Govenrment and Business Environment Case Study

Japan Post: Privatisation Woes

OR

Abstract:
In September 2004, Japanese Prime Minister Junichiro Koizumi formally announced his plans to privatise Japan Post, the world's largest financial institution which manages 330 trillion yen ($3 trillion) in savings and insurance deposits. Privatisation of Japan Post is said to be the most important reform measure, which Koizumi had long planned to undertake when he was appointed the Postal Minister in 1992. Since then, he had been persistently exploring the viability of the privatisation plans through the consensual approach among various groups, viz, a section of people within the party and opposition and industry experts who are against privatising Japan Post. However, Koizumi's privatisation plans encountered hurdles as many argued that privatisation would result in loss of jobs. Experts believed that it might not give any significant economic benefits as they think that the loan market is already overcrowded and many Japanese companies, which have rich cash flows, are not in need of such huge investments. However, Koizumi was persistent with his plans and on August 8 th 2005, he tabled the bill of postal privatisation before the Parliament. The Upper House voted down the bill by 125 to 108 votes. This led Koizumi to dissolve the Parliament and called for fresh elections. When the results were declared, Koizumi's LDP (Liberal Democratic Party) secured 296 seats out of a total of 480 seats and on October 14 th 2005, the Upper House of Japan's Parliament passed the bill to privatise the Japan Post in phases by 2007, the bill was approved by 134 to 100.

Pedagogical Objectives:

• To discuss the problems faced by Prime Minister Junichiro Koizumi in privatizing Japan Post
• To discuss the effect of privatization on the Japanese economy.

Keywords : Japan Post, Koizumi, Japanese economy, United States of America,Fiscal Policy Case Study, LDP (Liberal Democratic Party), Public debt, US Treasury Bonds, Fiscal deficit, Post Master, Privatisation, Postal reforms, Financial services