Junichiro Koizumi

Koizumi hopes to gain LDP approval for the plan, but given the stiff objection to the privatization proposal seen so far, a political showdown appears inevitable.

Under the plan, the state-run postal services would be split into four entities, each separately dealing with mail delivery, postal savings, postal insurance and over-the-counter services.

A government-owned holding company also would be established in April 2007 to hold the shares of each of the four companies.

Whether and how the holding company sells off its shares in the firms handling postal savings and postal insurance had been the focus of heated debate among ministers.

The matter was left for Koizumi to decide, and the prime minister deemed that all of the shares of the two firms should be sold off by 2017, the end of a 10-year transition period.

Many LDP members have argued that the government needs to maintain control over the two companies, fearing full privatization and the introduction of market principles could lead to a drastic reduction in loss-making postal offices, particularly in rural areas.

The Japan Times Weekly: April 9, 2005
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