Japan’s weapons transfers to Southeast Asia: Opportunities and challenges

Research fellow Victor Teo says that Japan’s re-emergence as a weapon exporter is fuelled by desires to increase Japanese capabilities, counteract China’s rise, hedge against possible future strategic abandonment by the US, fund next-generation weapon research, and foster Japan’s global leadership and influence in Southeast Asia. Using its overseas development assistance to the region, it is promoting the transfer of weapon systems, naval vessels and surveillance planes, particularly to Southeast Asian claimant states in the South China Sea. What are the implications of these actions?
A UH-1J helicopter flies during a live fire exercise at Japan's Ground Self-Defense Forces (JGSDF) training grounds in the East Fuji Manuever Area in Gotemba on 22 May 2021. (Akio Kon/AFP)
A UH-1J helicopter flies during a live fire exercise at Japan's Ground Self-Defense Forces (JGSDF) training grounds in the East Fuji Manuever Area in Gotemba on 22 May 2021. (Akio Kon/AFP)

Since the Meiji Restoration, Japan had had a tradition of importing foreign technology and adopting it for her own modernisation. This national obsession stimulated industrial growth and cultivated technological development, and over time, nurtured the institutions and practices of indigenisation and diffusion of technology. This enabled Japan to close the capabilities gap with the West. By the 1930s, Japan had built a fleet powerful enough to challenge the US Navy.

After the Second World War, Japan’s wartime industrial capacity was reoriented wholly towards domestic economic reconstruction. Due to Cold War exigencies, the US restored Japan as an important strategic actor, but Washington remained wary about Japan’ s industrial capacity and technological prowess, and kept a close eye on these developments. By 1967, Japan’s Diet promulgated the Three Principles on Arms Exports, limiting Japan’s defence exports. During the Cold War, Japan’s defence exports were intended only for the US-Japan alliance during the Korea and Vietnam Wars and for projects subsumed under the alliance, such as the FSX fighter project and items (such as gyroscopes) used in Patriot missiles.

In the post-Cold War era, Japan’s defence industry has been beset by the twin problems of limited demand in Japan due to tight defence budgets, and lack of access to co-development partners and economies of scale for increasingly expensive weapon systems. The latter was directly due to the ban on arms transfers (which was removed in 2014). Under Abe’s new doctrine of proactive pacifism, the Japanese government revised the "three principles on transfer of defence equipment and technology" in 2014, and promulgated a new Development Cooperation Charter that gives Japanese overseas developmental assistance (ODA) a "strategic edge" in 2015. As such, Japan’s ODA, including those to South China Sea (SCS) claimant states, can now include weapon systems to boost their maritime capacity and surveillance capabilities.

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Japan's Ground Self-Defense Forces (JGSDF) Type-74 tanks move during a live fire exercise at the JGSDF training grounds in the East Fuji Manuever Area in Gotemba on 22 May 2021. (Akio Kon/AFP)

It is important to note that weapon transfers to Southeast Asian countries from Japan are not new. Commercial shipping from Japan and other nations has often suffered from piracy attacks in the Straits of Malacca and the Gulf of Aden. In this regard, Tokyo has since 2006 provided aid on an ad hoc basis to certain Southeast Asian states (Indonesia, Malaysia, The Philippines and Vietnam) to improve their maritime security — mostly using technical cooperation and funds to build up infrastructures such as ports or the purchase of equipment (communication equipment, range finders, speedboats, hand thermal imagers, X-ray machines). Japan also extended a loan to Indonesia to purchase three patrol vessels in FY2006 (JPY1.9 billion), billed as “civilian items” for the prevention of ‘piracy, maritime terrorism and proliferation of weapons’.

Riding on the rise of neo-conservatism in Japan, the Abe government decided in 2012 that it was vital for Japan to acquire greater autonomy and independence for the sake of its technological sector, particularly those related to the manufacturing of weapon systems. In order to revive its domestic defence industry, Japan saw the need for a viable export market to scale up manufacturing to make its products cheaper to domestic and foreign customers. To that end, it has tried to enter the global arms market by advertising Japan’s submarines (Soryu class) to Australia and its planes (P-1 and US-2) to Germany, the UK, New Zealand, Greece and France. Within Asia, Japan has tried to transfer weapons and radar systems to India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

There are six reasons why Japan wants to revive her defence industry: (1) manage the strategic rise of China; (2) increase Japan’s strategic independence under the rubric of US-Japan alliance and hedge against possible strategic abandonment by the US; (3) improve the effectiveness and capability of Japanese forces; (4) fund next-generation weapon research; (5) foster Japan’s global leadership and influence; and (6) cultivate a politically favourable role for Tokyo in Southeast Asia.

