TOKYO (Reuters) - Japan's defense budget will post the biggest drop in more than half a century next year but Tokyo will make new investments in equipment to help defend remote islands, the defense ministry said on Friday.
The focus on defense of remote islands comes as Japan's ties with neighboring China and South Korea have deteriorated sharply over competing sovereignty claims for tiny islets in the seas between them.
The ministry said it requested 4.57 trillion yen ($58 billion) in budget appropriations for the year starting next April 1, down 1.7 percent from the current year.
That would mark the 11th consecutive year of decline in the defense budget and the largest percentage drop in 58 years.
The fall will be significant next year due mainly to across-the-board pay cuts for government workers, a measure aimed at helping finance reconstruction following last year's earthquake and tsunami.
But the ministry plans to earmark 2.5 billion yen in next year's budget to buy its first four armored amphibious vehicles, which could be used to counter threats against remote islands.
"In Japan's southwest, for example, there are many small islands. It is just not feasible to deploy troops to each island," a ministry official said.
"If some enemy force makes a landing, what can we do? It is necessary to obtain a capability that enables us to take action against such enemy threats."
In a sweeping update of its national defense policies two years ago, Japan decided to bolster its defense posture in its southwest, where it shares a maritime border with China.
Japan is locked in a bitter territorial dispute with China over East China Sea islets that both countries claim. The isles, called Senkaku in Japan and Diaoyu in China, are located near rich fishing grounds and potentially large gas reserves.
Also, Tokyo's ties with Seoul frayed badly after President Lee Myung-bak last month became the first South Korean leader to set foot on a set of islands claimed by both countries and located about midway between them, known as Takeshima in Japan and Dokdo in Korea.
Japan's Coast Guard plans to procure seven new patrol ships next year to strengthen its surveillance activities, while the Foreign Ministry is more than doubling a budget for promoting globally Japan's stance on the disputed islets to 1 billion yen, covering costs such as holding symposiums, producing pamphlets and making Internet videos.
In a news conference last month, Prime Minister Yoshihiko Noda vowed to protect all of Japan's territories and waters, but also said the government would deal with territorial disputes calmly.
In the defense ministry budget request, about 21 billion yen is set aside to boost its capacity to defend against cyber attacks. The government and the private sector have come under growing hacking threats in recent years.
The ministry plans to set up a team of about 100 officials and soldiers, tentatively named the "cyber space defense squad", to collect information on cyber attacks and conduct research on cyber security. ($1 = 78.9700 Japanese yen)
(Reporting by Kiyoshi Takenaka; Editing by Paul Tait and Michael Watson)