The Defense Ministry will request a record budget of ¥5.16 trillion ($51 billion) for fiscal 2017, as tension rises in the East China Sea and North Korea steps up its missile threat, a government official with direct knowledge of the plan said.
The hike of 2.3 percent over this year's budget of ¥5.05 trillion marks the fifth successive annual increase sought by the ministry, which is keen to stiffen Japan's defenses as North Korea upgrades its ballistic missile technology.
The government will formally unveil budget requests for ministries later this month, in line with usual practice.
The defense ministry's request covers the ¥100 billion cost of upgrading the PAC-3 missile defense system, said the source, who declined to be identified, as he was not authorized to speak to the media.
Such an upgrade would roughly double the missile system's range to more than 30 km (19 miles), other sources have said.
The budget proposal also includes the cost of production for the Block IIA version of the Standard Missile-3 system being jointly developed with the United States to shoot down missiles at higher altitudes, the source added.
The defense ministry will also allocate funds to acquire an upgraded version of the F-35 stealth fighter, made by Lockheed Martin Corp., the source said.
Also included is the cost of strengthening the coast guard around Miyako Island in Okinawa Prefecture and Amami Oshima Island in Kagoshima, to allay worries over China's more assertive activities in the East China Sea, said the source.
Tension mounted this month after a flotilla of Chinese coast guard and other vessels sailed near Senkaku Islands. Japan, China and South Korea are in talks to convene their foreign ministers next week, Japanese media said this week. China's foreign ministry admitted the three were in talks but revealed no date for the meeting.