Japan plans to introduce financing system for defense exports

through Jon Grevatt

The Japanese government is reportedly studying the possibility of supporting defense exports by granting loans at low interest rates.

The plan would involve the state-owned Japan Bank for International Cooperation (JBIC) providing credit to potential clients.

Government sources quoted by Japanese media said the loans would enable developing countries with a funding gap to procure defense equipment in Japan. The government’s official export credit agency, Nippon Export and Investment Insurance (NEXI), would support the loans.

Japan is reportedly seeking to establish a framework that can provide financial support for defense exports, including a potential sale of the Japanese-class 30FFM frigate (pictured) to Indonesia. (Mitsui E&S)

Contacted by Janes, JBIC and NEXI did not comment on the reports.

however, Janes understands that the potential move is aligned with an effort by the Japanese government to introduce a formal framework to financially support defense exports.

Government officials have already said Janes such a decision would be in line with trends in other exporting countries and support Japan’s strategy to strengthen security ties with international partners. The security aspect is seen as a priority, especially in Japan’s alliances in Southeast Asia.

The intention was laid out in the Tokyo White Paper on Defense of Japan 2020, which stated that the government will work on the [the] implementation of related rules to promote appropriate overseas transfers of defense equipment ”.

In the past, Japan has supported exports of security equipment through its Official Development Assistance (ODA) mechanism, managed by the Japan International Cooperation Agency (JICA).

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