Photo/Illutration Then-Defense Minister Nobuo Kishi, second from left, meets with the heads of 15 major defense contractors at the Defense Ministry in Tokyo's Ichigaya district in April. (Naoki Matsuyama)

Japan’s Defense Ministry plans to ask for next fiscal year’s budget to include a new fund for boosting the defense industry to prevent domestic firms from leaving it, sources said.

It comes amid growing calls to increase the proportion of domestically produced equipment to ensure economic security in the sector, as many companies have been withdrawing from defense-related businesses.

“Japan’s entire defense capability relies on the industry,” a ministry official said.

The ministry wants to finalize the plan by the end of the year, but it will make a request this summer for the fiscal 2023 budget without specifying how much the fund would cost.

The fund would cover expenses for strengthening cybersecurity, assistance in taking over business from companies withdrawing from the industry and support for exporting equipment overseas.

Those expenses are currently not included in regular defense contracts.

The ministry is also seeking a reduction in corporate taxes for companies that made new investments in cybersecurity that meet certain requirements.

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