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Privatizing postal system spells system changes

Date Posted: 2007-01-12

Hundreds of small post offices across Japan will be shuttered this year as the Japan Postal Service Public Corporation begins a transition to private company.

The impact on Okinawa remains to be seen, as the southernmost prefecture has few of the small post offices of the type earmarked for closing. Switching the Japan Postal System to a private entity becomes effective October 1st as part of the Trinity Reform Plan instituted by the Prime Minister Junichiro Koizumi to curb rampant government spending. The Trinity Plan mandates privatizing some government agencies, while switching responsibility for many other government programs from the national level down to prefectures and local governments.

The Japan Postal Service projects 4,400 small post offices will close. “Not all of these will actually close,” says a Japan Postal Service executive. “Some will continue after temporary closures, after stopping for a while to do paperwork. Then they will be private business service areas.”

The process of transforming Japan Postal Service Public Corporation to a private agency is complicated, largely because of realigning the labor force and closing or scaling back small or non-profitable postal stations. An official says some Okinawa small stations could close, mainly in the northern part of Okinawa or in outer islands, but declined to be specific.

Already, 300 small post offices are in the closing process across Japan. Japan Postal System research suggests143 of the small post offices may close only temporarily. “It depends on the conditions” said one official. Confusing the issue is how the postal system’s research says only a small number of small post offices should be closed, yet the larger number announced.

One explanation is that new private post offices will also engage in private banking business services too. Some people didn’t want that, but the services were agreed to by the central government as part of the takeover deal. The new services will put the private postal system in competition with existing banking businesses.

There are currently more than 24,600 post offices in Japan. The postal service says it still believes the number of small post offices to be closed will increase in the next year or so, as the new contractors discover operating costs to be higher, and revenues less than forecast.

Most of the small post offices identified for closing are in Akita, Shimone, Kumamoto, Kagoshima, Nagasaki and Miyazaki Prefectures. Okinawa’s few existing small post offices are already organized by private contractors. Those contractors have not indicated any service changes.

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