TOKYO May 30 Japan plans to create an arms
procurement agency to streamline Tokyo's spending on
defence-related hardware that will also promote military exports
and take charge of advanced weapons research, two people with
knowledge of the developing plan said.
One immediate aim of the new agency would be to lower the
outsized costs of buying equipment for Japan's military at a
time when Prime Minister Shinzo Abe is looking to counter
China's military build-up and bolster Japan's claims to disputed
islands held by Tokyo in the East China Sea.
"The goal is to cut costs. It (the agency) is being created
to improve how we buy things," said Akira Sato, a ruling Liberal
Democratic Party lawmaker involved in formulating defence policy
as Parliamentary Secretary of Defense.
Helping to win overseas business for defence contractors
such as Mitsubishi Heavy Industries, the nation's
biggest, would go some way to realising that ambition.
While arms procurement agencies exist in other nations,
including South Korea and Australia, Japan's military purchases
have been less coordinated because of legal and political limits
on its military rooted in Japan's defeat in World War Two.
Abe has made a priority of initiating more robust armed
forces and less apologetic diplomacy after decades of restraint
under Japan's pacifist post-war constitution, and is calling for
a review of legal limits on Japanese forces fighting overseas.
The new proposed agency taking shape under Abe would combine
currently separate procurement activities for Japan's sea, land
and air forces, according to the people involved in the
planning, who asked not to be identified.
The yet-to-be-named agency will also include oversight of
the Technical Research and Development Institute, Japan's main
weapons research and development unit, with projects ranging
from a home grown stealth fighter to electronic warfare systems.
Staffed by as many as 2,000 people, the agency could tap
outside advisers at Japanese corporations and foreign
consultants such as Deloitte and KPMG with
expertise in managing global supply chains, according to a
source involved in the planning.
Abe, pressing to give Japan's Self-Defence Forces a freer
hand to come to the aid of allies in future conflicts, raised
Japan's military spending by 2.6 percent over five years and
invested in early-warning plans, beach assault vehicles and
Because Japan's defence contractors have been largely barred
from exports and restricted to selling small lots of aircraft,
tanks and other equipment to Japan's armed forces, the costs per
unit are often more than twice as much as those paid by other
countries, according to industry experts in Japan.
BIGGER BANG FOR THE YEN
France's Direction générale de l'armement (DGA), which
coordinates France's role in Europe-wide arms development
projects such as the Eurofighter while supporting French exports
and evaluating equipment for use by the nation's military, has
been a model for the proposed Japanese agency, the sources said.
In March, Japan eased a ban on military exports that could
open new markets for companies such as Mitsubishi Heavy and
Kawasaki Heavy Industries.
One goal of that move, officials have said, was to bring
down costs for Japan's military by creating a larger market for
Japan's participation in international projects so far has
been limited to a handful of exceptions to export restrictions.
Among the projects the new agency will likely inherit is
Japan's participation as a supplier to Lockheed Martin Corp's
F-35 fighter jet, a nine-nation consortium, including
firms in the United States, Britain, Italy, Turkey, Canada,
Australia, Denmark, Norway and the Netherlands.
One goal of a new procurement agency will be to win a bigger
portion of work for Japanese companies on the project, one of
the sources said.
Mitsubishi Heavy is expected to supply F-35 parts to
Britain's BAE Systems, which builds the rear fuselage
of the stealth jet, sources told Reuters in January, placing a
Japanese company in an international military project for the
Another major project is the joint development of an
upgraded U.S. anti-ballistic missile, the SM-3 IIA, designed to
destroy warheads above the earth's atmosphere. Japan is looking
to deploy the anti-missile defence against a possible strike
from North Korea, officials have said.
With flight tests set to begin soon, a final decision on
production could hinge on Japan's willingness to allow sales to
third countries deemed acceptable by the U.S. government, say
defence industry analysts.
In the 20 years to 2012, Japan was the sixth-biggest
military spender in the world, according to the Stockholm
International Peace Research Institute. China, by contrast,
leapt to second place from seventh after it hiked its defence
spending more than five-fold.
(Editing by Mike Collett-White)