Japan’s success lies overwhelmingly in transferring her used equipment, particularly naval assets to Southeast Asian states, especially the SCS claimants.

Japan's weapon transfers to Southeast Asia

Table I at the end of this article provides an overview of Japan’s attempts to transfer significant defence systems to Southeast Asia and beyond from 2012, including both successful and unsuccessful deals. Successful transfers include donations (or items granted outright), assistance (subsidised/co-funded items) and commercial sale of naval vessels, aircraft and radar systems. Japan has also approached European and Oceania countries to sell limited defence hardware (P-1 Anti-Submarine Warfare [ASW] Aircraft and the US-2 Seaplane), but it has not been very successful. Most of these countries chose to buy from American firms. Japan’s success lies overwhelmingly in transferring her used equipment, particularly naval assets to Southeast Asian states, especially the SCS claimants as detailed below.

The Philippines

Under President Benigno Aquino III (2010-2016), the Philippines saw its relations with Japan strengthen significantly from 2012 onwards. Tokyo had signed bilateral agreements with Manila even before the Weapon Exports Ban was lifted in 2014. In 2013, under the first phase of the joint Japanese-Philippines Maritime Safety Capability Improvement Project (MSCIP) designed to strengthen the Philippine Coast Guard (PCG), Japan provided Manila with ten Japan-built 44.5 meters multirole response patrol vessels (MMRV), considered as Parola-class by the Philippines and Bizan-class vessels by Japan. The contract for these vessels was worth JPY18.7 billion (US$172 million), 85% of which was funded by the Japan International Cooperation Agency (JICA). The Philippine Navy has designated the vessels for law enforcement, environmental and humanitarian missions, and maritime security operations and patrol missions.

The second phase of the MSCIP was signed on 7 February 2020, involving a contract worth JPY14.55 billion (US$132.57 million) with a JPY7 billion (US$64.2 million) JICA loan. Tokyo will build two 96-metre Kunigami-class (or Kunisaki-class) patrol ships for the PCG by 2022.

In 2013, Japan agreed to lease two retired TC-90 surveillance aircraft to the Philippines, and as part of the leasing deal, hosted a training programme at the Tokushima air base to train the Philippine crew to operate the aircraft. The terms of the deal changed over the course of 2017-2018, when Japan donated five TC-90 Beecher Turbo-prob aircraft as part of its ODA to help Manila build its surveillance capacity. Japan has used these aircraft since the early 1970s, and only managed to transfer them officially after the amendment of the export law.

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Philippine President Rodrigo Duterte delivers a speech during their joint press statement with Japan's Prime Minister Shinzō Abe (not pictured) at Abe's official residence in Tokyo, Japan, 31 May 2019. (Kazuhiro Nogi/Pool via Reuters)

Japan further responded to a Philippine request for used Huey helicopter parts in June 2017. The deal involved transferring about 40,000 units of different parts of retired JASDF Vietnam war-era Hueys, worth about JPY50 million (US$461,000). The transferred parts enabled the Philippines to restore several helicopters back to operational status, thereby ensuring their full serviceability and readiness. The Philippine Air Force Chief Lt. Gen. Rozzano Briguez indicated that spare parts would restore up to a maximum of seven Hueys to full mission capable status, transport and intelligence, reconnaissance and surveillance missions of the Philippine Air Force (PAF).

The first successful commercial deal for Japan in Southeast Asia was the sale of early warning radar technology to the Philippines. Under a contract between the Philippine Department of National Defense (DND) and Mitsubishi Electric Corporation (MELCO) in 2018, Manila purchased four MELCO-manufactured air radar systems as part of the “Cooperation to Enhance The Philippines’ Capacity in Vigilance and Surveillance” efforts based on Japan-Philippines “Concerning the Transfer of Defense Equipment and Technology”. The weapon system was originally reported to cost between JPY1 to 2 billion but by 2020, the entire package was stipulated to cost JPY10 billion (US$92.2 million).

