Postal spin-offs to dwarf Japan’s top companies
On the evening of Oct. 14, after watching his postal privatization bills pass the Diet, Prime Minister Junichiro Koizumi received a visit from Ulrich Cartelier, chairman of the German-Japanese Forum and auditor of Deutsche Bank AG.
The two discussed Deutsche Post, an oft-raised example of a postal service that was successfully privatized.
Koizumi told Cartelier that Deutsche Post was a good reference point for Japan's postal privatization, to which the German added that while Deutsche Post was a state-run business, it had grown to include one of the world's largest global shipping services.
Japan's new postal firms, which are slated to be launched in 2007, aim to be self-reliant private-sector companies in the Deutsche Post mold.
Plans for many new business services have been proposed for the new companies.
They include international shipping services, convenience stores inside the branches, ticket sales, new financial products and loans to small and midsize companies.
Yet many people remain concerned the sheer size of the privatized postal companies may overpower their private-sector rivals.
The new bank to take over postal savings will have more assets than that of Mitsubishi UFJ Financial Group, which is currently the largest in the world.
The insurance firm to take over postal insurance services will boast total assets about 2.5 times that of Nippon Life Insurance Co., the nation's largest insurer.
In his testimony on July 4 before the House of Representatives' special committee on postal privatization, Makoto Fukuda, deputy head of the Regional Banks Association of Japan, said, "[The government] is creating huge financial institutions rare on the world stage."
"While the government retains some stake in the privatized companies, the new firms should not be allowed to enter some business areas, such as loans to individuals and small and midsize companies," he added.
Chief Cabinet Secretary Hiroyuki Hosoda said the government would let the privatized postal firms expand their activities only gradually, but private-sector financiers remain skeptical.
The government's basic policy of postal privatization, which was decided in September 2004, stipulates the services must be on "equal footing with the private sector" and must protect the three postal businesses from negatively affecting each other.
However, revision to the bills during the latest ordinary Diet session would allow the postal holding company to buy back shares in the new postal service firms in the future, though all shares in the two financial service firms will ideally be sold off by 2017, when the privatization process is to be completed.
Even after completion, it would be possible to maintain a postal business group controlled by the holding company, in which the government holds a partial stake.
If that happens, it is possible that the two firms that are to take over postal financial services would continue enjoying a de facto government guarantee for their businesses.
In that situation, business risks may be insufficient between the pair of financial firms and the new postal delivery company, which will risk a decreased number of customers as e-mail usage continues to spread.
Heizo Takenaka, state minister in charge of economic, fiscal and postal reform policy, said Friday, "Just because the bills have passed doesn't mean our job is done…There are a number of things the government should do during the 10-year transition period."
With the privatization, post offices will end their more than 130-year history as state-run entities and will enter a new age as privatized business entities.
Exactly what shape will the new companies take, and how will the change in postal services affect the public? Only time will tell.
