Japanese Government to keep control of some postal services after privatisation

The government intends to keep mail delivery and over-the-counter post office services under its control even after postal privatisation is complete, the final draft of a basic policy on postal reform showed Wednesday.

Prime Minister Junichiro Koizumi’s Cabinet is expected to endorse the policy Friday after the government’s Council on Economic and Fiscal Policy adopts the draft.

According to the draft, Japan Post will be split in April 2007 into four concerns that will operate mail delivery, postal savings, “kampo” life insurance, and over-the-counter services under a holding company.

The postal savings company will engage in the lending business, the draft says.

The holding firm will start as a concern wholly owned by the government when the privatization process starts. The government will gradually unload shares in the firm during the 10-year privatization period but intends to keep more than one-third of the outstanding shares after that stage, the draft says.

To maintain government influence over mail delivery and over-the-counter services, the holding company will keep all shares in those concerns, it says.

The government will gradually reduce its stakes in the postal savings and life insurance units with a view to spinning them off from the holding firm in the future, the draft says.

As for postal savings and life insurance contracts concluded before the privatization process starts, a bridge company will take over their management and commission the new entities in charge to invest them, it says.

Japan Post, created in April 2003 as a public corporation to take over the mail delivery, postal savings and life insurance businesses from the Postal Services Agency, is currently under the supervision of the Public Management, Home Affairs, Posts and Telecommunications Ministry.