Economic forum / govt must deliver postal reforms

One year has passed since the launch of Prime Minister Junichiro Koizumi Cabinet in April last year. Since that time he has been trumpeting his reformist goals, saying, "There will be no growth without reforms."

However, Koizumi's reform campaign appears to have had the rug pulled out from underneath it, and under the circumstances, his reform efforts could be labeled a failure.

On April 26, when a bill related to a planned postal public corporation was presented to the Diet, Yamato Transport Co., the nation's largest home-delivery business, said it would abandon a plan to enter the mail-delivery business in competition with the state-owned postal service.

Yamato had been the only private firm to express a serious interest in entering the mail-delivery business once the field was opened to private enterprise.

At a press conference held the day the bill was submitted to the Diet, Yamato Transport President Keiji Aritomi severely criticized the content of the proposed legislation, saying, "The bill will be tantamount to transforming private-sector services into a government enterprise by enabling the Public Management Ministry to tie private corporations hand and foot."

Yamato's decision not to enter the postal business effectively renders meaningless Koizumi's attempt to open the mail-delivery market to the private sector.

Since taking office, Koizumi has said that his administration would seek to ensure that "whatever the private sector can do will be entrusted to the private sector."

Koizumi has repeatedly insisted that the privatization of mail-delivery services is a major part of his structural reform campaign. He has demonstrated his readiness to push ahead with his reform goals.

One of the key pledges Koizumi made when he ran for the Liberal Democratic Party's presidency in April 2001 was to pursue his long-cherished goal of privatizing three state-run postal services: mail delivery, postal savings and life insurance.

Koizumi argued that he would turn the mail-delivery service into a private-sector business after the planned Postal Public Corporation takeover of the functions of the current Postal Services Agency.

The bill is aimed at allowing the private sector to enter the postal business, as well as entrusting the services now provided by the government-run Postal Services Agency to public corporations. Koizumi may be planning to use the legislation as a stepping stone toward eventual privatization of the three postal services.

However, Yamato Transport's decision seems to have thrown cold water on Koizumi's ambition.

The content of the bill deserves to be criticized. The situation is well summarized by a remark made by a representative of a private home-delivery firm who said "the bill will prevent us from entering the postal business."

As a condition for entering the mail-delivery business, the bill requires private companies to establish postal boxes at about 99,000 locations across the country to be determined by government and ministry ordinances after the approval of the bill is accomplished.

In addition, the bill is unlikely to permit introduction to the mail-delivery business of a system currently in use between home-delivery service companies and convenience stores that allows addressees to pick up parcels at convenience stores.

With such hurdles to clear, it is natural for the private sector to be unwilling to enter the mail-delivery business even if the bill allows it.

The Yomiuri Shimbun conducted an experiment in 1997 to compare Yamato's home-delivery service with the post office's parcel post service by simultaneously sending similar parcels from Tokyo to Sapporo and Rebun Island off Hokkaido, one of the northernmost areas in the country.

All the parcels arrived at their destinations two days later. However, Yamato's service was faster than the post office's by four and three hours, respectively. It took the same number of days for both services to deliver a parcel to other areas.

The post office is usually thought of as an institution whose nationwide network allows it to deliver parcels faster than any other delivery service. However, the experiment showed that both services were virtually equal in delivery time.

Yamato currently has a system that is able to deliver parcels to almost every area of the country. In that sense, Yamato has shown that a private company can provide the same level of delivery service as the government-supported post office.

Koizumi should take the initiative to ease the conditions stipulated in the bill to allow private-sector companies to participate more easily in the mail-delivery business.

Koizumi also should introduce the principle of competition into the postal services, leading to a lowering of postal fees.

Of course, it may be necessary to take measures to prevent the private sector's mail-delivery business from concentrating only on more profitable metropolitan areas.

Among the three postal services, the first that is to be privatized should be the postal savings service, often called the largest financial institution in the world.

It is necessary to change the current structure that allows the vast amounts of money collected through the postal savings system to be used to support inefficient projects and public corporations.

If the reform of the mail-delivery business fails at the first stage of the postal service reforms, the changes will not reach the postal savings service and public confidence in Koizumi's structural reforms could be lost.