The Development Bank of Japan (DBJ), a Japanese government-affiliated financial institution, has decided to allow investment and lending to domestic weapons manufacturing companies. The state bank has removed an obstacle to financing the defense industry, in line with the Japanese government's push to expand defense equipment exports.
According to the Nihon Keizai Shimbun (Nikkei) on Wednesday, DBJ recently changed its internal operating rules to make investment and lending to weapons manufacturing businesses in Japan "subject to consideration." The move eases an internal standard that previously required the bank to "respond cautiously" to financial support for arms manufacturers.
The DBJ measure aligns with the Japanese government's recent shift in defense policy. Last month, the government revised the "Three Principles on Transfer of Defense Equipment" and its operational guidelines to permit the export of weapons with lethal capabilities. Before the revision, finished defense equipment could only be exported in five non-lethal categories: lifesaving, transport, warning, surveillance, and minesweeping.
DBJ revised its guidelines to allow investment and lending to companies producing defense equipment outside these five existing categories, accommodating changes in the international security environment, including the deteriorating situation in the Middle East, and the government's policy shift.
Japan's Ministry of Defense also welcomed the state bank's support for the defense industry. Defense Minister Shinjiro Koizumi met with reporters at the National Assembly on the same day and said, "This DBJ measure will support startups' entry into the defense sector and strengthen the defense industry." He added, "The defense industry has a high level of public interest directly connected to protecting the lives of citizens, and financial support is expected to generate technology spillover effects into private industrial sectors and contribute significantly to Japan's economic growth."
