Tag: Japan

The government has decided to sell its entire stake in postal savings and insurance units by the 2017 end of a controversial proposal to privatise Japan’s postal system over a 10-year period, government sources said Monday.

The decision is part of an outline of legislations to privatise Japan Post in the face of strong reservation within the ruling Liberal Democratic Party.

The outline is expected to be announced later in the day after Prime Minister Junichiro Koizumi conveys it to ministers at a morning meeting.

The government has also decided to set up a 1 trillion yen fund to make up for possible losses from providing the postal savings and insurance services in thinly populated communities as a result of maintaining uniform nationwide operations at the two privatised entities, the sources said.

Internal Affairs and Communications Minister Taro Aso is gaining a greater say in discussions between the government and the Liberal Democratic Party [LDP] over the privatization of the postal services. LDP members are complaining about the debate being promoted under the leadership of Postal Services Privatization Minister Heizo Takenaka. “He is conducting discussions all by himself, without taking into consideration the situation within the LDP,” said a senior LDP official. It turned out that Aso volunteered to “serve as a mediator” between the LDP and the government. However, Aso, if he increases his stance of compromising with the party, may create an impression that Prime Minister Junichiro Koizumi’s reform line has regressed. It seems likely that the power balance between Takenaka and Aso will have a subtle impact on the future of the postal service reform.

The government has concluded that it will be difficult under World Trade Organisation rules for it to legally regulate foreign ownership in the postal savings bank and postal life insurance company due to be created in April 2007 as a result of privatising Japan Post, government sources said.

WTO rules stipulate that free cross-border investment activities should be guaranteed, in principle, for service companies and other businesses.

The rules, however, allow national governments to protect their interests by legally regulating the percentage of foreign holdings in certain types of businesses, such as airlines and broadcasting firms, as well as other operations directly run by governments.

Japan and other industrialised nations do not include service firms, including financial institutions, among the businesses that should be protected against foreign capital.