In an effort to ensure stable and safe procurement, the Defense Ministry will strengthen its surveillance of the financial conditions of domestic equipment suppliers to the Self-Defense Forces, a government source said Sunday.
It will also consider using state funds to bail out firms in the industry, which consists of many small and medium-size businesses, in such cases as when they face the threat of acquisition by foreign rivals, according to the source.
The ministry will start gathering information through credit research firms in fiscal 2020 to check defense-related companies’ business situations. It has requested ¥10 million to cover relevant costs under the state budget for the business year starting April 1, the source said.
By stabilizing the country’s defense industry, Japan aims to promote joint development of vital equipment such as missile defense-related parts, Aegis destroyer radars and fighter jets with U.S. and European nations, and to keep technology from leaking to China, whose weapons have been becoming more high-tech.
The Acquisition, Technology and Logistics Agency has surveyed and listed suppliers, including prime contractors and subcontractors, of the SDF’s main equipment such as submarines since 2015.
The ministry is considering using subsidies for smaller companies as well as purchasing stocks through state-run financial institutions, according to a ministry official. It will discuss the relief measures with the Ministry of Economy, Trade and Industry.
Japan has been trying to prevent information leaks on defense equipment in line with the United States.
U.S. President Donald Trump has enhanced regulations amid fears that China will steal cutting-edge technologies from government bodies or private companies.