Japan’s Prime Minister Junichiro Koizumi has won an overwhelming victory in elections to the Lower House of the country’s Parliament. Koizumi called a snap general election last August (See IJ Website Aug. 7) following legislators’ rejection of his plan to privatize Japan Post.
The huge enterprise has about 25,000 offices across the country and an estimated $3 trillion in assets. In addition to delivering the mail, it sells all sorts of financial products. Japan Post is particularly strong in the more conservative rural areas, providing not only postal services, but also savings and insurance products. A number of conservative legislators, including many from his own Liberal Democratic Party (LDP), had opposed the privatization, as it threatened a number of entrenched interests. Over the years the system has been seen as stalwart LDP supporter and a source of votes, which have helped keep the party in power for most of the post Wold War II era.
Public broadcaster NHK and the Kyodo news agency indicated that the LDP had won 296 seats in the 480-seat Lower House. While opposition parties had tried to focus on some of Koizumi’s failures as Prime Minister, the election was essentially fought over the issue of postal reform. Koizumi’s victory means he now has a mandate to carry out his privatization plans, which could eventually free up large amounts of capital that are now locked within Japan Post, thereby stimulating the country’s stagnant economy.
Analysts also see it bringing to an end the practice of government borrowing at low cost to finance Japan’s huge debt load, which is approaching 150 percent of GDP.
Decreasing the presence of Japan Post in the insurance market could also stimulate Japan’s highly competitive private insurance sector.
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