Photo/Illutration A CH-47-JA Chinook at the Ground Self-Defense Force’s Camp Metabaru in Saga Prefecture in June 2022 (Asahi Shimbun file photo)

Rising costs for materials and the yen’s depreciation have pushed up prices for defense equipment, including transport helicopters, to levels that threaten to shatter the government’s spending framework for security.

The purchase prices of major defense equipment in the initial budget for fiscal 2024, approved in March, have ballooned by about 1.5 times the levels from fiscal 2019 to fiscal 2022.

The government plans to significantly increase defense spending to about 43 trillion yen ($283.2 billion) over the five years through fiscal 2027.

But it is not clear whether the government will be able to keep spending within this framework.

“I don’t intend for it to exceed the 43-trillion-yen figure,” Prime Minister Fumio Kishida has said.

However, calls from within the ruling Liberal Democratic Party and the defense industry are growing to raise the ceiling.

For two straight years, the government has postponed the starting date of a tax hike aimed at financing the strengthening of Japan’s defense forces.

It is unclear where the funds will come from if prices continue to soar.

In 2023, a Finance Ministry council highlighted seven types of defense equipment whose prices have sharply increased, including large helicopters, transport aircraft, submarines and tanks.

According to the Defense Ministry, the average price for one CH-47 Chinook, a large transport helicopter for troops and supplies, was 7.6 billion yen from fiscal 2019 to fiscal 2022.

In the fiscal 2024 initial budget, however, the price for a CH-47 Chinook increased 2.3 times to 17.6 billion yen for the Ground Self-Defense Force and 2.5 times to 19.6 billion yen for the Air SDF, according to Asahi Shimbun calculations.

The price of a P-1 patrol aircraft to monitor Japanese waters has risen 1.45 times to 32.5 billion yen over the same period because of extra costs for components.

The “taigei” submarine, the latest type of submarine equipped with lithium-ion batteries, now costs 95 billion yen, up 1.34 times, due to increasing prices for steel, semiconductors and other materials.

Prices for the seven items highlighted by the Finance Ministry increased by 47 percent on average. Other equipment is also now more expensive.

The yen has recently been trading at around 150 yen to the U.S. dollar, a significant depreciation compared with the 110-yen level in 2019.

Imports of foreign-made products are becoming more expensive, and the prices of domestically manufactured equipment are also rising because many parts are imported.

Defense equipment manufacturers sell only to the government and other entities, and they are adding a certain amount to production costs to ensure they can secure profits in the face of high prices for materials.

The higher prices can also take away flexibility from the defense budget.

The government does not make a lump-sum payment for purchases of the more expensive equipment. Instead, the costs are paid over multiple fiscal years.

But if the price for such items grows, payments for the following fiscal years also increase. And this could lead to government difficulties in securing personnel to operate the equipment and covering maintenance and repair costs.

(This article was written by Junichi Kamiyama and Nobuhiko Tajima.)

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