Prime Minister Junichiro Koizumi’s policy panel agreed Tuesday that Japan Post should be split into four companies by the April 2007 outset of its privatization process.
The Council on Economic and Fiscal Policy will receive Cabinet endorsement of its privatization plan Friday.
The council had been stalled by debate over when postal operations would be divided up into a mail delivery company, a postal savings firm, an insurance entity and a company overseeing over-the-counter services.
The government had initially considered keeping the whole postal corporation intact at the beginning. But critics have said that could further hamper private financial institutions.
The council’s plan calls for privatizing Japan Post in stages until 2017.
Still, the 2007 start of the splitup may change.
A team of technical experts, to be chosen by the government, will decide by year’s end whether the privatized entities will be able to create new computer systems by 2007, said Heizo Takenaka, state minister in charge of financial, economic and fiscal policy.
“What can’t be done can’t be done,” Takenaka told reporters, echoing Japan Post President Masaharu Ikuta’s statement that a division of Japan Post before 2008 was technically infeasible.
The remarks by Takenaka, who spearheaded the postal privatization, was widely taken as a face-saving tactic for Ikuta and Liberal Democratic Party members who have demanded that the privatization be delayed.
Critical elements remain hazy in the council’s plan. The final size of each of the four companies, for instance, will be left for Japan Post managers to decide.
That omission makes financial institutions wary. They fear Japan Post is using the time before full privatization to gather enough strength to take away their customers.
Japan Post holds a quarter of Japan’s 1.4 quadrillion yen in personal savings and employs 270,000 public servants. Ikuta has called for more time for the government-owned entity to prepare for full privatization, when it will lose its government guarantees and tax exemptions.
To break the impasse, Koizumi and Ikuta met Tuesday afternoon.
Ikuta opposed Koizumi’s repeated requests to divide Japan Post by 2007. He said revamping its computer systems would take “at least three years,” and preparations could not start until the administration decides on the legal and tax status of the new entities and postal services’ managers-to-be formulate their business plans.
Information from Kyodo added