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Japanese Defence Ministry reviewing "Buy Japan" policy

Monday, 11 Nov 2013 | 9:28 AM ET

TOKYO, Nov 11 (Reuters) - Japan's Defence Ministry is reviewing its decades-old policy to prioritise domestic procurement over purchases of foreign gear, a cabinet minister said on Monday, a move likely to make the Japanese market more accessible to foreign defence contractors.

It would also help Tokyo buy competitively-priced hardware.

Although creaking under the strain of massive public debt, Japan is looking to bolster its defence posture in the face of a bitter territorial dispute with China and North Korea's nuclear and missile programmes.

Asked about a report by Kyodo news agency that the ministry will revise the policy by next March, Chief Cabinet Secretary Yoshihide Suga said: "I have been informed that such a discussion is taking place at the Defence Ministry. But I was not informed that they have decided on revising the policy."

The policy, which has been in place since 1970, states that domestic development and production of defence equipment should be promoted to boost Japan's defence capability. As a result, domestic products have accounted for some 90 percent of the ministry's defence procurement.

Security experts said the shift would benefit Japan's defence posture but also expose Japanese defence manufacturers, many of which are relatively small, to stiff global competition.

"This would be a right step when it comes to Japan's defence capability because good equipment can be purchased at lower prices," said Narushige Michishita, associate professor at the National Graduate Institute for Policy Studies.

"Japanese products have not been used in actual combats and they are not produced in large quantities because they are not exported. I'm afraid Japanese products tend to be less competitive than overseas ones."

In principle, Japanese defence contractors such as Mitsubishi Heavy Industries Ltd are not allowed to export products due to Tokyo's self-imposed ban on weapons exports, although that restriction is also due to be reviewed.

(Reporting by Kiyoshi Takenaka; Editing by Mark Heinrich)