Rising defense spending in Japan may benefit U.S. contractors

Japanese PM Shinzo Abe, Deputy PM and Finance Minister Taro Aso, and Defence Minister

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Japan will soon reveal its fifth straight annual request for an increase in defense spending, according to a Reuters report. The budget request of about $51 billion for fiscal 2017 represents a 2.3 percent increase from 2016.

The Japan Defense Ministry’s request could benefit major U.S. defense contractors. The budget contains nearly $1 billion for an upgrade to the PAC-3 missile defense system made by Lockheed Martin Corp. and Raytheon Co.; funds for the Standard Missile 3 (SM-3), also made by Raytheon; and money to purchase Lockheed’s F-35 fighters.

Japan’s steady increases in defense spending are fueled primarily by rising tensions in the South China Sea. According to Bloomberg Government data, Japan requested about $6.4 billion in foreign military sales from the U.S. in fiscal 2015 and has asked for $1.2 billion in the first half of fiscal 2016. Bloomberg Government data also shows that in fiscal 2013 and 2014, Japan’s commercial purchase of $36.5 billion in U.S military equipment made it the top U.S. defense customer globally.

Tensions in Asia are not likely to subside soon, and Japan and other U.S. allies in the region should continue to be lucrative and growing markets for U.S. defense firms.

(Source : about.bgov.com)

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