Japan's PM Wants Postal Privatization

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Prime Minister Junichiro Koizumi yesterday proposed privatizing Japan's postal service by 2017, according to the Associated Press.

The plan calls for splitting Japan Post into separate businesses for mail delivery, banking services and insurance starting in 2007. A fourth company would handle employee salaries and manage post office properties, according to the AP.

The companies would be grouped under a holding company at first, but the umbrella organization would have to sell its shares in the banking and insurance enterprises by 2017.

The prime minister's plan mandates that the new company have a duty to provide universal postal service nationwide, including in isolated areas where maintaining a presence might be unprofitable. The government would set up a $9.3 billion fund to help.

Koizumi hopes to win over opponents to the plan in his own Liberal Democratic Party so he can submit legislation to Japan's parliament this month, but he may face a tough battle. There is a risk that his plan, designed in part to subject the postal service to market discipline, will enable the revamped company to overwhelm existing domestic private banks because of its size, the AP reported.

Japan Post has savings deposits of $2.1 trillion, more than three times those of Mitsubishi Tokyo Financial Group Inc., which at $626 billion is Japan's largest private holder of deposits.

Japan's postal system has 25,000 branches while the country's seven nationwide banks combined have only 2,606 branches.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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