democratic Party argue, however, that those guidelines should be reviewed to allow the export of fighter jets and escort vessels as well.

Such a measure could allow the government in the future to back the supply of lethal weapons to overseas parties, a possibility that should not be taken lightly.

Another provision of concern would allow the defense minister to designate “secrets on defense equipment etc.” when an agreement is signed with a corporate contractor.

Careful consideration should be given to that clause, which would threaten to punish corporate workers with imprisonment of up to one year or a fine of up to 500,000 yen for leaking similar secrets.

–The Asahi Shimbun, April 9