Japan Post chief pushes reforms as prime minister pushes

The president of Japan’s postal service has promised to carry out far-reaching reforms to make his business profitable in four years, but stopped short of backing Prime Minister Junichiro Koizumi’s proposal to privatize the company.

Masaharu Ikuta, former chairman of shipping company Mitsui O.S.K. Lines, was hand-picked by Koizumi to be president of Japan Post six months ago when the government agency became a public corporation.

The prime minister has vowed to privatize the postal service, but resistance has arisen among the ruling party’s old guard, and opposition politicians claim the plan is a ploy to win votes in parliamentary elections, expected in November.

Steering clear of the privatization debate, Ikuta told the Foreign correspondents’ Club in Tokyo he was determined to turn the mammoth mail system into a moneymaking modern business.

Japan Post will turn profitable by March 2007, and will slash 17,000 jobs, or 6% of its work force, he said.

The company has started to offer after-hours mail delivery and a cheaper parcel service, is tying up with delivery companies and is planning to sell investment trust products.

Japan’s postal system already has a banking section with 230 trillion yen (US$2 trillion) in savings deposits and an insurance section that boasts 120 trillion yen (US$1 trillion) in funds making it, in effect, the world’s largest bank.

The big challenge, Ikuta said, is to change the mind-set of the workers who are more used to rigid government controls than dynamic responses to market changes.

“This is a big point for the staff to understand. We are in the market. We are in the service industry,” he said.

When asked about the privatization of Japan Post, Ikuta dismissed it as a political decision in which he had no say.

“The question of privatization is highly political,” he said, adding that details of the privatization plan were still being worked out. “I am not in a position to make a comment on it.”

Koizumi, who won re-election as head of the ruling party earlier this month, has made the privatization of money-bleeding public sectors the rallying cry for forthcoming parliamentary elections.

This week, the opposition has been hammering Koizumi with questions about the privatization proposal in Parliament, and the postal service with 24,700 offices nationwide is rapidly emerging the biggest issue in the elections for the 480 seats in the lower house.

But resistance to the reforms is already erupting from old-guard politicians in Koizumi’s Liberal Democratic Party, and the opposition is pointing to that infighting as a sign that Koizumi’s reforms are more show than action.

The Japanese public has long resented inefficient bureaucracies that feed off taxpayer money, offer bad service and have a reputation for nepotistic hiring, especially at a time when the nation’s struggling private sector is being forced to shed jobs and trim paychecks.