Prime Minister Junichiro Koizumi said his top economic policy goal for this year is winning approval to sell Japan Post, the world's largest saving bank, allowing private companies to manage some of its US$3.4 trillion in assets.
"The private sector should be allowed to do what it does best," Koizumi said yesterday at a New Year's press conference in Tokyo. He will ask parliament this month to approve plans to split up and sell state-run postal services beginning in 2007.
Koizumi faces opposition from members of his own ruling party to plans that would shrink Japan Post, helping Mizuho Financial Group Inc and other banks compete for deposits and provide other financial services. Koizumi may have to weaken his proposals to ensure the backing of dissident lawmakers, who say the sale will trigger job losses among Japan Post's 400,000 employees, according to Minoru Morita, a political analyst.
"About a third of LDP [Liberal Democratic Party] lawmakers oppose Koizumi's selloff plan," said Morita, the head of Morita Research Institute and the author of books on public finance and domestic politics. "It may end up being privatization in name only."
Koizumi's government, which includes coalition partner New Komeito, commands a 43-seat majority in the national parliament's 480-seat lower house. By itself, the LDP has a nine-seat majority.
Strains within Koizumi's ruling LDP appeared last month when a committee endorsed proposals to force the postal service to provide savings and insurance policies at all its 25,000 branches once it is sold.
Koizumi wants to end the role of Japan Post to provide universal services to make it easier for banks and insurers to compete, including selling their products at post offices.
Japan Post, with about ?350 trillion (US$3.4 trillion) in postal savings and insurance policies, is the biggest buyer of state debt, holding about ?140 trillion of government bonds.
Koizumi, the country's longest-serving prime minister in almost two decades, also vowed in yesterday's press conference to stick to efforts to curb public spending, close down or sell off state-run companies, and maintain other policies to ensure the world's second-largest economy continues to grow.
"The economy has revived, but the conditions are still tough," Koizumi said.
The Nikkei 225 Stock Average, which rose 7.6 percent last year, gained 0.3 percent to 11,517.75 at the end of the first trading day of the year in Tokyo.
Separately, Tatsuya Ito, Japan's minister for financial services, pledged to bolster investors' confidence in the nation's financial industry to help the economy grow.
"We need to build a credible financial market to offer financial functions that meet market users' needs," Ito said at a press conference in Tokyo to mark the first day of stock trading for the year.
Ito became Japan's chief bank regulator in September after his predecessor Heizo Takenaka left to oversee preparations to sell off Japan Post.