09/09 Shares may pay for recovery / Postal reforms key to raising 7 tril. yen for disaster reconstruction

The Yomiuri Shimbun

The government and the ruling Democratic Party of Japan are considering allocating profits from sales of Japan Post Holdings Co. shares, which are wholly held by the state, to fund reconstruction from the March 11 disaster, according to sources.

The government has estimated profits from selling the shares at about 7 trillion yen, based on the stocks' book value, which would cover a significant amount of the 16.2 trillion yen required over the next five years for disaster reconstruction.

However, the passage of postal reform bills, which have stalled in the Diet due to resistance from opposition parties, must come before selling Japan Post shares. The government intends to request dialogue with the opposition and may revise the bills if necessary, the sources said.

Under the DPJ, a law to freeze sales of Japan Post shares was enacted in 2009 to prevent a Liberal Democratic Party push for full privatization of the postal service.

The postal reform bills currently being promoted by the DPJ would require the government to own more than one-third of Japan Post shares. If legislation is passed into law, the government would be able to sell about 66 percent of those shares.

"If profits from selling Japan Post shares can be used for reconstruction, we can keep tax increases to a minimum. We would likely be able to win the understanding of the opposition bloc," one DPJ senior official said.

Some members of the opposition camp support the idea.

"If Japan Post shares can be sold, a considerable amount of funds would be secured," said Keiichi Ishii, chairman of the New Komeito policy research council.

However, both the LDP and Komeito have opposed the postal reform bills, arguing government ownership of more than one-third of Japan Post shares allows the government to maintain influence over the postal service and weigh on rival private companies.

It remains unknown whether the postal reform bills will be passed in the Diet.

Meanwhile, the government is planning to issue reconstruction bonds of more than 16 trillion yen to finance disaster reconstruction efforts; profits from the sale of Japan Post shares could be used for reimbursement of those bonds.

Apparently, the government would not be required to sell its Japan Post shares immediately, and doing so within a time frame of several years would suffice.

Because state assets would be tapped to fund reconstruction, the plan may face criticism that the financial burden from the move would be passed on to future generations.

(Sep. 9, 2011)