Splitting up and privatizing Japan Post into four independent units could increase profits by up to 900 billion yen a year, according to a recent estimate presented to the government’s postal privatization preparatory office.
The estimate was computed by Sakon Uta, a senior analyst at McKinsey & Co., who attended a meeting of experts convened by the preparatory office, government officials said.
The estimate will be presented to a meeting of the government’s key policy-setting panel, the Council on Economic and Fiscal Policy, to be held Monday, the officials said. The council is headed by Prime Minister Junichiro Koizumi.
The estimate assumes splitting Japan Post into four independent companies with each taking charge of the public corporation’s existing three main duties — mail delivery, postal savings and “kampo” life insurance — with the fourth running post office counters. The government is considering privatizing Japan Post in five to 10 years from 2007.
One of the assumptions used for the estimate is that a privatized Japan Post will be given competitive conditions equal to those enjoyed by commercial banks and other private-sector businesses.
Another assumption is that a privatized firm in charge of mail operations will provide services of the same quality at uniform rates nationwide.
The estimate assumes that mail collection and delivery, one of the most costly services at Japan Post, will be “separated” from those presently offered at post office counters nationwide.
This separation alone would slash Japan Post’s expenses by 700 billion yen a year, according to the study.
The estimate concludes that the four privatized companies will be profitable.
However, analysts said the explanations given for such a rosy estimate have been inadequate. They said Uta failed to provide the specifics of his profit estimates for each of the four companies.