Asia Defense | Security | East Asia

Japan Eyes a Homegrown FMS System as Defense Exports Become a Strategic Tool

The government is considering establishing a new organization – to manage a Japanese-style Foreign Military Sales system and promote defense exports.

Japan’s Ministry of Defense

Japan is considering what could become one of its most significant defense-industrial reforms since relaxing arms export restrictions in 2014: the creation of a Japanese version of the U.S. Foreign Military Sales (FMS) system. 

Defense Minister Koizumi Shinjiro recently confirmed that the government is examining measures that include a Japanese-style FMS framework and a new organization to support defense exports and industrial development. While emphasizing that no final decisions have been made, Koizumi acknowledged that relevant ministries are engaged in what he described as “continuous deliberations” on concrete measures and institutional arrangements.

Such carefully worded language often precedes major policy shifts in Japan’s security policy.

The proposal would mark a notable departure from Japan’s traditional approach to defense exports. Under the current system, Japanese companies are largely responsible for negotiating and managing overseas sales themselves. A Japanese-style FMS would significantly increase government involvement by allowing the state to serve as the principal contracting window for foreign customers.

According to Japanese media reports, the government is considering establishing a new organization – possibly in the form of an independent administrative agency – to manage a Japanese-style FMS system and promote defense exports. The organization would also help strengthen Japan’s defense-industrial base and support the development of dual-use technologies, including artificial intelligence, drones, and autonomous systems.

The initiative is expected to be incorporated into revisions of Japan’s three key national security documents later this year, with implementing legislation potentially following in 2027.

Koizumi framed the issue in strategic terms. Defense equipment transfers, he argued, help strengthen the deterrence and response capabilities of allies and like-minded countries while reinforcing Japan’s own production base. 

He described the defense industrial sector as a “defense capability itself” and summarized the government’s emerging philosophy with a succinct phrase: “Production capacity itself is deterrence.”

That view reflects lessons Japanese policymakers have drawn from Russia’s invasion of Ukraine. The war has underscored that military power is not measured solely by advanced weapons platforms. Countries must also possess the industrial capacity to replenish ammunition, replace losses, sustain maintenance, and continue production during prolonged conflicts. Japanese defense planners increasingly refer to this requirement as “sustained combat capability,” a concept that has gained prominence in recent strategic discussions.

For decades, however, Japan’s defense industry struggled under strict export restrictions and a relatively small domestic market. Limited production runs drove up costs, while some firms reduced or abandoned defense-related activities because of low profits and reputational concerns.

Although Tokyo has gradually relaxed export controls since 2014, Japanese companies have often found it difficult to compete internationally against firms backed by governments with more established export support mechanisms.

The proposal comes at a time when Japan’s defense sector is gaining momentum, as Tokyo seeks to strengthen defense-industrial cooperation with allies and partners.

Japan would not be breaking entirely new ground by creating a new organization to streamline and support defense exports. Many major defense-exporting countries already maintain specialized organizations........

© The Diplomat