Barriers to postal privatization remain
With six months left before the privatization of Japan Post on Oct. 1, there are many hurdles to clear, such as the purchase of government-commissioned special postal offices privately owned by individuals across the country.
Japan Post Corp., a company established in January 2006 by Japan Post in preparation for postal privatization, will submit to the government a detailed business plan at the end of this month in a move to enter the final stage of preparations for postal privatization.
Japan Post Corp. President Yoshifumi Nishikawa, who has doubled as president of Japan Post since Sunday, said at a news conference Monday, "A host of issues read to be resolved before realizing postal privatization."
The task to be tackled for the moment is the purchase of special post offices owned by postmasters. Of about 17,500 special post offices, Japan Post Corp. plans to purchase 2,400 of them engaged only in delivery and mail collection at a total cost of 100 billion yen.
Currently, Japan Post pays about 80 billion yen a year in rental fees to the 17,500 special post offices. Rental fees to 2,400 post offices on the purchase list amount to 16 billion yen.
In many cases, the rent is set at higher levels than going rates, according to a source who asked not to be identified.
The national association of postmasters of special post offices, for its part, is resisting the plan to purchase special post offices. About 900 special post offices, or nearly 40 percent of those on the purchase list, have refused to sell, saying the purchase offer is too low.
Japan Post is making strenuous efforts to persuade them to sell their post offices by extending the deadline for negotiations earlier set for the end of March until early April.
Nishikawa admitted there had been difficulty making deals, saying, "[We] can't force them to sell their property used as postal offices because they are their private assets." Special post offices that cannot be purchased inevitably will continue under the current rental formula. Given this, estimates of possible future cost reductions should be revised down.
Japan Post handled about 24.8 billion pieces of mail in fiscal 2005, down 0.7 percent from the previous fiscal year for the fourth straight year-on-year decline. With e-mail becoming more widely used, one Japan Post executive was pessimistic about the organization's future prospects, saying, "We can't expect a recovery in the future, either."
The company that will succeed Japan Post's mail delivery business will look into the possibility of fully entering the delivery business linking Japan with China and other Asian countries as a way to secure new revenue sources.
Japan Post failed to work out a tie-up deal last June with TNT, a major Dutch delivery company, which has a delivery network in China.
Japan Post established an airfreight company in April last year jointly with All Nippon Airways and others to launch delivery business on such routes as one linking Kansai Airport with Shanghai. But delivery service within China has been left in the hands of China Post.
A Japan Post executive expressed a desire to secure a business tie-up with a foreign firm that has a strong business foothold in Asia. "Unless we can put overseas delivery also under our control, it will be impossible to win sufficient trust from customers and increase the delivery volume," he said.
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Affiliate deals under review
At Monday's news conference, Nishikawa also revealed a plan to consolidate or review transactions with 36 affiliated companies and 35 public entities.
A committee consisting of five experts from outside Japan Post will assess business deals with the affiliated companies and related public entities with an eye to curtailing costs. If unfairly high-priced arrangements are found, they will be rectified.
Of the affiliated companies, five are currently incorporated into Japan Post's consolidated account settlement. A Japan Post official who wanted to remain anonymous said, "Among the 31 affiliated companies that aren't included in Japan Post's consolidated account settlement, and the [35] related public entities, some have been allowed to conclude relatively high contracts in return for offering amakudari [postretirement] posts for retired Japan Post officials."
The five-member committee will be headed by Toyo University Prof. Satoru Matsubara. The committee will hold its first meeting within this month and submit an interim report to Nishikawa in October at the latest.
