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Privatisation of Japan Post set to go ahead

5 December 2005


Six bills to subdivide and privatise Japan Post were approved by the Lower House on October 11 and by the Upper House on October 14. This privatisation programme is at the centre of Prime Minister Koizumi's reform initiatives: he has stressed that reforms to the postal services, along with other structural reforms, will help revitalise the Japanese economy. Shibuya Post Office, Tokyo
A post office in Tokyo

Postal services - delivery, savings and life insurance - have been managed by the government since the Meiji era in the late 19th century, and played an important role in underpinning the infrastructure of Japan's economic growth and social development. Nowadays, however, these services can also be provided by private companies and there is no particular Japan Post function that only the government is capable of fulfilling. In privatising Japan Post, the government is seeking to balance the convenience of services to the public with profitability and the generation of tax revenues in the wider national interest.

Post office counter services
Post office counter services

Postal delivery

Postal delivery

The basic policy on privatisation was originally announced by the Cabinet on September 10, 2004. This policy has three main elements. The first is to make it possible to exploit the latent potential of the main business areas of Japan Post - over-the-counter services, postal services, postal savings and postal life insurance. A high-quality service in these areas can be offered more economically when the business is freed from public-sector constraints. The second point concerns the ¥340 trillion (roughly £165bn) of funds - the largest single pool of assets in the world - in Japan's postal savings and life insurance system. Until now, vast sums have been directed into the public sector, for instance as funds for public corporations such as those involved in road and bridge construction, or for the purchase of government bonds. This allocation of funds has not always proved fruitful or produced adequate returns. Such funds will now be channelled into the private sector, thereby allowing personal savings to attract higher returns and contribute more effectively to revitalising the economy. Third, the transfer of Japan Post's huge workforce - 270,000 people, constituting 30 per cent of government employees - will contribute significantly to the Koizumi administration's goal of realising "smaller government".

The privatisation process will work in three stages:
  • Currently, Japan Post is wholly owned by the government, and is divided into two broad areas: postal services and financial services (postal savings and insurance).
  • In October 2007, Japan Post will be privatised. Four independent companies will be established, each to administer one of Japan Post's four functions (over-the-counter services network, postal services, postal savings and postal life insurance). Each company will be a 100% subsidiary of a government-owned holding company. A separate entity will be set up to hold pre-privatisation savings and insurance assets.

  • By October 2017, the government will have disposed of its stakes in the savings and insurance operations, which will be independent private companies. However, the government will retain a minimum 1/3 stake in the holding company which will own the postal delivery and over-the-counter services firms.
    Images © Japan Post



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