Separate accounting urged for Japanese postal services

A key government panel plans to propose the allocation of an independent accounting system for each postal-related service–mail delivery, postal savings and kanpo life insurance services–to come into effect after the services are privatized, according to the panel’s draft interim report on postal privatization.

The Council on Economic and Fiscal Policy is expected to announce the plan Wednesday and formally approve it Monday, sources said.

The draft report also cites a need to maintain stable business operations after the privatization of Japan Post to ensure job security for postal employees.

Heizo Takenaka, state minister in charge of economic, fiscal and financial policy, is scheduled to announce the plan Wednesday at a panel meeting to be chaired by Prime Minister Junichiro Koizumi.

In the interim report, postal services are categorized into four sections–services offered at post office counters, mail delivery, postal savings and life insurance services.

The report likens post offices to convenience stores selling a wide range of goods and says the counter services should be freed up to allow development that will benefit customers, and that more services should be introduced. The report also called for a review of the national postal network to research possible mergers and closures of some offices to improve efficiency.

Fixed rates for deliveries nationwide should be set, and entry into regional and international markets, including the establishment of distribution centers in other countries, should be the mail service’s goal, says the report. The panel suggested the mail delivery service could achieve this through mergers of foreign distribution service companies.

Funds held in postal savings and life insurance service deposits should be “incorporated smoothly” into the private sector, in consideration of other reforms in the financial sector, the report says. The report implies that it is desirable to decrease the huge amounts of money collected through these services.

Each business should be operated under independent accounting systems to avoid combining risks of the services and properly segregate funds, it says.

In a timetable, the panel proposed a three-step plan under which the privatization process would begin in 2007 to be followed by a transitional period of about a decade before privatization is complete.