Japanese Government LDP execs reach accord on postal privatisation

The government got the nod Monday from executives of the ruling Liberal Democratic Party on its postal privatization policy, having accepted most of the party’s requests designed to water down the plan to fully privatize postal savings and life insurance services.

The accord is aimed at concluding the months of political bickering between Prime Minister Junichiro Koizumi’s government and the LDP, and clearing the way for the government to adopt a set of postal privatization bills on Tuesday.

But LDP lawmakers opposing the policy remained discontent and may not support the bills when they are put to a vote in the Diet.

Koizumi wants to submit the bills to parliament by Thursday to see them passed during the ongoing Diet session through June 19.

Speaking briefly to reporters at his office, Koizumi said the government has made no concessions in terms of changing the bill’s outline.

“They are in line with the outline,” he said.

The LDP executives tried to draw as many compromises from the government as possible in their intermittent talks with Cabinet ministers Monday afternoon.

As a result, the two sides agreed that the management of a holding company to be born out of the planned privatization of Japan Post will not be held responsible even if the firm fails to sell its entire stake in postal savings and “kampo” life insurance operators, according to a draft agreement.

Koizumi earlier decided to oblige the holding company to sell its entire stake in the two planned financial units by March 2017 but did not ban it from buying back those shares afterward.

The two sides also agreed “not to prevent a continual shareholding” in the financial units by the other privatized units after the privatization process finishes, according to the document which did not add further details.

In addition, they enabled the planned 1 trillion yen fund that would make up for losses from providing the financial services in remote areas to be doubled, and agreed not to prevent continued financial services through post offices from being extended beyond 2017.

The LDP feared that a full privatization of Japan Post’s two financial operations will result in a cut in those services in thinly populated areas where it would be costly to keep providing them.

The government plans to split Japan Post in April 2007 into four business units that, under the holding company, will take over its mail delivery, savings, life insurance services and network of post offices. The privatization process is to be completed by March 2017.

It plans to reduce its stake in the holding company to a little over one-third during the 10-year period, while leaving the other two spinoffs for mail delivery and network as wholly owned subsidiaries of the holding firm.