Japan's lower house of parliament passes postal sale
(Bloomberg)
Updated: 2005-07-05 16:58

Japan's lower house of parliament on Tuesday narrowly approved legislation to split up and sell the nation's postal service, a step that Prime Minister Junichiro Koizumi has called the nation's biggest reform in a century.

The vote by lower house legislators in Tokyo was 233-228. Heizo Takenaka, the minister in charge of the sale, told reporters he would push for approval in the upper house. Koizumi last week said a rejection of the bill would be equivalent to a vote of no confidence in his government.

"It is a clear victory for Koizumi and Takenaka," said Kirby Daley, a strategist at Societe Generale Securities' Fimat unit in Tokyo. Still, "the process of negotiation within the Liberal Democratic Party has led to some concessions made by the administration."

Koizumi, who was postal minister in 1992, has said private companies rather than bureaucrats should manage Japan Post, the world's largest savings bank with 350 trillion yen ($3.1 trillion) of assets. A revised plan in April that watered down some proposals failed to quell resistance within the party, with opponents saying the post office provides services that private businesses aren't willing to offer, and that jobs would be lost.

Koizumi told reporters the vote was "very close" and that opposition to the sale within his ruling party was higher than he had expected. Within the LDP, 199 lawmakers voted for the sale and 37 opposed it, an official count showed.

The plan would split Japan Post into four units to handle mail delivery, insurance, postal savings and management of post offices. Japan Post, with 400,000 workers, is also the country's biggest holder of public debt, with about 140 trillion yen of government bonds, equivalent to a quarter of the total.

Diluted Plan

The revised plan released on April 4 calls for a gradual expansion of savings, insurance and other postal services. It also allows all post offices to keep offering postal savings and insurance services for at least a decade until the sale is completed in 2017. The sale may start as late as October 2007.

This will force lenders led by Mizuho Financial Group Inc. and insurers such as Nippon Life Insurance Co. to keep competing for business with Japan Post. An earlier plan would have eliminated the services.

The government, however, stuck to its plan to completely sell off the savings and insurance businesses, while keeping a stake in the postal delivery and branch management units.

Key stock indexes pared earlier losses after the passage of the bill, boosting optimism that Koizumi's reform plans will be carried out to sustain economic growth.

The passage came after the opposition Democratic Party of Japan gained ground on Governor Shintaro Ishihara's Liberal Democratic Party in the Tokyo Assembly election over the weekend.

Fired

Two senior vice ministers, one from the Justice Ministry and the other from the Health, Labor and Welfare Ministry, as well as two parliamentary secretaries were fired from the Cabinet for voting against the bill, the government said in a statement.

Hiroyuki Hosoda, the chief government spokesman, earlier today said the ruling party will consider severely punishing members who voted against the bill.

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