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Postal, life insurance, other firms to stay intact

TOKYO - The government is considering keeping the privatized postal savings, life insurance and mail companies intact as nationwide firms since dividing them into regional units, as some people have proposed, would hurt their efficiency and inconvenience customers, government sources said.

The government is also mulling the possibility of retaining a controlling stake in the privatized mail service company, government sources said on Saturday.

Privatization of Japan Post, which runs the three postal services, is scheduled for April 2007. It has already been decided to set up private companies for each service as well as strip 270,000 postal workers of their status as public employees after privatization.

The question of whether to split the privatized operations into several local units is one of the last major issues yet to be determined.

If the postal savings business is divided by region, however, it could be difficult for people in one part of the country to open an account at a post office in another, said sources familiar with the matter.

Customers would also face cumbersome procedures for buying financial products handled at other regional units, or they would need to pay a fee for making withdrawals from a post office belonging to a different unit.

In the case of the life insurance business, dividing the operations might make it harder for a regional company to collect enough premiums, increasing the risk that the unit would fail to pay benefits.

Efficiency in managing savings and insurance assets might drop sharply because the level of assets at each regional unit would be much lower than if the services were respectively handled by a single entity operating throughout the country.

(Asia Pulse/Nikkei)

Jul 27, 2004

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