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Opinion: Late last year, the Japanese government unveiled a landmark policy developed by the Ministry of Economy, Trade and Industry that marks a major shift in Japan’s defence and industrial strategy, explains Guy Boekenstein.
The policy comes in response to the growing security challenges in the Indo-Pacific region and signals a new approach to defence manufacturing, supply chains and technological innovation. It also builds on similar policies that the Japan Ministry of Defense (MOD) has been driving and, quite unusually, it seems that the Ministry of Economy, Trade and Industry (METI) and the MOD are working closely on these initiatives.
While understood by Japan watchers, this is probably not as clear to many Australian dual-use technology companies. There are opportunities here worth exploring by export ready companies and also companies seeking to enter consortiums with Japan, the US and other allied partners.
Strategic shift towards a stronger defence sector
Japan’s evolving security concerns are at the heart of this policy. With regional instability increasing, especially around Japan’s borders, there has been a clear pivot from the country’s long-standing pacifist stance toward a more robust defence posture.
The Japanese government is placing greater emphasis on bolstering its defence manufacturing capabilities, specifically in areas like missile defence, radar systems and unmanned technologies. These sectors are crucial for fortifying Japan’s national security and preparedness for future challenges.
METI’s role is to focus on industrial growth and economic development, while the MOD will work to stabilise and strengthen the supply chains that provide essential equipment for the Japan Self-Defense Forces. A key aspect of this policy is the creation of hubs like the Rapid Acquisition Process hub, the Joint Promotion Council for Startups in Defense hub, and the Startup Technology Proposal Evaluation Method hub, all designed to integrate start-up innovation into defence procurement.
Emphasis on technological innovation and dual-use capabilities
A cornerstone of the new policy is the promotion of dual-use technologies, which can serve both civilian and military purposes. Japan, a global leader in fields like robotics, artificial intelligence and semiconductor manufacturing, intends to leverage its civilian industrial prowess to boost its defence capabilities. By fostering innovation across both sectors, Japan hopes to create synergies that benefit national security while advancing its technological edge.
For instance, Japan’s robotics and AI expertise will be harnessed for developing autonomous vehicles, advanced defence systems and other cutting-edge technologies, ensuring that these innovations serve both civilian industries and national defence interests.
Building resilient domestic supply chains
Another key priority in the policy is strengthening Japan’s domestic manufacturing capabilities for critical defence technologies. The government recognises the risks associated with over-reliance on foreign defence contractors, particularly for high-tech materials like advanced semiconductors and rare earth elements, which are essential for modern weapon systems.
To mitigate these vulnerabilities, METI’s 2024 policy outlines investments aimed at revitalising the Japanese defence industrial base. The policy encourages collaboration between private sector companies, defence contractors and the government to build secure, resilient supply chains that will safeguard Japan’s long-term defence capabilities.
Strengthening regional and international cooperation
While the policy primarily focuses on Japan’s domestic defence sector, it also underscores the importance of regional and international cooperation. Japan is committed to strengthening alliances with like-minded nations, particularly the US, Australia and other Indo-Pacific partners. This includes joint defence technology development, co-production of military equipment and the sharing of intelligence related to regional security threats.
Japan’s approach to defence now includes a more proactive role in regional security arrangements, with the broader goal of contributing to the stability of the Indo-Pacific region while ensuring Japan’s defence sovereignty remains intact.
This market will be relatively new for many Australian companies, given Japan’s world-leading edge in many technology areas (some that align nicely with AUKUS Pillar II sectors), the size of the market, the Japanese government’s clear desire to engage more and our shared alliances with the US.
Companies should consider engaging with events such as DSEI Japan in May 2025 and no doubt Austrade will coordinate participation. These kinds of events are very useful for new entrants into Japan to test the market interest levels etc. However, doing business in Japan requires strong, trusted networks. Armatus can assist with market knowledge, entry and critically connecting companies to genuine government contract opportunities.
Guy Boekenstein is the director – Australia for Armatus and has two decades experience working with the Japanese government and private sector.
