Chairman's Comments on the Postal Public Corporation Law

Today, the House of Councilors passed the Law on the Postal Public Corporation and its enforcement law, both of which provide an outline of the Postal Public Corporation of Japan to be established in April 2003.Japan's Postal Savings has expanded excessively, both quantitatively and qualitatively, deviating from its original objective of "providing vehicles for small value savings" to reach its present balance of some 24 trillion yen (as of the end of March 2002). The Postal Savings also hampers revitalization of Japanese financial markets and provision of risk money to prospective businesses by keeping enormous amounts of money out of the market while enjoying privileges granted to a government-run corporation, such as guarantees on savings and tax exemptions. JBA has resolutely insisted that the management form and business scope of the Postal Savings be fundamentally reformed.Although the newly-enacted Law stipulates that the Postal Public Corporation must be subject to corporate accounting principles and on-site inspections by the Financial Services Agency, it does not clearly stipulate the Corporation's objective to be supplementing the business of the private sector. Moreover, the enforcement law has not incorporated our request to lower the upper limit of savings per depositor, which is currently set at 10 million yen.With regard to payments to government coffers by the Corporation, the Law stipulates that the Corporation pays the government only when the accumulated profits in the final year of a medium-term management plan exceeds the level needed to secure sound management. Since the Corporation is said to be undercapitalized, payment to the government is unlikely to occur for the time being. Moreover, although the government explained at the Diet session that the amount the Corporation pays to the government should be equivalent to corporate tax and the cost of government guarantees, the Law does not stipulate such.JBA resolutely demands that the Corporation realign itself with the original purpose of the Postal Savings and reduce its size and business scope, as long as the government is involved in its operation.Furthermore, JBA strongly hopes that wide and open discussions will take place concerning the future postal savings business after establishment of the Corporation. Discussions must cover the agenda for abolishing the Postal Savings or privatizing it on the condition that an equal competitive environment with private financial institutions is secured. This would adhere to the guiding principle of "letting the private sector handle areas it can."