A parliamentary committee approved closely watched legislation yesterday to privatize Japan's sprawling postal savings system and create the world's largest bank.
The package will go to the full chamber of the upper house of parliament, which is expected to vote on the measure on Monday.
The package is at the center of a fierce political debate pitting Prime Minister Junichiro Koizumi, a champion of the reforms, against opponents in his own Liberal Democratic Party (LDP).
Koizumi has suggested he would dissolve parliament and call general elections if the upper house rejects the proposal. The package narrowly passed the lower house last month.
Koizumi had hoped for a full-floor vote on privatization by yesterday, but that had to be delayed because of resistance from the unified opposition and some LDP members.
Opponents say they fear the reforms will reduce postal services in rural areas, lead to layoffs of postal workers and create a bank of such size that it would dwarf other private banks in Japan.
Upper house lawmaker Hirofumi Nakasone said he would vote against the reforms.
"If things carry on like this until the plenary session, I cannot help casting a `no' vote," he said.
Nakasone, the son of influential former conservative prime minister Yasuhiro Nakasone, is said to be able to bring with him several other votes, which will be critical as Koizumi himself has predicted a razor-thin margin Monday.
But Chief Cabinet Secretary Hiroyuki Hosoda said Koizumi's statements on the bills in parliament earlier this week had diluted some of the opposition.
"This is really up to the individual judgment of each lawmaker ... but I think those explanations have cleared the doubts raised previously on the bill," Hosoda said.
With the opposition against the reforms, 18 LDP defectors would be enough to reject the bill. Japanese media have reported that 12 of the 114 LDP members in the upper house have voiced their opposition to the bills.
Education Minister Nariaki Nakayama urged opponents "to reconsider [their decision] because [the] bills' failure and a Parliament dissolution would be suicidal for (the) LDP."
But LDP Secretary General Tsutomu Takebe urged party members to prepare for a general election in case the bills are voted down.
"We must be prepared for any kind of situation we may face," Takebe said.
Japan Post, to be privatized by 2017 under the bills, is in effect the world's largest bank, with ?330 trillion (US$2.9 trillion) in savings and insurance deposits.
Koizumi argues that the postal reform is needed in order to make the trillions of dollars deposited in the postal savings system open to more efficient investment, providing a jump-start to a country that is only now emerging fitfully from a lengthy slowdown triggered by the bursting of the "bubble economy" of the 1980s.
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