Japanese lower house of Parliament to vote on closely watched postal reform bill
Prime Minister Junichiro Koizumi's government sternly urged Parliament to approve legislation Tuesday to create the world's largest bank by privatizing the sprawling state-run postal system, which handles trillions of yen (dollars) in savings and insurance deposits.
The powerful lower house was scheduled to vote on the bills later Tuesday, amid infighting in the ruling Liberal Democratic Party that has pitted calls for reform to streamline the financial system against fears that privatization will reduce jobs and services.
The vote was crucial for Koizumi, who has made the project the centerpiece of his government since winning re-election last year. Koizumi has argued that reform is needed to make more efficient use of Japan Post's 330 trillion yen (US$3 trillion; €1.8 trillion) in savings and insurance deposits.
Koizumi has faced fierce opposition within his own party, some of whom have close ties to postal workers. Some 3,000 workers, fearing that privatization threatens their jobs, protested against the plan on Monday in downtown Tokyo.
A leader of one of the LDP's main factions said on Tuesday that he was resigning his post so that he can cast a "no" vote, while two vice ministers have reportedly submitted resignation in protest to the bills.
Government leaders called for party discipline.
"We will take severe actions against those who plan to oppose or make absentee or abstention votes," Chief Cabinet Secretary Hiroyuki Hosoda told a news conference, without elaborating. "Naturally, we expect that the legislation will be approved."
The bills, approved by a Parliamentary committee on Monday, would privatize the postal system by 2017. They call for dividing state-run Japan Post into separate businesses for mail delivery, banking services and insurance starting in 2007. A fourth company would handle employee salaries and manage post office properties.
All four companies would be grouped under a holding company at first, but the umbrella organization would have to sell its shares in the banking and insurance enterprises by 2017.
Proponents say privatization would improve postal services by making them more competitive and give the market a greater say in how to efficiently use the massive deposits now in the state-run system.
Critics, however, fear that postal services will be reduced in rural areas, some of the country's 400,000 postal system workers will lose their jobs, and the mammoth bank created will drive existing private financial institutions out of business.
As a sign of the government's determination, the parliamentary session was extended until mid-August to deal with the package. If the reform is rejected, Koizumi's aides have said he could dissolve the legislature and call elections.
Passage by the lower house would send the bills to the upper house. But even rejection by the upper house would not block the legislation, since the lower house can override that with a second vote.
Japan Post boasts savings deposits of 211 trillion yen (US$1.9 trillion; €1.6 trillion) _ some three times those of Mitsubishi Tokyo Financial Group Inc., which at 67 trillion yen (US$600 billion; €505 billion) is Japan's biggest private holder of deposits.
The postal system has some 25,000 branches around the country, while Japan's seven nationwide banks combined have only 2,606 branches.
U.S.-based Citigroup Inc. is the world's largest bank in terms of assets. But shareholders of Japanese banks Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. last month approved a merger that will pave the way for creation of a bank with 190 trillion yen (US$1.7 trillion; €1.41 trillion), surpassing Citigroup.
