TOKYO - Japan's defence ministry plans to seek a record-high budget of 5.26 trillion yen ($65.5 billion) for fiscal 2018, mainly to enable it to beef up its missile defence capabilities amid mounting threats from North Korea, a government source said on Tuesday (Aug 22).

The budget request would mean a 2.5 per cent rise from the initial budget for the current year through March. Kyodo News agency reported.

Japan's defence budget has been increasing every year since Prime Minister Shinzo Abe assumed office in 2012.

For the year starting in April 2018, the ministry plans to set aside 47.2 billion yen to buy a new type of interceptor missile to be loaded on its Self-Defence Forces' (SDF) destroyers equipped with the Aegis missile defence system. The ministry will also ask for funding to acquire a land-based Aegis system known as Aegis Ashore.

Under the country's current ballistic missile defence system, the Maritime Self-Defence Force's Aegis destroyers, equipped with Standard Missile-3 (SM-3) interceptors, are tasked with destroying short- to intermediate-range ballistic missiles in the outer atmosphere.

If they fail, the Air Self-Defence Force's Patriot Advanced Capability-3 (PAC-3) surface-to-air guided interceptors will be the next line of defence.

The new interceptor the ministry is eyeing is the SM-3 Block IIA. This next-generation interceptor is being developed between the United States and Japan and can be deployed on land as well as at sea. Its larger rocket motors will allow it to defend bigger areas from ballistic missile threats.

The ministry also plans to spend 20.5 billion yen to purchase an improved version of PAC-3 missiles known as PAC-3 MSE, Kyodo reported.

To update the air defence radar network, the ministry will need 10.7 billion yen, the source said.

The upgraded network will be aimed at defending the country against missiles launched on a highly lofted trajectory, which are more difficult to intercept than those fired on a normal trajectory.

The ministry also plans to develop a prototype radar system to improve missile detection, which is expected to cost 19.6 billion yen.

To counter China's growing maritime assertiveness, the ministry will also seek 55.2 billion yen to install facilities in the country's southwest.

Japan also plans to purchase six F-35 stealth fighter jets for 88.1 billion yen and four Osprey tilt-rotor transport aircraft for 45.7 billion yen.

The source said the ministry also aims to create a new "space unit" under the SDF, which will be in charge of protecting satellites, Kyodo News reported.