Japan’s lower house of parliament has a draft law to strengthen the domestic defense sector to decide. The draft has recently been heavily criticized because, according to critics, it only supports unproductive companies.
The draft aims to take into account and strengthen the uniqueness of the Japanese industry, since the sale of weapons abroad is strictly controlled.
Japan is an arms exporter
A few large companies are involved in the Japanese defense industry, including Mitsubishi Heavy Industries and Kawasaki Heavy Industries. Companies make destroyers and fighter jets, among other things, and employ many subcontractors and suppliers.
The total value of Japan’s defense industry is currently estimated at around 3 trillion yen, but more and more companies are leaving the industry due to poor profitability. Currently, the Japanese Ministry of Defense is the only customer.
One step is to help companies find customers outside of Japan. All costs related to calibration and performance for export should be financed.
The Japanese government has allocated about 40 billion yen (about 270 million euros) for this in the current budget.
Nationalization of the arms industry criticized
In addition, any company approved as a manufacturer of so-called “critical equipment” for the Defense Forces should also receive subsidies to improve production.
36.3 billion yen (about 245 million euros) is planned for these grants in this financial year.
The main challenge is that the bill would allow the Japanese government to buy land and manufacturing facilities from companies if they stop production.
In such a situation, the Japanese government wants to find another company to take over the production. To facilitate entry into the arms industry, part of the property tax and the costs of maintaining production facilities should be financed from the tax.
Critics claimed that this represented the nationalization of Japan’s defense industry.
During a preliminary debate in the National Security Committee of the House of Representatives, Seiken Akamine of the JCP said: “Buying production facilities without regard to profitability and efficiency, and allowing production to continue after the facility is strengthened, is nothing but the last form of Defense industry support.”
However, the JCP passed the bill in the lower house, as did the Nippon Ishin. Only the Japanese Communist Party voted against it.
The debate on the law will now continue in the House of Lords.