Japan’s Koizumi goes ahead with postal privatisation despite opposition
Japanese Prime Minister Junichiro Koizumi’s cabinet approved a controversial plan to privatise postal services on Friday, brushing aside stiff opposition from within his own party.
At an emergency meeting, the cabinet gave the go-ahead to a plan outlined by an advisory panel headed by Koizumi, although it failed to gain full support from the ruling Liberal Democratic Party (LDP).
“It is the biggest reform since the Meiji Era,” Koizumi told the meeting, referring to the 1868-1912 modernization period that ended the feudalistic rule of the shoguns.
In Japanese politics, it is rare for the government to take action before winning endorsement from differing factions within the ruling party, which has virtually controlled parliament for the past five decades.
Under the plan, the government aims to divide the state-backed Japan Post, which controls large postal savings, into four entities at the start of the privatisation process planned for April 2007.
Japan Post, set up before World War II as a fund-collecting machine for war operations, is regarded as the biggest bank in the world by virtue of the 355 trillion yen (3.2 trillion dollars) in savings and insurance funds it manages.
The figure was even bigger than accumulated funds in saving accounts at the nation’s Big Four banks — Mizuho Financial Group, Mitsubishi Tokyo Financial Group Sumitomo Mitsui Financial Group and UFJ Holdings.
The plan, a pet project for Koizumi, is most likely to draw heated debate in parliament’s ordinary session that starts in January as some conservative LDP lawmakers already warned in public that they would block legislation needed to enact the plan.
On Wednesday, some 250 lawmakers of the 360-member LDP adopted a resolution against the privatisation of the huge network of some 280,000 employees, one third of the nation’s entire public officials.
“Without party procedures, no bills can be passed,” Tamisuke Watanuki, chairman of the LDP’s committee on postal businesses, and a senior figure of the party, told a group meeting.
Officials at local branches of Japan Post, which has maintained close ties with the LDP, are largely seen as the biggest support group of the party providing some one million votes for the party in every national election — about one percent of Japanese voters.
Postal privatisation has been a central plank of Koizumi’s policies since his time as the minister of posts and telecommunications in 1993. Since he took office in 2001, he has called it “the core” of his reform drive.
The government now aims to set up a holding company to control the four services — mail delivery, postal savings, life insurance and management of the network of over-the-counter services at post offices — in 2007.
The postal savings and life insurance firms will leave the umbrella in 2017 while the government will keep a stake of more than one-third in the holding company even after 2017.
Analysts said postal saving reforms are necessary but questioned whether the reforms would bring fair competition to the nation’s financial industry.
“It is unclear how those monsters can be released into the private sector,” said Yasuo Goto, an analyst at Mitsubishi Research Institute.
“If those postal service arms are privatised with their current dominance preserved, you cannot expect fair competition.”
The idea is also at odds with many rural dwellers, where residents are heavily dependent on the national postal services.
