Japan Post Ppt

8/2/2019 Japan Post Ppt

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ByRubeenaJyothi

shilpa


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In Sept., 2004, Japans Prime Minister JUNICHROKOIZUMI formally announced his plans to privatizeJapan Post, the worlds largest financial institution.

Since the date of his appointment as Postal Minister in 1992, Koizumihad been persistently exploring the viability of the privatization plansthrough a consensus approach. The opposition and the industry expertswere against the move.


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He had to convince the members of his ownparty, Employees Union as well as consumers.

To counter the argument that privatization

would result in loss of jobs and lack of access topostal services in remote areas.

Apprehension about losing the support of thepostmasters as they wielded considerableinfluence over the rural voters.


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In spite of all the above hurdles, it sought toperform a miracle by privatizing the JAPANPOST.


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Postal service may not offer any significanteconomic benefits as the loan market is alreadyovercrowded.

It would lead to fiscal crisis for the governmentas the Japan Post may not fund the nationaldebt which it has been doing till date.

Skeptical about the flow of funds into privatesector after privatization.


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It was set up in 1875. Having a network of 24,700 Post Offices across the nation, 2,80,504

employees and asset base of 386 trillion yen.

In 2004, Postal saving system has about 214 trillion yen in asssets. It acts as an important source to the government providing

indirect funding for the national development projects.

In terms of deposits, it is on par with the four largest private sectorbanks of Japan are put together.


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The operations of Japan Post were divided intothree areas:

Yucho ( Postal Savings)

Kamp (Postal Life Insurance) Yubin (Mail Delivery)

The postal savings and postal insurance accountsfor roughly 30% of each in total savings and totallife insurance equity ion Japan.

With its wide reach, it has been able to accesspeople living in remotest of villages and otherregions as against private enterprises.


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People are relatively assured about the safetyof their investments in the Japan Post as Govt.is providing guarantee on repayment of

savings and insurance payments. Govt. borrowed money from the Japan post

and invested in the infrastructural projectswhich were not financially viable. The money

was channeled into private persons in collusionwith the govt. officials which resulted in illegalfunding.


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Analysts believed that through privatizationsome level of accountability could be broughtand wasteful costs eliminated.

Koizumi believed that postal reforms were theneed of the hour to efficiently channelise thetrillions of funds deposited in the savingsschemes and thereby revive the country after

the bubble economy burst in the 1980s.


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With the privatization, the monopolistic powers ofJapan Post could be contained substantially as itwould give other private companies a chance to

compete on an equal footing.

Privatization of Japan Post is expected to lead tothe development of more sophisticated financial

and capital market as funds which are channeledinto private sector will revitalize the firms andsupport the needs of small emerging companies.


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On April 4th 2005, Koizumi announced hisplans for privatizing the Japan Post, worldslargest financial institution

The actual privatization would begin on April2nd 2007 followed by a transition period of 10years (i.e. 2017) after which full privatizationwould be achieved.

The Govt. Council on Economic and FiscalPolicy on its part have accepted the proposal ofprivatization of postal services by 2007.


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As per the privatization plan, the Japan Post would be divided

into four separate companies handling postal savings (Yucho), Life Insurance (Kampo),

Mail Delivery (Yubin) and Managing the over counter services Post Offices.

All the above four units would be owned by a holding companywhich would under Govt. control.

Within 10 years from the start of privatization in 2007, the holdingcompany would sell its shares in the savings and insurancebusiness to turn them into private business.


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US is keenly observing the privatizationprocess. The US government is not satisfiedwith the proposals and has raised questions on

whether Japan Post would dominate even afterprivatization. It called for formulation ofstandard rules applicable to all and withdrawalof privileges to new companies.


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As a first step towards addressing the problems withinhis party, he reshuffled his cabinet and appointedpeople who shared his vision of postal privatization.

First appointment in the process was that of HeizoTekenaka who earlier held financial services portfolioas the Minister of Postal Reforms and Economic Policy.

To remove misconception among the US and otherEuropean countries, the Japanese Ministry of Financeorganized road shows in New York and London.

The Law makers were likely to vote with their personal

allegiances rather than on the policy itself. But,Koizumi was persistent.


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The Bill was passed in the Lower House of theDiet on July 5th 2005. The matter was to be

discussed in the Upper House where the LDPhad a thin majority.

Koizumi was determined to get the bill passedbefore the closure of the assembly session onAugust 13th 2005.


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The Upper House voted against the Bill on August 8th 2005 by 125 to 108 votes. The above defeat lead Koizumi to dissolve the parliament and call for fresh elections. He expelled 37 members of his own party and recruited a new team of high profile

candidates to contest against them. The election was won by his party with thumping majority by securing 296 out of 480

seats, its biggest win since 1986. On October 14th 2005, the Upper House of Japan Parliament passed the Bill to privatize

the Japan Post in phases by 2007. The votes counted in favour of the bill were 134 to 100which Mr. Koizumi described as aPolitical Miracle .

Many economists in Japan opined that the passage of the bill would lead to sustainablelong-term economic recovery of the economy.


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Japan Post has to compete against the already establishedplayers such as FedEx, DHL etc., in express mail and logisticprovider segment.

Big Players being already established have economies of

scale. As of now, 70% of the market share in internationalexpress delivery market is with the Big Four viz., UPS,FedEx, DHL and TNT of Netherlands.

With enactment in Oct., 2005, Japan Post was allowed to

enter the international distribution market from April, 2006. To counter the competition in the international market,

Japan Post formed partnership with ANA.


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In another move, Japan Post also tied up with TNT,service provider of international express mail. FromApril, 2006, the two would offer a co-brandedpremium international express service to its Japanese

customers. In the tie up, Japan post will utilize TNTslogistics and IT systems and both plans to buildbusiness by banking Japan Posts large customer base.

On banking front, many experts feel that Japan Post

will face toughest competition from big player likeMitsubshi UFJ Trust and Banking corporation forcorporate services.


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As per the survey conducted by a leadingResearch Firm, Teikoko Data Bank, PostalPrivatization would benefit the economy as awhole.

Peter J.Morgan feels the benefits of aredeployment of the assets of the postalfinancial institutions would be limited

The final destination of Japanese postal services

money is yet to be decided by the Governmentof Japan.

Documents

Japan Post Ppt