Technical problems threaten to delay privatisation of Japanese post office
Privatisation of Japan’s postal service could be delayed two years by the technical difficulties of developing a new computer system needed to split the business into four units.
Masaharu Ikuta, president of Japan Post, said in an interview with the Financial Times that tenders for a new system – needed to split the giant organisation into mail-delivery, savings, insurance and counter services – could not go out until late 2005, meaning work would not start until 2006.
IT consultants at IBM, Accenture, NTT Data and Nomura Research Institute estimate that it would then take three to five years to build the system, he said.
“I reported to the prime minister (Junichiro Koizumi) that from those experts’ opinions, it would be difficult to start the system from April 1, 2007,” Mr Ikuta said. “If the system fails the moment it is inaugurated, it would be a nightmarish event right across the Japanese archipelago.”
Mr Koizumi has made privatising the post office, the world’s biggest financial services company, the centrepiece of his final two years in office.
The prime minister says privatisation is a vital step in shrinking the overbearing state, though critics say his reform is little more than a political squabble over the institution’s Y360,000bn (Dollars 3,376bn, Euros 2,645bn, Pounds 1,839bn) in funds.
Mr Koizumi has also backed the position that the huge organisation, which employs 400,000 workers, must be split into four to avoid it overwhelming its competitors.
The plan threatens to provoke strong resistance from unions representing postal workers who will lose their public-service status. Some senior managers within the post office are also threatening to fight the privatisation, saying they do not want to see the destruction of one of Japan’s most beloved public institutions.
One senior Japan Post executive complained bitterly: “The so-called commercial banks have received billions in taxpayer bailouts. Yet they dare to accuse us of being inefficient.”
Mr Ikuta insisted that his warning on the privatisation timetable was solely technical. “People with little knowledge of computer systems accuse me of seeking to postpone the separation of the businesses under the pretext of system-development difficulties,” he said. “That criticism is way off the mark and shows gross misunderstanding.”
It might be possible to proceed in 2007 with a “basic system framework” that met minimum requirements, he said, though that would leave several unspecified issues pending that would need to be fully disclosed.
Mr Ikuta said that, if a reliable computer system could not be built in time, the wisest option would be to postpone privatisation.
The other alternative, of a two-step privatisation – with one big post office subsequently being split into four units several years later – would disrupt and demoralise staff, he said.
The post office boss scoffed at suggestions, advocated by the American Chamber of Commerce in Japan, that a poorly executed privatisation could create a “monster” with unfair advantages over competition. The post office has 24,000 branches against fewer than 500 for Japan’s biggest banks.
“I’d like to pay tribute to their capacity for rich expression that make people half believe what they hear,” Mr Ikuta said of the ACCJ. “If anybody wants to criticise us, they should use numbers, not come up with expressions from the cartoon world.”
