Japanese government eyes no restrictions on foreign stake in 3 postal entities

The government has decided not to impose restrictions on foreign ownership of three entities to be created following the privatization of Japan Post, government sources said Sunday.

The decision reflects the government’s resolve to ensure the market mechanism works at the privatized companies, the sources said, adding equity restrictions on these entities would trigger a backlash from foreign investors eyeing the privatized Japan Post business in Japan.

Under a 10-year privatization plan starting in April 2007, Japan Post is to be divided into four entities, mail delivery, postal savings, life insurance and post office management, all to be run under a holding company.

The government is not considering any equity restrictions aimed at foreigners for the entities in charge of postal savings, insurance and the holding company, the sources said.

All shares of the remaining two firms — the one in charge of mail delivery and the one for post office management — will be owned by the holding company.

The government is to be obliged to own more than one-third of the holding company’s outstanding shares to enable it to exercise veto power on matters affecting national interests.

This obligation would prevent the holding company from being hampered in its operations even if foreign businesses own part of its equity.

The government will include the latest plan on foreign equity stakes in postal privatization bills expected to be submitted to parliament in March, the sources said.

But the plan is expected to meet with opposition from some Liberal Democratic Party lawmakers who are insisting equity ownership by foreigners in the postal entities should be restricted.

At present, foreign investors are barred from buying significant shares of Japanese companies that affect national interests, such as Nippon Telegraph and Telephone Corp. and airlines.