Masatake Matsuda, president of East Japan Railway Co., recalls how his company, along with Central Japan Railway Co. (JR Tokai) and West Japan Railway Co., rejected the government’s plan in December to have the three JR group firms shoulder a greater financial burden for building new bullet train lines.
Matsuda stressed in an interview that the state can no longer force JR group firms to do things for the government as a result of the 1987 privatization of the former Japanese National Railways.
This month, JR group firms celebrated their 10th anniversary since the state-run JNR, which had accumulated long-term debts of 37.1 trillion yen, was dissolved into one freight and six passenger carriers in April 1987. “The main objective of the JNR privatization program was to reduce political influence over the management of the railway business,” Matsuda said. “The fact that we became a private company enabled us to reject things that do not suit private corporations.”
Matsuda himself was one of the three mid-level JNR executives who pursued the privatization path 10 years ago. The two others were Yoshiyuki Kasai, the current president of JR Tokai, and Masataka Ide, now JR West’s chairman. The now-defunct JNR suffered from losses due to excessive investments driven by political interests. The morale of its workers was also deteriorating amid the escalation of labor union activities.
“Political intervention into our railway business has been substantially reduced over the past 10 years, but we are now worried that bureaucrats and politicians of the new generation may not understand the meaning of the JNR privatization program, and that they may again try to exert their influence,” said Matsuda. “In order to avoid such a risk, we want to sell all our outstanding shares (currently held by the government) to the public as early as possible,” he said. Matsuda hopes to sell the remaining shares of JR East on stock markets around the same time JR Tokai lists its shares this fall.
Since it listed its shares in 1993, 2.5 million of the outstanding JR East shares have been sold to the public, while 1.5 million shares remain in the hands of the government. Matsuda says he is confident that services as well as the railway infrastructure of the JR group firms are a dramatic improvement on those of JNR.
“Financially speaking, we have also made progress,” he said. “We did not expect this much improvement initially.” He said JNR posted deficits of about 1.7 trillion yen every year and that it raised fares 11 times over the last 13 years of its existence. With the exception of two occasions — when the government introduced the 3 percent consumption tax in 1989 and when the tax rate was raised to 5 percent this month — JR East has kept its fares unchanged.