Deregulation

Japan Goes Postal

Freeing the mail

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Japan's post office has been run by the government for 130 years, but not for much longer. Last fall Japan Post began the first stage of its 10-year privatization plan by officially splitting into four separate businesses: Japan Post Service Co., Japan Post Network Co., Japan Post Bank Co., and Japan Post Insurance Co. The privatization is the result of reforms instituted in 2005 by then-Prime Minister Junichiro Koizumi.

In addition to delivering mail, Japan Post provides life insurance and savings depository services. Japan Post Insurance wants to start selling other types of insurance, such as medical coverage, and Japan Post Bank wants to offer mortgage loans and credit cards. The bank now becomes the world's second-largest bank, with ¥188 trillion ($1.6 trillion) in deposits. Interest rates on these savings accounts have been notoriously low, and the privatization is expected to encourage people to turn to higher-return investments such as stocks. Mail delivery will be handled by Japan Post Service, while Japan Post Network will manage the organization's 24,000-plus post offices and its real estate.

The four spinoffs will initially be held by a government-controlled holding company, Japan Post Holdings Co. The bank and insurance companies will go public as early as 2009 or 2010. By October 2017, all shares of the companies will be traded on the market. The government will gradually sell off two-thirds of the shares of Japan Post Holdings through 2017.

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