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Controversial Plan to Reform Japan's Postal System - 2001-08-29

Japanese Prime Minister Junichiro Koizumi has vowed to reinvigorate Japan's troubled economy, and privatizing the country's sprawling postal system is at the core of his reform plans. The plan is highly controversial.

A central plank of Prime Minister Junichiro Koizumi's reform plan calls for the privatization of Japan's vast postal network of about 24,000 offices. They not only distribute mail but also act as a giant bank and insurance company.

In fact, Japan's postal system is actually the world's largest bank, with about $3 trillion on deposit. It controls one-third of all individual financial assets in this country.

Mr. Koizumi has set up a task force to study privatizing the system. Sigefumi Matsuzawa is a lawmaker who sits on that panel. He says privatization will remake post offices into community centers where people can relax, drink coffee or tea and write letters. He adds the current law restricts post office activities, but privatization would change that.

Originally set up about 150 years ago, the postal system served as the chief point of contact with the outside world for millions of people in rural areas. A lack of funds and a limited transportation system meant that Tokyo had to rely on community leaders to run the offices. These citizens often built post offices on their own property in exchange for the honor of civil service appointments.

Currently, the system employs about 240,000 people. Many are staunchly against privatization, out of fear of massive job losses.

Kiyoshi Teitou is a leader of one of the labor unions representing postal workers. He warns that privatization could also spur higher mail delivery costs and the shutting down of many rural post offices which serve few customers. He says there is a risk of losing universal service. He adds that privatization could also create longer hours for workers.

But many taxpayers resent the postal system's vast budget of more than $150 billion.

Mr. Matsuzawa, who sits on the privatization task force, says that the present set-up also runs contrary to the free market system of other Japanese industries. He says that Japan is a developed nation with a free economy, but the postal system remains a government monopoly, hindering competition. But he adds he believes that privatization will ultimately help the economy by circulating more money to private companies.

Scandal has also damaged the postal system's reputation. Funds on deposit have been used to finance numerous public works projects, many of them unprofitable. It is possible that tax revenue will be used to cover these losses. A vote peddling scandal involving postal employees has also made the headlines recently.

Privatization supporters say these events show that reform is urgently needed.

But not everyone is convinced. Many old-guard politicians from Mr. Koizumi's LDP party are reluctant to make changes. For decades, postal workers have been loyal party supporters and community activists for the LDP, particularly in rural areas.

There is currently no timetable for Mr. Koizumi's privatization plan, but the issue is on the agenda for the upcoming session of Parliament.

In the meantime, the Ministry of Posts plans to begin the deregulation process by turning the system into a self-supporting public corporation with greater accountability. The prime minister hopes that this will mark an important step towards his privatization goal.