Japan’s Finance Ministry has proposed between 50 trillion and 60 trillion yen for defense over the five years beginning in April 2027, Reuters reported, citing four sources familiar with the discussions. That would be more than the current five-year plan of 43 trillion yen, but significantly below the 80 trillion yen under discussion.
The difference could lead to a serious contraction in arms orders. According to the agency’s sources, some planned purchases of missiles and aircraft could be reduced by up to 50%, including deliveries of American F-35 fighter jets.
Funding dispute
The Finance Ministry believes that a larger increase would be difficult to reconcile with Prime Minister Sanae Takaichi’s plans to invest in economic growth and cut taxes on food. According to Reuters, the tax change would leave an annual revenue shortfall of about 4.3 trillion yen.
The proposal is likely to face resistance from representatives of the ruling Liberal Democratic Party, who are calling for stronger military reinforcement. “If the goal is to build capabilities that can deter and prevent such an emergency, an amount in the 50 trillion yen range is out of the question,” an unnamed party representative told the agency.
Tokyo is expanding state support for strategic industries. In August, Japan’s Ministry of Economy proposed allowing the state-owned organization JOGMEC to invest in critical minerals projects without the mandatory participation of a Japanese private company.
Another example is JSR, a manufacturer of materials for advanced chips. In November, Mitsui Chemicals and the Development Bank of Japan agreed to its acquisition by the state-backed Japan Investment Corp. The deal demonstrates increased state involvement and consolidation in the strategic sector, but does not constitute the temporary nationalization of the chemical and metallurgical industries.
The final size of Japan’s defense spending will be determined after political negotiations and the budget process.
Sources: devdiscourse.com, marketscreener.com, japantimes.co.jp