As a first step, the government plans to convene an advisory panel to consider specific proposals to create a way to finance military sales by Japanese firms and fund defense industry cooperation abroad, four people involved told Reuters.
One possibility to be considered is for a government-backed body to provide concessional financing for military projects modeled on the self-financing Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation Agency (JICA), said the people involved.
They asked not to be identified because of the sensitivity of talks on a move that would likely upset China, where memories of Japan's wartime past run deep and which has already criticized Abe's decision in April to end a decades-old ban on arms exports.
Japan's Defense Ministry declined to comment. "We are considering a number of options in regard to defense equipment, but as of yet, nothing has been decided," a spokesman said in response to a question from Reuters.
Abe dissolved parliament last week and called lower house elections for Dec. 14, which his Liberal Democratic Party and its coalition partner are expected to win.