Japan Considers Postal Reform

Prime Minister Junichiro Koizumi won a tough fight with conservatives in his own party to open the postal service to competition, but critics said Thursday the legislation is so watered down that real change is unlikely.

Parliament is expected Friday to endorse bills allowing private companies into mail delivery and changing the postal service’s control from the state to a public corporation.

Postal system reform is an emotionally charged issue in Japan because of the role postmasters play in communities, particularly in remote rural areas. They not only deliver mail, but also manage savings accounts and even run errands for elderly people.

Backers of Prime Minister Junichiro Koizumi, a self-styled champion of reform, say he faced such strong resistance within his own party that it is a wonder the bills are going before Parliament at all.

“This was an unprecedented process,” said Koizumi spokeswoman Misako Kaji.

But companies that had hoped to gain from deregulation complained the bills will block rather than facilitate private sector access to the mail industry.

The bills require newcomers to set up 100,000 postboxes across the country – a hurdle that prompted Japan’s biggest transport company, Yamato Transport, to drop its interest.

“This is a law designed to protect vested interests,” said Jun Uchida, spokesman for Yamato Transport.

Critics also noted the legislation bars any reductions in the network of 25,000 state-run post offices and limits the type of mail that competing companies can handle.

Crucially, it also won’t loosen government control over Japan’s postal savings system, which – with $2.1 trillion in deposits – is the world’s biggest savings bank.

“It’s not going to change anything,” Shigenori Okazaki, political analyst at the investment firm UBS Warburg in Tokyo, said the legislation.

Koizumi made postal changes one of the key planks in his program for economic reform, and Okazaki predicts the prime minister’s sagging popularity will take another hit if voters feel he caved in to anti-reform forces within his Liberal Democratic Party. Koizumi’s backing in opinion polls has slid to 40 percent from 70 percent a year ago.

“Since he had been promising sweeping privatization, this may damage Koizumi,” Okazaki said. “People are going to see him as weaker now.”

Japan’s top-selling newspaper, Yomiuri, said the fight within the governing party had obscured the main reform needed for the postal system – freeing up the money that sits in virtually zero-interest postal savings accounts and is used to finance wasteful pork-barrel projects instead of productive entrepreneurs.

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