Of the four air defence radar systems, three will be improved versions of the FPS-3 radar system and one will be the TPS-P14 air defence system. The former will be deployed in fixed localities to detect incoming fighter jets or missiles, while the latter will be mounted on a mobile platform (such as a vehicle or a ship).

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This picture taken on 16 March 2021 shows a sign showcasing the countries in the Association of Southeast Asian Nations (ASEAN) at the border between Thailand and Laos, as seen from the northern Thai region of Nong Khai. (Panumas Sanguanwong/AFP)

Vietnam

In 2014, Vietnam and Japan elevated their relations to Extensive Strategic Partnership. In 2015, Vietnam took delivery of six second-hand fishery patrol vessels from Japan as part of a JPY500 million (US$4.6 million) ODA grant to improve her maritime security. Japan MSDF ships along with US vessels have been making port calls at Cam Ranh Bay since 2016.

In October 2020, Japan announced that it had reached an agreement to export technology and weapons to Vietnam. While its actual details have yet to be announced, Vietnam-Japan cooperation is focused on maritime security, with Japan offering to export offshore patrol vessels, maritime patrol craft, radar and surveillance equipment and communications and information system. In July 2020, JICA agreed to loan Vietnam JPY36.6 billion (US$349 million) to finance the procurement of a second batch of six patrol vessels for the Vietnam Coast Guard (VCG) by 2025. Vietnam has also expressed an interest to acquire second-hand American P3 ASW aircraft from Japan, although Tokyo is keen to sell her more advanced domestically produced P-1 aircraft to Hanoi too. Purchasing the P1 will help boost Japan’s ambition as a weapon exporter. It is not clear how far they have progressed on this front.

Thailand

Thailand has reportedly expressed an interest in acquiring ShinMaywa US-2 Seaplane, P-1 ASW planes and Mitsubishi Electric’s FPS-3 fix warning and control radar systems from Japan. However, to date, there has been no successful deal made between the two countries.

Indonesia

In 2006, Japan transferred three small patrol vessels to Indonesia’s marine police to combat piracy and terrorism. Japan announced in February 2020 that Tokyo will donate a maritime patrol vessel Hakurei Maru, a 499-ton purposely built Fishery Surveillance Patrol Vessel to Indonesia’s Coast Guard. By end-2020, Japan was to have provided an additional JPY2.2 billion to upgrade Indonesia’s Coast Guard Fleet but the pandemic has delayed this from happening in 2020. There are reports that Indonesia has expressed an interest in acquiring ShinMaywa US-2 Seaplane from Japan, but so far there has been no official confirmation of this.

On 30 March 2021, after a meeting between Indonesian and Japanese defence and foreign ministers, both sides announced ambitions to work more closely on maritime security. Tokyo and Jakarta concluded a tentative US$3.6 billion deal for the purchase of eight Mogami-class stealth frigates worth US$450 million each, four of which are to be delivered by Japan by 2023-2024, and another four to be built in Indonesia after that. If actualised, these multi-role frigates will improve the Indonesian navy’s capability on the high seas. This agreement however has yet to be officially confirmed by the Japanese or Indonesian authorities.

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A soldier stands guard at a roadblock during lockdown ahead of the Eid al-Fitr celebrations in an effort to prevent a large-scale transmission of the coronavirus disease (Covid-19), in Petaling Jaya, Malaysia, 10 May 2021. (Lim Huey Teng/Reuters)

Malaysia

In November 2016, Japan pledged to donate two Offshore Patrol Vessels from the Japanese Coast Guard to Malaysia, and these were delivered in 2017. There were reports in 2017 that Malaysia was interested in acquiring second-hand PC-3 planes from Japan, but these reports were subsequently denied by Malaysia’s Ministry of Defence.

The inability or reluctance of most Southeast Asian states to pay top dollar for Japan’s weapon systems means that sustained exports can only be possible if Tokyo is prepared to export on terms that most competing global arms companies cannot afford to offer...

