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MOF calls for cuts in defense equipment procurement costs

  • October 23, 2019
  • , Jiji Press , 2:05 p.m.
  • English Press

Tokyo, Oct. 23 (Jiji Press)–The Japanese Ministry of Finance on Wednesday called for thorough reductions in procurement costs for defense-related equipment.

The request was made at the day’s meeting of a subcommittee of the ministry’s Fiscal System Council, which advises the finance minister.

While admitting the need for reinforcing Japan’s defense capabilities against the backdrop of North Korea’s nuclear and missile development programs, the ministry requested a review of ways to purchase defense equipment. Specifically, while acknowledging that per-unit prices would go down through blanket purchases of equipment such as helicopters under long-term contracts, the ministry also pointed to the risk that an easy bulk purchase may help balloon the overall expenditures.

“Thoroughly cutting unit prices is a precondition” for making bulk purchases, a ministry official said.

The ministry also said procurement through production in Japan using the technologies of overseas firms should be limited to cases with legitimate reasons as costs for such procurement method are higher than those for importing products.

Elsewhere at the subcommittee meeting, the ministry stressed the need to scrutinize respective cases of grant aid extended under the country’s official development assistance program in order to prevent a surge in the overall aid budget size.

The total amount of grant aid has been increasing in recent years to meet expanding demand for high-quality infrastructure investment projects in emerging countries that take into consideration the fiscal health of aid recipients.

The ministry called for selecting regions and fields to put emphasis on by closely examining respective aid needs.

Measures to support small firms were also discussed at the meeting. The ministry requested a review of existing subsidies for small firms, saying that some of them are provided under goals that have no clear links with the enhancement of recipient companies’ productivity.

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