Sat, Oct 15, 2005 - Page 5 News List

Upper-house body approves Japan Post's privatization

AP , TOKYO

A committee of Japan's upper house of parliament approved privatization of the postal service yesterday, sending the package to the full chamber for a vote expected to deliver a crucial victory for Prime Minister Junichiro Koizumi's reform plans.

The bills would split up and sell off Japan Post's delivery, savings deposit and insurance services by 2017, creating the world's largest private bank.

Koizumi has argued that the change is needed to put the system's massive amount of deposits at the disposal of private investors.

The powerful lower house of parliament approved the package on Tuesday, and the upper house was expected to follow suit later yesterday.

Even without upper house support, the ruling coalition's two-thirds majority in the lower house means it can enact bills on its own.

The upper house, which Koizumi's Liberal Democratic Party (LDP) dominates only with the help of a coalition partner, rejected the package in August, prompting the prime minister to call snap lower-house elections that he billed as a referendum on postal reform.

But the LDP's landslide victory in the Sept. 11 elections has convinced some former opponents to support the project.

"Japanese voters have shown in the last elections their deep understanding toward Prime Minister Koizumi who says pos-tal reform is the core of his reform program," Tsutomu Takebe, secretary general of the LDP, said before the vote.

Heizo Takenaka, economics minister and architect of the reform proposal, told the committee after its approval of privatization that the government was determined to do all it can to push through reform.

"We will make our utmost efforts, respecting your strong will," Takenaka said.

The legislation would start the division of Japan Post in late 2007.

Proponents argue the reform would make more efficient use of Japan Post's ?330 trillion (US$3 trillion) in savings and insurance deposits, while streamlining the country's enormous delivery service.

Reform opponents fear the bills will lead to job losses and would put ordinary people's savings in the hands of untrustworthy private investors.

They also argue that privatization will lead to a reduction in delivery services in sparsely populated rural areas.

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