Implications

Japan’s emergence as weapons exporter: Japan faces competition for almost every category of weapon export from Western and Asian competitors. While the Japanese items are often technically more advanced, they are almost invariably costlier. Tokyo’s endeavour to become a more important strategic actor through weapon exports has been more successful through ODA transfers than through commercial deals. The inability or reluctance of most Southeast Asian states to pay top dollar for Japan’s weapon systems means that sustained exports can only be possible if Tokyo is prepared to export on terms that most competing global arms companies cannot afford to offer (i.e. providing them for free, or heavily subsidising them or transferring the weapons as second-hand equipment).

As a new kid on the block, Japan faces considerable difficulties displacing the US and Russia as the dominant weapons supplier commercially. The Philippines for instance has imported weapons from the US, Russia, India, and South Korea. Likewise, Vietnam is a significant client of Russia, acquiring 78% of her weapons from Russia during the 2010-2018 period. South Korea is emerging as a formidable competitor, at least in terms of naval vessels. Apart from the cost issue, Southeast Asian countries have other considerations too, such as the desire to develop their domestic defence industrial capacity, and the exigencies of geopolitics. For instance, the Thai military has opted to acquire Chinese S26T diesel-electric Yuan-class submarines instead of the technically more advanced Soryu submarines from Japan, albeit the deal has been delayed because of budget difficulties.

Enhanced strategic deterrence

The patterns of Japan’s weapon transfers to Southeast Asia suggest a clear strategic imperative. Tokyo wants to improve the capabilities of Southeast Asian claimant states in the SCS disputes with China, and prevent those states with tense relations with the US (such as Indonesia, Myanmar and Thailand) from falling further into China’s strategic orbit. Tokyo has signed agreements with the SCS claimant states (Vietnam and The Philippines) to assist their maritime needs. These sets of relationships will likely grow and hence these states are likely to be “locked” into a de facto (as opposed to a de jure) defence relationship with Japan for the foreseeable future.

Tokyo’s assistance to Indonesia also provided an alternative at a time when Indonesia-US relations were tense (until 2020) and Beijing was courting Jakarta with defence assistance. Likewise, Japan’s reach-out to Bangkok stems out of its concern about Thailand tilting too much towards Beijing as Thailand-US relations remain relatively estranged, since the 2014 coup.

Southeast Asian states risk becoming proxies in the Sino-Japanese rivalry, i.e. some SCS claimants have now become defence partners of sorts with Japan, leaning towards Tokyo to “balance” against China, either overtly or tacitly.

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Indonesian Foreign Minister Retno Marsudi and Defence Minister Prabowo Subianto conduct talks with Japanese Foreign Minister Toshimitsu Motegi and Defence Minister Kishi Nobuo during their "2+2" meeting at the foreign ministry's Iikura Guest House in Tokyo, Japan, 30 March 2021. (David Mareuil/Pool via Reuters)

While these transfers might be good for Japan and Southeast Asian states to build up deterrence capabilities against the Chinese navy, there are costs involved. Southeast Asian states risk becoming proxies in the Sino-Japanese rivalry, i.e. some SCS claimants have now become defence partners of sorts with Japan, leaning towards Tokyo to “balance” against China, either overtly or tacitly.

From the Southeast Asian perspective, certainly donations and grants of second-hand equipment are welcome. However, they might not want to see ODA assistance loans being increasingly tied to weapon purchases at the expense of ODA dedicated to infrastructure or in-country public goods investment. While this is still not an overt policy by Japan, it is clear that the ruling Liberal Democratic Party (LDP) is increasingly linking ODA to Japan’s strategic needs. Hence, the question is whether weapon-related ODA is necessarily beneficial for the Southeast Asian country concerned.

There are two considerations here: (1) whether the assistance will greatly enhance the recipient country’s operational capabilities, and (2) whether this assistance through weapon exports is made in lieu of other important development-related ODA.

Table II shows that Vietnam (36.7%), the Philippines (15.7%) and Indonesia (16.9%) have benefitted from a lion’s share of Japanese ODA since 2014. Excluding the latest agreement between Indonesia and Japan, the share of funds to subsidise weapons sales to Vietnam, the Philippines and Indonesia, expressed as a percentage of JICA’s ODA to Southeast Asia, is around 17.6%. This is not an insignificant amount, and reflects an additional avenue whereby Japan can increase her strategic influence in the region.

