Panel gives basic approval of Japan Post privatisation plan

A key economic policy-setting panel have basically agreed that Japan Post should be privatised in five to 10 years starting in 2007, economic and fiscal policy minister Heizo Takenaka said.

The proposed timeframe is stipulated in a draft interim report on ways to privatise the entity, which was presented by Takenaka during the day’s meeting of the Council on Economic and Fiscal Policy.

After some fine-tuning on wording, the council, which is chaired by Prime Minister Junichiro Koizumi, unofficially endorsed the text, Takenaka said.

The council will formally adopt the interim report next Monday.

The draft report calls on the government to put the privatized postal entity on a level playing field with private-sector rivals, including financial institutions that have been competing with post offices in savings and life insurance businesses.

With regard to savings and “kampo” life insurance operations offered by Japan Post, the report says the government should continue providing a refund guarantee for the funds until the entity is privatized.

But once it is privatized, such a guarantee should not be given to new depositors and insurance policyholders, it says.

The text proposes that the government maintain the current nationwide and universal postal services even after the privatization of Japan Post, and that a privatized entity should have a stable management so its employees’ job security can be kept.

It also says the three postal services of mail delivery, savings and life insurance should become more “self-supportive” in management.

Throughout the privatization process, Japan Post should be given greater freedom to determine its business strategies with diversified methods of management to boost convenience for the public to the maximum.

In addition, Japan Post should grow into an international mail and parcel delivery business operator through tie-ups and acquisitions of other business entities and explore chances to advance to the parcel and cargo delivery markets in the rest of Asia, the report says.

Japan Post was created in April 2003 as a public corporation to take over the government-run mail delivery, postal savings and “kampo” operations. Koizumi has made privatizing Japan Post one of his key policy goals.