04 December 2019

Japan draws up plan to bolster defence supply chains

by Jon Grevatt

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.

Japan is considering a series of measures to provide financial support for SMEs involved in the supply chains of major national programmes such as the construction of Soryu-class submarines (pictured). (Japanese Ministry of Defense)

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.

The Japanese Ministry of Defense’s Acquisition, Technology & Logistics Agency (ATLA) is considering ...

Jane's Find unrivaled intelligence, consultancy and advertising solutions to the defence and national security sectors.