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EDITORIAL:Postal privatization

LDP's plan hampers Koizumi's reform agenda.

The hottest topic at this year's regular Diet session, due to be convened later this month, will be postal privatization, the centerpiece of Prime Minister Junichiro Koizumi's structural reform agenda.

The Koizumi government has already decided to turn Japan Post, a public corporation handling mail, postal savings and insurance services, into four separate units under a holding company wholly owned by the state in April 2007. This will be the first step toward complete privatization through sales of government-held shares. The government plans to submit a privatization bill to the Diet in March.

Late last year, the ruling Liberal Democratic Party announced a set of basic principles for postal reform. They call for imposing a legal obligation on the new post companies to provide uniform mail, savings and insurance services across the nation. They also demand that the current nationwide network of post offices be maintained without a major cutback.

The LDP's blueprint even refuses to refer to the reorganization as privatization, apparently in deference to party lawmakers opposing the reform. The blueprint only says the LDP's final decision on this issue will be made after watching the government's responses to its proposals.

The ruling party's principles are a classic example of bad politics. The LDP elected Koizumi its president knowing perfectly well that postal privatization is his signature issue. The party's campaign platform for the Lower House election about a year ago promised a conclusion by the autumn of 2004 on the basis of the government's policy of privatizing postal services. If the announced principles are the party's conclusion, it is purely scandalous.

The LDP capitalized on Koizumi's popularity to win the election but has ridden roughshod over one of the few policy initiatives Koizumi has been pursuing consistently. This sharp disagreement between the ruling party and its head raises serious doubts about the health of the nation's democracy based on a parliamentary Cabinet system.

The LDP's recipe for postal reform can only be described as a political scheme to keep the post-office network intact for the benefit of postmasters, who make up an important constituency for the party. And the LDP makes no secret of its ambition to widen the scope of postal operations to areas the state-run postal body is not allowed to enter.

We have been calling for a privatization formula that limits the legal obligation for uniform services to mail operations, exempting the savings and insurance operations from such a burdensome requirement. The primary argument for this is that private-sector players should be the ones providing financial services. In fact, no other industrial countries impose such a requirement on operators of savings and insurance services. If, in addition to this rule, the current post-office network is kept as it is, there can be no relocations for higher efficiency.

Post offices are often indispensable for residents in rural places like mountain villages. The government's privatization policy also stresses the importance of maintaining post offices in depopulated areas. That makes it all the more important to scrap post offices in cities where there are too many of them and sell their assets to raise money necessary to keep afloat money-losing offices in rural areas. The LDP's emphasis on maintaining the status quo hampers this restructuring effort.

Postal services will eventually become unviable unless they are constantly reviewed and reinvented through flexible thinking in the private sector. The spreading use of e-mail is bound to reduce the volume of conventional mail year after year. A major change in the current low interest rate climate could jeopardize the postal savings business, the largest revenue source for Japan Post. The LDP refuses to face these harsh realities.

In the bitter political battle over the privatization of the money-losing public toll road operators, Koizumi made a tactless 11th-hour compromise with the anti-reform forces within the LDP and thereby allowed them to emasculate the reform plan. If he is really committed to the postal privatization crusade, Koizumi must not make that mistake again.

--The Asahi Shimbun, Jan. 4(IHT/Asahi: January 5,2005)


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