JAPAN: Japan's upper house of parliament yesterday approved the privatisation of the country's post office, handing prime minister Junichiro Koizumi the most significant victory of his administration and sending out a message that his programme of reforms is to continue.
Post office privatisation was the issue that triggered last month's snap election after the upper house voted to reject the Bill.
The subsequent landslide victory for Mr Koizumi altered the political landscape by highlighting the strength of public support for his reforms.
Yesterday's vote has cleared the way for the post office - which is a financial services giant with 24,700 branches and bank deposits of $2,200 billion (€1,828 billion), more than Citibank, HSBC and Deutsche Bank combined - to be partially privatised in stages up to 2017.
Japan Post includes a savings bank that is the world's biggest deposit-taking institution and Japan's largest life insurer.
Together they held more than $3 trillion in investment assets at the end of June.
The institution holds a quarter of total personal assets in Japan. About 85 per cent of households have postal savings accounts, and more than 60 per cent have postal life insurance.
The average Japanese lives no farther than about 1km (0.6 mile) from a post office.
In rural areas, postmaster positions are often handed down from generation to generation, and postmasters had traditionally mobilised votes for the long-ruling Liberal Democratic Party.
The privatisation is part of a broader plan by Mr Koizumi and his political allies to reduce the role of the government in Japan and replace it with a system that allows the private sector to take priority.
He is poised to announce in November a plan to reform eight government-affiliated banks by 2008, the first concrete sign that he plans to extend reforms beyond post office privatisation and further empower private-sector lenders.
It remains to be seen how much bureaucratic opposition Mr Koizumi will encounter in his drive to free parts of the country from state control, or whether his successor will be as adept a politician in implementing these reforms after he steps down as leader next year.
Japan built itself up from the ruins of the war with a system of strong centralised control overseen by an elite corps of bureaucrats, politicians and businessmen.
Mr Koizumi's privatisation drive is the first attempt to modify this entrenched system.
- (Financial Times Service; additional reporting Reuters)