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Last Published: 9/6/2019

Defense Procurement

For Japan Fiscal Year (JFY) 2019, which began in April 2019, the Japanese defense budget was the sixth largest in the world and second largest in Asia at 5.26 trillion yen (approx. U.S. $47.8 billion).  Japanese defense expenditure is mainly driven by the threat from North Korea's long-range ballistic missiles and China's maritime expansion. The Japanese Ministry of Defense (JMOD) spends most of its budget on salaries, operational expenses, training, and development. Capital expenditure represents the second largest share, and includes the procurement of military equipment, material and R&D expenses, aircraft acquisition and shipbuilding.

Over recent decades, Japanese defense expenditure has been slightly less than 1 percent of GDP, an informal self-imposed ceiling.  It has increased slightly for the last five years with consecutive record defense budgets after a decade of decline.  Japan's defense posture and procurement strategy is grounded in a pair of foundational documents, the 10-year "National Defense Program Guidelines (NDPG) for FY 2019 and Beyond" and the 5-year "Medium Term Defense Program, FY2019-2023 (MTDP)."  The NDPG and MTDP were released in December 2018 and providing renewed focus on existing capabilities and also including new focus on the defense capability areas of Space, Cyber, and Electronic Warfare.
The JFY 2019 budget, approved by the Japanese Diet, included spending increases on defense aimed at building defense capabilities in Space, Cyber, and Electronic Warfare. 

There is continued emphasis on strengthening the U.S.-Japan alliance and associated interoperability through procurement of defense equipment enhancing the following capabilities:  Integrated Air and Missile Defense (IAMD); intelligence, surveillance, and reconnaissance (ISR); intelligence; logistics; and command, control, communication, computers, and intelligence (C4I).  Additionally, the JMOD remains focused on capabilities that enhance their ability to defend remote islands and respond to large-scale disasters. 

Foreign Military Sales (FMS) of U.S. defense equipment, to Japan, are administered by the Defense Security Cooperation Agency (DSCA), which is part of the U.S. Department of Defense. The Mutual Defense Assistance Office (MDAO) at the U.S. Embassy in Tokyo is the in-country office for FMS. FMS transactions for a specific item or service are initiated by a request from the Government of Japan for price and availability data.  Direct Commercial Sales (DCS) are handled through coordination with Japanese defense trading firms, distributors and agents.

In October 2015, Japan established the Acquisition Technology and Logistics Agency (ATLA) under the JMOD, integrating acquisition functions including its Internal Bureau, Staff Offices, Technical Research and Development Institute (TRDI), and Equipment Procurement and Construction Office (EPCO).  Roughly 1,800 officials work in ATLA under a commissioner reporting directly to the Minister of Defense.  ATLA is responsible for defense equipment policy and logistics planning, procurement, defense industrial policy as well as R&D, R&D policy and management of R&D institutes. 

As with any other government procurement, potential vendors to the JMOD and Japan Self Defense Forces (JSDF) are required to apply for and register with the Japanese Government. It is recommended that potential U.S. military equipment makers partner with Japanese trading firms, distributors or agents to conduct business with the Japanese military. A Japanese partner is also helpful with the local language and unique cultural and business practices.

Japan Ministry of Defense (JMOD)
Defense Security Cooperation Agency (DSCA)
Acquisition Technology and Logistics Agency (ATLA)

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