The Economic Strategy Institute has published a new research report on the upcoming privatization of Japan Post. Dr. Robert Cohen analyzes the the details of the privatization and issues a trenchant warning highlighting the dangers to the competitive landscape in the international express delivery market.
On its face, Japan's plans to privatize Japan Post appear to be laudable. New publicly held corporations will take over key functions of the government-owned post office and its current delivery, banking and insurance interests. The resulting postal, transportation, finance and insurance operating entities will adopt private sector management practices and compete internationally. It is hoped that Japanese capital markets and its postal and transportation industries will become more efficient and profitable. Indeed, in theory, the privatization of Japan Post entails many praiseworthy steps towards ensuring Japan's economic recovery continues.
However, despite its good intentions, the government of Japan is changing the role of this state-owned monopoly without considering the potential harm to domestic and international markets. While a series of reviews are intended to insure that any new operations increase competition within the express delivery and financial industries, the structure and design of the review process, which includes a variety of ministries and government institutions, is vague and its procedures are not transparent.
If the newly reorganized Japan Post does become a significant competitor in global markets it will do so in large part due to the enormous government-won assets it possesses and the sizable monopoly profits it generates. The resulting entities will have the potential to undercut the position of domestic and international competitors that have grown their businesses in competitive markets without the benefit of government largesse.
The international community and the Japanese electorate should hold the government responsible if this privatization process ends up distorting market forces or decreases the overall competitiveness of the express delivery and financial industries.
Click Here to Download the Full Report in PDF Format