Japan to delay start of postal privatization process by 6 months

The Japanese government on Tuesday decided to delay the start of postal service privatization by six months to give state-run Japan Post sufficient time to prepare its computer system.

Under the new timetable, the privatization process will start in October 2007. The government will make no other major changes to its postal reform program plans. It will permit Japan Post to start international distribution services from April 2006 as planned.

Economic and Fiscal Policy Minister Heizo Takenaka, who is also in charge of postal privatization, said the changes were made solely for technical reasons. The government hopes for Japan Post to make utmost effort during the newly given preparatory period to prevent any computer system failures. But another half year can be added to the period if a major system glitch does occur.

The government plans to break up Japan Post into entities for mail, savings, insurance and post office management, and place the four parts under a government-funded holding firm as the first step of the privatization process.

It will resubmit postal privatization bills during a special parliamentary session, which will convene later this month following Sunday’s House of Representatives election. The bills are expected to clear parliament around mid-October.

The original bills envisioned the privatization process starting in April 2007. The government had expected the bills to clear parliament in early August. But the House of Councillors, the upper chamber, killed the bills and derailed the timetable.

The Upper House’s rejection of the bills let Prime Minister Junichiro Koizumi dissolve the Lower House in order to hold the general election, in which Koizumi’s Liberal Democratic Party marked a historic victory.

The LDP’s landslide victory has ensured enactment of the bills, allowing Koizumi to focus on technical matters that are indispensable for successful postal privatization, people familiar with the matter said.