Japan needs to bolster economic base for security crises: Finance Ministry

Japan's Finance Ministry has urged the nation to bolster its economic and fiscal foundation in preparation for potential security crises, citing the country's heavy dependence on imported resources. The ministry warned that Japan's military readiness would be significantly challenged during prolonged emergencies due to its reliance on external energy, raw materials, and food supplies.

Comparing the domestic situation to Ukraine's, which has been battling a Russian invasion since February 2022, the ministry set the goal of rapidly scaling up production of military equipment and other strategic goods in emergencies. This proposal comes as Japan seeks to enhance its defense capabilities in response to growing security threats from China, North Korea, and Russia.

The ministry emphasized that defense budget increases should be funded through spending reforms instead of additional government borrowing. The proposed measures include leveraging civilian products like drones for defense, sharing production facilities, and allowing commercial goods manufacturers to pivot towards defense equipment production on a large scale.

Additionally, the Defense Ministry and Self-Defense Forces are urged to modify their equipment specifications to attract more suppliers and reduce entry barriers for businesses. The government must also help defense-related businesses become more profitable, potentially through overseas sales. Japan is currently preparing to revise three key national security and defense policy documents by the end of the year, with further defense spending increases expected to place additional strain on public finances.

The ministry discussed the possibility of financing the buildup through cuts in other spending or tax increases.