Japan has approved a historic policy shift allowing its companies to export lethal weapons for the first time since World War II. Prime Minister Sanae Takaichi's government approved the change on Tuesday, citing the "most severe" security environment since the war. The move opens the door for Mitsubishi Heavy Industries and Kawasaki Heavy Industries to become major suppliers of missiles, aircraft and ships to the US, UK and Southeast Asian nations.

Under the previous regime established in 2014, exports were limited to five categories of non-lethal military equipment used in search and rescue or minesweeping. The new system frees Japanese companies to export almost any military equipment provided the buyer passes strict screening criteria and is not involved in an active conflict. The change provides the legal basis for Japan's recent multibillion-dollar deal with Australia for three Mogami-class frigates and the next-generation fighter jet Japan is developing with the UK and Italy.

The timing coincides with US arms supply under strain from the wars in Ukraine and the Middle East, creating an opportunity for Japan to fill gaps in missile, drone and warship demand. Defence minister Shinjiro Koizumi is expected to discuss equipment sales during visits to Indonesia and the Philippines. However, Yoshinobu Tsutsui, chair of Keidanren, Japan's biggest business lobby, warned that Japan's own defence needs must come first, calling for an appropriate balance between domestic requirements and exports.