Without a substantial export market beyond Southeast Asia, the revival of Japan’s defence industry might be more difficult than the Japanese government envisages as production cannot be scaled up sufficiently to achieve the kind of self-sustaining dynamics that Western and Russian weapons firms enjoy.

Reviving Japan's defence industry

The immediate beneficiaries of Japan’s defence industry revival would be the Japanese companies involved such as Mitsubishi Electric, Kawasaki, ShinMaywa and Marine United Corporation. With the necessary government funding, they will be able to do cutting-edge R&D, build better systems and stay at the forefront of latest defence technologies. Japan would be able to acquire valuable indigenous capabilities and prestige if their domestic companies are capable of producing advanced weaponry, and become competitive in the international export market.

Tokyo’s attempt to export to Australia her Soryu submarines failed for two reasons: domestic politics related to how the award of the contracts would affect jobs in Australia and some Australian elites who felt uncomfortable or thought that it was unwise to buy from Japan. Without a substantial export market beyond Southeast Asia, the revival of Japan’s defence industry might be more difficult than the Japanese government envisages as production cannot be scaled up sufficiently to achieve the kind of self-sustaining dynamics that Western and Russian weapons firms enjoy.

Insofar as Southeast Asia is concerned, Tokyo will find it hard to sell arms and weapon systems without heavily subsidising or donating the sales involved or providing loans for purchase. While Japan will no doubt find solace in the political support of the Southeast Asian recipients of Japanese ODA, there is no guarantee that their arms acquisition henceforth would increasingly or exclusively be from Japan. Russian arms will continue to be attractive because of their lower costs and Moscow’s no-strings-attached policy, and American companies have an edge because of Uncle Sam’s patronage.

The upside, however, is that Japan might find it easier to “upgrade” its own defence arsenal as Southeast Asia will become the prime destination for Japan’s obsolete equipment. The Japan Self-Defense Forces (JSDF) will benefit in the sense that the Japanese government can ask its domestic industry to construct new weapons to replace the equipment donated out as part of Japan’s ODA. It might even be plausible that in the future, Japan will apportion increasing amounts of ODA funds towards the donation of weapons, and reduce ODA in other categories to make the programme more sustainable.

chinook
A Chinook helicopter flies over a field during a joint military drill between the Japan Self-Defense Force, the French Army and US Marines at the Kirishima exercise area in Ebino, Miyazaki prefecture on 15 May 2021. (Charly Triballeau/AFP)

Japan’s domestic politics

The main political beneficiaries would be neo-conservative elements in the LDP. If successful in their efforts to revive the fledging defence industry, they will gain significant momentum in their political platform of “normalising” Japan going forward, and will certainly enjoy the support of the military and the industry involved in these programmes.

Increased militarisation in South China Sea

Southeast Asia has already been seeing an arms race of sorts prior to these transfers from Japan. From 2006-2017, the competitive arms acquisition is driven not only by China-threat perceptions, but also by domestic challenges in various countries related to Islamic fundamentalism, separatist challenges and territorial grievances. Arms purchases in the region are generally focused on upgrading weapon systems in the air force and the navy, particularly in Anti-Access/Area Denial and Maritime Domain Awareness. Japan’s transfers to Southeast Asia are increasingly falling into this category.

While the improvement of the capabilities of SCS claimant states might be important to the balance of power at sea between these states and China, there are considerable risks too. For one, would such transfers embolden the claimants to take more drastic measures against perceived Chinese incursions or provocations and lead to an escalation in naval skirmishes? If that should happen, would it provide a pretext for greater involvement and military presence by the US?

In the longer term, these dynamics will have repercussions for Sino-Japanese relations as well as for the dynamics of intra-Southeast Asian relations.

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Note on Table I: Shaded grey boxes denote successful weapons transfer deals that have taken place or are in process; unshaded boxes denote unsuccessful attempts.

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Table I: part 1 (Source: ISEAS/Image: Jace Yip)
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Table I: part 2 (Source: ISEAS/Image: Jace Yip)
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Table I: part 3 (Source: ISEAS/Image: Jace Yip)
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Table I: part 4 (Source: ISEAS/Image: Jace Yip)
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Table II (Source: ISEAS/Image: Jace Yip)

This article was first published as ISEAS Perspective 2020/70 “Japan’s Weapons Transfers to Southeast Asia: Opportunities and Challenges” by Victor Teo.

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