Gov’t to allow Japan Post to enter into int’l delivery business

The government intends to enable the state-backed Japan Post to enter into international parcel delivery business before its planned privatization in April 2007, government sources said Wednesday.

The plan will form the core of a set of six bills for privatizing postal services that the government will submit to a regular Diet session convening later this month, the sources told Kyodo News.

Removing the current ban on Japan Post’s branching out into delivery services abroad is intended to improve its profitability and help facilitate the 10-year postal privatization process, which begins in April 2007, they said.

Industry sources said, however, the move is sure to trigger broadsides from private parcel delivery firms wanting to expand their operations in China and other Asian countries.

It is also expected to figure high in upcoming policy coordination talks between the government and the ruling Liberal Democratic Party, which has been reluctant to propel privatization.

Citing the outline of the draft bills, the sources said the government will also endow two of the four new units to be born out of Japan Post’s privatization in charge of postal savings and postal insurance with banking and insurance licenses, respectively.

Under the government plan, Japan Post will be split into four entities in charge of mail delivery, postal savings, postal insurance and over-the-counter services, all under a new holding company, when the 10-year process begins in April 2007.

Requiring the postal savings and postal insurance units to obtain approval in entering into new business fields is intended to soothe concerns among private financial institutions about possible detrimental effects the new entities may have on their businesses, government officials said.

According to the outline, the government will also keep more than one-third of the outstanding shares in the holding company so it can continue to wield clout over mail delivery and over-the-counter services.

A governmental panel in charge of monitoring planned privatization is scheduled to be launched in July 2006, well before the privatization process starts. The early setting up of the panel would allow it to offer recommendations to the prime minister and ministers concerned even before the privatization process starts.

Japan Post was set up in April 2003 to take over the government-run postal services of mail and parcel delivery, savings and life insurance.