The Japanese Ministry of Defense's Acquisition, Technology & Logistics Agency (ATLA) is considering the introduction of a range of measures to provide financial support for defence-sector small and medium-sized enterprises (SMEs).
ATLA told Jane's that the measures are in line with wider efforts to "maintain and strengthen" national defence industrial supply chains and bolster the competitiveness of Japan's defence industry. The SME support measures are expected to be introduced from fiscal year 2020, which starts in April.
ATLA said one of the proposed measures will be supported by a funding request of JPY10 million (USD92,000), sourced from the defence budget, to acquire financial data from credit research firms about SMEs that participate in defence production supply chains such as those supporting Japan's construction of Soryu-class submarines.
ATLA said the acquired data will enable it to foresee financial problems that SMEs may face. State funding to support the SME to remain operational will also be considered. "[The data will allow us] to quickly see signs of possible bankruptcy and SME withdrawal [from supply chains] and cope with it appropriately," a spokesperson from ATLA said.
Another plan is to support an expansion of SME capabilities, with a focus on replacing small businesses that are forced into bankruptcy. In the 2020 budget ATLA has requested funding of JPY30 million for this effort.
"To manage risk in the supply chains we have requested funding to research and study measures to support companies' efforts to continue to produce equipment instead of other companies that are going bankrupt or withdrawing from the sector," said the spokesperson.
ATLA said it has yet to decide on concrete measures to support defence-sector SMEs but stressed that such assistance is required to strengthen supply chains.
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