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| ATD-X Shinshin Stealth Fighter, development Prototype for the F-3 |
By: Paul Kallender-Umezu
TOKYO — Several nascent procurement plans offer some hope of increased revenues for Japan’s top military contractors, but the overall picture could remain business as usual without either a radical increase in defense spending post-2018, when Japan will release its new Mid-Term Defense Program (MTDP), or a major breakthrough in overseas weapons sales.
Japan’s defense budget request, unveiled in late August, requests 5.17 trillion yen ($50.6 billion), an increase of 2.3 percent over the current amount, and will include 100 billion yen ($980 million) to upgrade PAC-3 missile batteries to PAC-3 MSE and account for rising F-35 costs, according to local media reports.
But a radical rise in the budget or overseas sales success looks unlikely unless the prospect of an actual armed conflict with China emerges, or Japanese contractors and the Japanese defense establishment works much harder to sell internationally, according to analysts.
Japan’s defense procurement is governed by MTDPs that decide exactly how many and what type of weapon systems and programs will be required over a five-year period. Equipment is then bought by the Self-Defense Forces in small, annual lots. While the self-contained system provides a stable annual income for five years, it leaves little room or incentive for major contractors such as Mitsubishi Heavy Industries (MHI), Mitsubishi Electric Corp., NEC Corp., Kawasaki Heavy Industries (KHI), IHI Ltd. or Mitsui Engineering & Shipbuilding Co. to invest in major new weapon platforms, and it leaves them inexperienced in international contract bidding.
A case in point is this year’s loss to French shipbuilder DCNS by an MHI and KHI-led consortium to convince the Royal Australian Navy to purchase 12 advanced Soryu-class submarines in a deal worth up to $40 billion, despite the vaunted stealth superiority of the Japanese submarines, and their advanced propulsion systems.
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