New Japan Post chief eyes efficiency
New Japan Post chief eyes efficiency
Newly inaugurated Japan Post President Yoshifumi Nishikawa told a news conference April 2 that he will focus on improving operational efficiency and cutting costs as the public postal entity prepares for the start of privatization this October.
“From the perspective of securing profitability, we need to build a lean and fit business structure,” said Nishikawa, who also oversees Japan Post Corp. That firmis to become the holding company for postal operations once privatization begins, with the goal of going public in 2010.
Nishikawa intends to pursue business reform at Japan Post, including the overhaul of its transactions with some 70 affiliated entities. Many of these outfits are run by former Japan Post executives, resulting in cozy business ties.
“Unless we revamp transaction terms that lack transparency, we will not be able to win the trust of investors,” said a senior Japan Post Corp. official.
As part of the efforts to promote change, Nishikawa said that Japan Post plans to establish a special in-house committee. The panel will be charged with exploring various topics, such as effective ways to use specially designated post offices run by independent contractors and introducing private-sector investment methods.
“These post offices have strong ties to their local areas and are a powerful force, particularly in financial businesses,” Nishikawa noted. Of the nation’s roughly 24,000 post offices, around 19,000 are run by independent contractors. More than 70% are said to be in the red, and in addition, nepotism and other counterproductive practices tend to run rampant at these specially designated facilities.
Nishikawa’s predecessor, Masaharu Ikuta, proposed changes like soliciting outsiders to operate the post offices. But Nishikawa is seeking to introduce a more contractor-friendly structure, consolidating the post offices into large regional groups while allowing them to retain their decision-making powers.
Branching out
Nishikawa said during another press interview on April 6 that Japan Post intends to enter the mortgage market, targeting single women and others who are considered too risky by banks.
As part of its privatization efforts, Japan Post is preparing to launch new businesses, including home loan operations, to build profit sources. But since it does not have experience in the mortgage business, it is considering teaming up with the Japan Housing Finance Agency, formerly known as the Housing Loan Corp.
Pending partnership with the housing loan entity, Japan Post would be able to offer fixed-rate home loans with repayment periods of up to 35 years.
Japan Post will also use its assets more effectively, Nishikawa said. It plans to expand the main post offices in Tokyo, Osaka and Nagoya, converting the five- and six-story structures into at least 20-story high-rises by 2011. Located in front of major train stations, these properties will be able to generate sizable rental income.
Seeking to raise funds for investment in information technology, Japan Post will consider securitization of assets such as post offices. This way, it can avoid an increase in debt.
