The ruling Liberal Democratic Party on Tuesday began weighing the scrapping a law barring complete privatization of Japan's telecom giant Nippon Telegraph & Telephone Corp., a move that could pave the way for sale of all the government's remaining stake worth over 4 trillion yen ($27 billion) in the company.
The LDP will discuss whether proceeds from selling the government's NTT stake should be used to fund planned increases in defense spending in coming years, according to party officials.
The party's project team tasked with reviewing the matter held its first meeting Tuesday. It will make its recommendations in November at the earliest.
Akira Amari, a former LDP secretary general who chairs the discussion group, told the meeting he has been "instructed to review issues including scrapping of the NTT law," which requires the government to hold at least one-third of the shares in the former telecommunication monopoly privatized in 1985.
The government currently has a 33 percent stake in NTT.
The LDP estimates that sales of the government's remaining stake in the company over 25 years will raise around 200 billion yen a year without significantly impacting the shares' demand and supply balance in the market.
While Amari said share sales will reduce the government's influence on NTT's operations and help increase the company's international competitiveness, the launch of the project team's discussions comes at a time when the government plans a five-year revamp of the country's defense posture by spending a combined 43 trillion yen, raising its annual defense budget to 2 percent of its gross domestic product in fiscal 2027.
As the country runs on a single fiscal year basis, the government of Prime Minister Fumio Kishida has yet to clearly show how the defense expansion will be funded during that period.
