Government to formulate “defense industrial strategy”

On the 27th, the government held the fifth meeting of a panel of experts at the prime minister's office to prepare for the revision of three security-related documents at the end of the year, and discussed increasing defense spending. Several attendees expressed the recognition that while an increase is essential given the harsh security environment surrounding Japan, it is also essential to secure stable financial resources and gain the understanding of the public. The government has formulated a new ``defense industrial base strategy'' and announced its policy to create a ``virtuous cycle between defense and economy.''

The themes for this day were "Security and Economy and Finance" and "Improving Public Understanding." The government explains that the ability to continuously mass-produce items such as ammunition, which is in low demand during peacetime, will improve the country's defense capabilities. In order for the government to take the initiative in supporting private companies, the government announced its intention to establish a new corporation that will comprehensively handle strengthening the domestic production base, promoting the transfer of defense equipment, and supporting the promotion of technological innovation.

One of the attendees pointed out that when strengthening defense capabilities, in addition to increasing core defense spending, costs related to economic security and artificial intelligence (AI) should also be included in defense-related spending. Another attendee said, ``Maintaining a sound fiscal system and gaining international trust in Japan's fiscal discipline will be at the core of our security policy.''

The current National Security Strategy, which was formulated in 2022, sets a target of 2% of gross domestic product (GDP) for defense spending and related expenses in fiscal 2027. The Takaichi administration achieved its goal last year, two years ahead of schedule. The Trump administration is pressuring allies to raise defense spending to at least 3.5% of GDP. The Ministry of Finance and the Ministry of Defense will consider the scale of the increase and the details of stable financial sources.