Japan's postal Titanic

Feature: Japan's postal Titanic
From UNITED PRESS INTERNATIONAL, September 17th, 2001

TOKYO, Sep 17, 2001 (United Press International via COMTEX) — In his
swearing-in speech as postal minister in 1997, Junichiro Koizumi shocked the
assembled top bureaucrats of the ministry he was about to lead. "The three key postal services must be privatized," Koizumi declared. "We
cannot be ruled by inefficiencies." It was effectively a declaration of war
from within, for privatization would mean that the bulk of those he was
addressing would be made redundant, and one of Japan's oldest ministries would
be crushed. Four years later, Koizumi is prime minister, and Japan's most popular leader
by far in recent history at that. His straight-talking, no-nonsense manner has
captured the hearts of an overwhelming number of voters, who are tired of over
a decade of little or no growth under the leadership of premiers with little
interest but to protect their own factions. Koizumi as prime minister has tried to remain true to his roots as postal
minister, advocating privatization or even elimination of the public
corporations and special agencies that are draining taxpayers' money. But he
has shied away from tackling the biggest drain on public funds, namely the
postal system, and has instead concentrated more on relatively smaller fish. Japan's Postal Ministry is responsible not only for postal delivery and other
postal services, but it also handles individual savings accounts as well as
personal life insurance, and dominates those two fields. Individual savings held by the ministry totals 250 trillion yen ($2.8
trillion), well over one-third of the nation's total personal savings. Bear in
mind that Japan has the highest individual savings rate among industrialized
nations — that's a lot of money. Meanwhile, the Postal Ministry is also the country's biggest life insurer,
with 119 trillion yen in assets ($1 trillion), four times more than its
largest counterpart in the private sector, Nippon Life. But when it comes to its basic operation of providing conventional postal
services, the ministry is unable to do so without going into the red. There
are currently over 25,000 post offices nationwide, with sales totaling 2.289
trillion yen ($19.2 billion) for the 12-month period ending March this year.
Yet, it still managed to be in the red to the tune of 35.1 billion yen ($294.9
million). "Many private-sector companies have already successfully embarked on
restructuring efforts," Koizumi said. "It is sectors that rely on tax money,
on protectionist measures, and government subsidies that are the most
inefficient. It is there we need to concentrate on putting in the scalpel." Even with last week's terrorist attacks on the United States and subsequent
global uncertainties, Koizumi said he will continue to press ahead with
structural reform, including privatizing the money-draining public
corporations. To be fair, the Postal Ministry has already been slated to separate the
savings and life insurance operations from the postal services by 2003 in an
effort to reduce some of the inefficiencies. But many argue that the life
insurance and savings operations should completely cease under the auspices of
the government, and instead be privatized completely. There is, however, considerable opposition from within the ranks of the ruling
Liberal Democratic Party, as well as from those who would be directly affected
by any changes. When debate on reforming the Postal Ministry first attracted
wider public attention in 1998, the option of privatization was eliminated
completely. Those against privatization argue that if the Postal Ministry's savings and
life insurance operations were to fall into private hands, it would crush the
regional banks across Japan as they would lose out to the newly formed
institutions. They also point out that privatization would lead to offices in
the remoter areas being shut down, which would leave a not inconsiderable
fraction of the population without access to basic postal and financial
services. But another reason why some politicians oppose privatization is because the
postal savings fund is also known as the "second budget" for the nation, a
source of money to provide funds to money-draining public corporations such as
the National Road Corp., which builds motorways nationwide. It is because
postal savings are used for such efforts that the Postal Ministry is in
deficit, even when it should be a profitable enterprise. If Koizumi proves successful in privatizing some of the weaker public
corporations, he may have a shot at pressing for privatizing the Postal
Ministry. Debate on privatizing the National Road Corporation, which comes
under the umbrella of the Transport Ministry, will be a gauge on whether that
will indeed be possible. Copyright 2001 by United Press International. -0-
SUBJECT CODE: 04000000UNITED PRESS INTERNATIONAL, 17th September 2001