Japan Post proposal nearly ready–we mean it
Those planning the privatization of Japan Post talked this weekend about selling off in stages the remaining government-held stake in the two new firms that will handle postal savings and life insurance. Some were still balking at the idea of offloading the entire government stake in ten years, but an agreement appears to have been reached: all government shares are to be sold by the end of March 2017. The government will unveil its basic proposal tomorrow after presenting it to the leaders of the LDP and Shin-Komeito.
BTW, people occasionally ask me how much money we’re talking about here. The answer: a WHOLE LOT OF MONEY. There are about ¥230 trillion (US $1.9 trillion) in postal savings accounts. That’s between one-third and one-half of the personal savings in Japan, and the “bankers” that manage it are in a special department of the Ministry of Finance. Much of it has been invested in government bonds that no one else is buying, much of the remainder serves as a sort of slush fund for favored government projects, and the rest is invested elsewhere. This Q&A-style piece from The Japan Times last fall gives some of the figures and major problems (consider that I haven’t discussed the insurance money). I’m in favor of privatization, but–like bank, pension, health care, and social insurance reforms–it’s going to be painful.
Added at 19:20: PM Koizumi has announced his joy over the completion of the proposal. Something I’ve kept forgetting to mention, though it’s at the bottom of most articles about the issue: if the new computer systems aren’t ready in time, the beginning of the switchover will be delayed by up to six months.
Added on 5 April: The Ministry of Internal Affairs and Communications, naturally, was not looking forward to the loss of control–its objections are not surprising. The somewhat thornier issues involve how to ensure that mail delivery continues to isolated communities, and they’ve been around for months. There are still questions about the plan that raise California-energy-fiasco-type worries. From the
Yomiuri
:
After the two units are fully privatized, the holding company will be allowed to buy back some of the shares it sells. In addition, the outline includes a provision that allows the four postal entities to hold shares in each other after the privatization process ends in 2017.
The outline also stipulates the creation of a 1 trillion yen fund to cover the privatized entities’ potential losses in providing postal savings and life insurance services in less populated areas as part of their universal service obligations.
So they’re being privatized but only partially deregulated. From what I can tell, the opening is also made for a version of 持ち合い (mochiai: “mutual-shareholding“), a Japanese business practice that may, as that page states, “[create] a sense of shared responsibilities and obligations of each other’s business success” but also makes you wonder what the point of having four separate companies would be.
Daily linklets 5th April
This is a daily collection of links, some with commentary, to news stories and interesting blog posts. It will be updated throughout the day with a new timestamp for the updates. Scroll down for today’s other posts. Strategypage alleges China is preparing an “out-of-the-blue” attack on Taiwan, under the cover of a military exercise. But curiously for such an important piece of news there is no attribution or source. Even more curious is the alleged timing: China/Taiwan relations have been thawing somewhat in the last few weeks with the KMT’s visit and overtures on talks. Glenn Reynolds links to the piece and says:Macchiavellian plan: Give nukes to Taiwan. Have Taiwan explode one in the Pacific as a “test.” Have Taiwan announce that it got them from North Korea and Iran and will acquire more. Watch China deal with both countries…I know he’s joking. What worries me are those who…
Yep, this is the type of financial institutation that give us negative deposit rate (where you actually have to pay for the privilage of depositing money on a very short term basis).
The much vaunted Japanese private citizen savings rate is mostly tied up in Japan Post account that pays in the fractions of percentage rate. At least there is an account somewhere (unlike that Ponzi scheme known as Social Security).
A few years ago, there was a spate of stories about how an increasing number of Japanese people were putting their life savings in the bank…by storing stacks of bills in their safety-deposit boxes. One of those laugh/cry things. With the pension system as it is, people are starting to pay a lot more attention to their own money.
That’s why the possibility of mutual shareholding worries me. The whole point of that system is that it advances other business goals at the extent of making money for investors. We want half of Japan’s personal savings tied up that way? I mean, granted, it already is, as you say, but the point of reform is to improve things.