Japan doubles down on Asia’s defence by expanding budget, reach of security aid scheme

TOKYO – Japan is set to significantly expand its Official Security Assistance (OSA) scheme across South-east Asia, as the initiative enters its fourth year with mounting momentum and support.

Launched in April 2023, the OSA provides military support to strengthen the security and deterrence capabilities of developing nations that Japan hopes to partner with on security.

It is the military counterpoint to the Official Development Assistance scheme, which focuses on civilian projects to support socio-economic growth in developing countries.

Three of the 10 OSA recipients so far are from ASEAN: the Philippines, Malaysia and Indonesia. Thailand is set to become the 11th recipient during the 2025 fiscal year, which ends in March.

Support is aimed at benefiting the armed forces or related organisations in like-minded countries, and may include capacity-building activities or military equipment for surveillance, counter-terrorism, counter-piracy, or disaster relief.

Looking ahead, Japan is keen to expand the OSA’s reach to more countries, with Cambodia, Vietnam and Laos identified as priority candidates, a senior government official told The Straits Times on condition of anonymity to discuss unannounced plans.

“We are talking to these countries. While the process can sometimes take time, there’s a clear willingness on our side to work with ASEAN on security cooperation through the OSA,” the official said.

This push follows

Japan’s Prime Minister Sanae Takaichi’s diplomatic debut

at the ASEAN Summit in Kuala Lumpur in October 2025, where she expressed a desire to strengthen Japan’s security cooperation with the region. She specified the OSA as a vital policy tool to achieve their shared objective of a Free and Open Indo-Pacific (FOIP).

To that end, Ms Takaichi’s Cabinet has allocated 18.1 billion yen (S$147 million) for the OSA in the 2026 fiscal year starting from April. This is a sharp increase for a budget that previously had steady increments from two billion yen in its first year, to five billion yen, and then eight billion yen.

Japan stresses that the OSA is not targeted at any particular country, although experts believe that China, given its assertive actions in regional waters as it claims nearly the entire South China Sea, is the elephant in the room.

Japan’s ultimate goal, as a maritime nation, was to create a favourable security environment for itself through partnerships with like-minded countries, the official said.

Eight OSA recipient nations – Papua New Guinea, Sri Lanka, Malaysia, Tonga, the Philippines, Fiji, Thailand and Indonesia – were identified for fiscal 2025, with agreements due to be signed by March for the latter four countries.

Of these, the Philippines, Malaysia and Indonesia had been OSA recipients in previous years. The official stressed that the scheme was meant to be “a continuous effort rather than an ad hoc initiative”.

With more than double the budget, Japan plans to have “around 12” recipient countries in fiscal 2026, while offering more sophisticated and higher-performance Japanese-made equipment.

The official said there would be “more existing recipient countries than new ones”, adding: “Each project will get bigger in scale. We are responding to requests from partner countries or candidate countries for higher-performance and higher-quality equipment, especially for surveillance purposes, like radars or unmanned aerial vehicles (UAVs).”

Singapore and Brunei, as high-income nations, do not qualify for the OSA, but the official noted: “They do not qualify as recipients, but if they are willing to work together with us in a third country like Timor-Leste, we are happy to pursue that.”

The scheme’s guidelines prohibit projects in areas under armed conflict, which disqualifies military-ruled Myanmar.

The

on-and-off border clashes

between Thailand and Cambodia, however, fall in a grey area. The official told ST: “I cannot say that there is no impact on our overall consideration, but we carefully avoid assistance that can be used in conflicts. We can justify this, and nobody can say the OSA will have any escalatory effect.”

A defining year for Japan’s security reforms

In any case, this is poised to be a defining year for Japan’s security reforms. It marks the 10th anniversary of Japan’s FOIP vision, while a revision of its National Security Strategy document, under which the OSA was first introduced in 2022, is on the cards.

Significantly, Japan is also expected to loosen its self-imposed post-war military export rules by abolishing restrictions that allow equipment to be transferred only for the purposes of rescue, transport, surveillance, monitoring and mine-sweeping.

This move is primarily designed for Japan to market itself as a purveyor of defence equipment, while facilitating the easier transfer of second-hand assets to partner countries.

But it could also theoretically lead to shipments of offensive weapons under the OSA, although the official believes this would be unlikely, given public scrutiny and the scheme’s likely budget constraints: “A change in rules does not necessarily mean the application of the OSA will change immediately.”

Further, the OSA is overseen by Japan’s Foreign Ministry and provides brand-new equipment, and is distinct from the Japanese Defence Ministry’s schemes for defence sales and second-hand equipment transfers, the official added.

Associate Professor Kei Koga, who heads the Public Policy and Global Affairs Programme at Nanyang Technological University’s School of Social Sciences, told ST that the increasing OSA budget “demonstrates Japan’s willingness to contribute to maintaining the status quo in the Indo-Pacific without rapidly disrupting the regional balance of power”.

“OSA will help empower regional states to become more self-reliant in the security domain, while fostering a security environment in which Japan is seen as a supportive and reliable partner in times of global turbulence,” he said, noting this would help build long-term strategic trust in Japan.

Concurring, Professor Heng Yee Kuang, director of security studies at The University of Tokyo’s Institute for Future Initiatives, noted that the OSA has “shaped regional calculations as Japan is now viewed as more likely to be forthcoming (in) supplying defence equipment”, which makes countries “more likely to proactively make requests as well”.

Beyond providing hardware, Prof Heng said bolstering infrastructure and logistics should be a priority to ensure the region is better prepared for potential crises.

He cited the example where the Lombok Strait and Makassar Strait can offer alternative, albeit longer, routes if the South China Sea were to be blockaded during a conflict.

“The OSA could help enhance port and logistics infrastructure around these sea lanes, as an alternative that could help sustain and support the Japan Maritime Self-Defense Force operations, in partnership with like-minded partners,” he said.