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Top>Opinion>Does the Postal Privatization Really Need Revision?


Shuya Nomura

Shuya Nomura [Profile]

Does the Postal Privatization Really Need Revision?

Shuya Nomura
Professor of Commercial Law, Chuo Law School, Chuo University, and Visiting Attorney, Mori Hamada & Matsumoto

Do citizens support the revision?

The Hatoyama administration is making steady progress in revising the postal privatization, following the intention of one coalition partner, The People's New Party. First, they shelved the listing of the postal companies, the goal provided in the postal privatization law, in the extraordinary Diet session held last fall after clearing away the existing management without holding a meeting of the nomination committee, which is an unusual omission. The upcoming ordinary Diet session is expected to pass a bill fundamentally revising the postal privatization.

I recall that the postal privatization was the only issue in the Koizumi administration's last Lower House election. People were undeniably swayed by the passion of the then Prime Minister Koizumi as well as his exciting, theatrical politics, and the majority of voters certainly supported the privatization, at least at that moment. I suspect that Hatoyama's explanation has been quite insufficient to reject the will of the people.

The Democratic Party apparently won the Lower House election last summer with the revision of the postal privatization as a pillar in the administration platform, assuming a coalition with The People's New Party. Their manifesto, however, involved a wide variety of policy pledges, with different electorates supporting different pledges. Their win does not necessarily indicate that there is overwhelming support for the revision from the vast majority of the people, as is evident in the seats lost by The People's New Party, which ranked the revision as their first priority.

The true motive behind the revision

Of course, the postal privatization has undoubtedly caused some disruptions. Small outsourced post offices temporarily decreased, primarily in under-populated areas. Many customers have claimed that the ease of use at the post office deteriorated due to reception services being divided into four sections. Furthermore, people have complained that they have difficulty using financial services at home because postal carriers can no longer deal with savings and other services. These issues are urgent, but the solution does not require giving up the listing or full privatization of the two financial companies: the Japan Post Bank and Japan Post Insurance. Some of the countermeasures implemented have already put the brakes on the temporary post office closure. The rest of the dissatisfaction will also be readily overcome by means of business alliances with convenience stores, agency agreements among postal companies, and vehicles equipped for use as mobile post offices.

Why, then, is the government still going to revise the privatization from scratch?

The postal privatization has enough momentum to fundamentally transform the postal business. The so-called postal family companies-which offer executive positions to retired postal officials resulting in rampant shady transactions-have been thoroughly restructured for the purpose of successfully listing the holding company Japan Post Holdings. Drastic measures have been initiated to solve the problem of expensive rent for offices. Strict Financial Services Agency (FSA) supervision over the two financial companies shed light on their appropriations and other fraudulent activities-which were extremely frequent as compared with private financial institutions-leading to enhanced compliance by introducing surveillance cameras, for example. Moreover, the remaining two group companies-the Japan Post Service and Japan Post Network-have their revenue managed more severely than before to allow for future separation from the two financial companies. Part of this process involves revenue goals that have been set for each office and a newly established employee evaluation system. These reforms are very unpopular with postmasters, however, who are now under close scrutiny, and with the postal family, who have been deprived of their vested interests.

If they succeed in preventing the listing of the holding company and its two financial subsidiaries, they will be released from the strict control. If laws dedicated to the two financial companies are enacted to bring the companies under the oversight of the Ministry of Internal Affairs and Communications, they will even be liberated from the supervision of the FSA. If they can continue exploiting the revenues of the most profitable two financial companies, they will not be forced to make a profit from the postal business. If these are the true motives for the revision of the postal privatization, it is a reactionary revision and not in the public interest.

Give the people a convincing explanation

The government said that they were going to position the two financial companies as organizations for people everywhere in the country to receive financial services equally. There is not a nation in the world, however, that requires private financial institutions to offer such universal services. If financial institutions facing fierce competition are compelled to do so, they cannot survive unless they are brought back under direct governmental control or receive extremely preferential treatment such as consumption tax exemption for internal transactions. These measures, however, hinder fair competition with private financial institutions. To avoid putting pressure on private businesses, these measures must be implemented on the condition of significant restrictions on the operations of the two financial companies.

If the Japan Post Bank remains banned from loan services as a result, their fund management will invariably continue to rely disproportionately on governmental and investment-and-loan bonds, blocking the flow of deposit funds to private businesses. This also means that the precious funds deposited by citizens will be exposed to financial risks.

Do we the citizens have to pay such a huge price to assist in reviving the postal family and the virtual descendents of postmasters from the previous so-called special post offices? The ordinary Diet session will start soon, and the Hatoyama administration must give a convincing explanation to the people.

Shuya Nomura
Professor of Commercial Law, Chuo Law School, Chuo University, and Visiting Attorney, Mori Hamada & Matsumoto
The author was born in 1962 in Hakodate, Hokkaido. He graduated from the Doctoral Program in the Graduate School of Law at Chuo University. He was a full-time lecturer in the Department of Law at Seinan-Gakuin University from 1989; Associate Professor for the same institution from 1992; and Professor on the Faculty of Law at Chuo University from 1998 before assuming his current position in 2004. Professor Nomura's current responsibilities include serving as a member of the Postal Privatization Committee; as chief of the Compliance Inspection Office at the Financial Services Agency; as a member of the Financial System Council; and as an examiner for the new National Bar Examination.