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     Feb 15, 2005
Two firms to form core bases for privatization

TOKYO - The government is proposing the establishment in fiscal 2006 of two firms that will serve as the core bases for privatization of the postal savings and life insurance services, The Nihon Keizai Shimbun has learned.

Under existing basic guidelines for the privatization process beginning April 2007, Japan Post will be split into four entities that will each handle different functions: postal savings, postal life insurance, mail delivery and post office management. These guidelines also call for the full-fledged privatization of the postal savings and life insurance units by 2017.

The government intends to include the contents of its latest proposals - which are based on the existing guidelines - in postal privatization-related bills scheduled for submission to the current Diet session. Under the government's plan, Japan Post would set up two wholly owned stock companies by the end of fiscal 2006 to prepare for the full-fledged privatization of the postal savings and life insurance units. A number of employees in the postal savings and life insurance operations would be transferred from Japan Post to the two companies and tasked with establishing the necessary structures for the provision of services and business management in fiscal 2007.

The senior officials slated to head the two new companies would be hand-picked prior to the privatization process. This would enable the privatized postal savings and life insurance entities to launch operations and pursue new business plans immediately after creation. In a bid to realize full-fledged privatization of the two units, the government will also require the holding company that succeeds Japan Post to start selling its stock in the postal savings and life insurance companies in 2007. The holding company would be mandated by law to sell the shares to the market within 10 years, removing itself from any involvement in the operations.

The government also intends to nullify special provisions in the Banking Law and Insurance Business Law by 2017. Although the government will pursue the privatization of the holding company, it will retain a capital stake of more than one-third and guarantee that mail services are available nationwide. The government is currently working on plans to establish a wholly owned Japan Post entity to serve as the base for the holding company as early as fiscal 2005.

(Asia Pulse/Nikkei)



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