The privatisation of Japan's post office, the biggest financial institution in the world, threatens to ?unleash a monster? that will compete unfairly against private businesses in banking, insurance and postal delivery services, the American Chamber of Commerce in Japan said on Monday.
Ending the public status of the post office, which employs 280,000 staff and controls assets of about Y400,000bn ($3,600bn, ?3,000bn, ?2,000bn), is the central plank of market-led reforms being pushed by Junichiro Koizumi, prime minister, in what is expected to be his final two years of office.
The privatisation, a priority for Mr Koizumi for 20 years, is due to take place over a decade from April 2007 in a process that could profoundly influence Japan's financial system.
US business and some domestic banks, insurers and parcel companies are concerned that, during the transition period, the post office will be allowed to keep privileges associated with a state monopoly. At the same time, they fear, it may be able to invade areas of business previously beyond its remit, such as engaging in commercial lending and offering a wider range of insurance products.
The ACCJ voiced grave concerns about the way the process was being handled, saying it was worried that a quasi-privatised post office would be more lightly regulated than its competitors and be allowed to maintain unfair privileges.
Andrew Conrad, vice-chairman of the ACCJ's privatisation taskforce, said a partially privatised body could steamroller competitors if, as proposed, it were allowed to enter new types of business.
?Until the post office is regulated by the same regulator and abides by the same laws as the rest of the industry, then it should not be allowed to expand at all,? he said.
?From one second past midnight [April 1 2007], we're concerned what the post office is going to be doing. We want laws in place to ensure that they're not allowed to act like a privatised company when they're not.?
One concern is that the post office will be asked to continue its universal-service mandate which ensures, for example, that letters to remote areas of Japan are delivered at the same price as letters within Tokyo.
The ACCJ says that, in return for such an obligation, the post office will be offered privileges, such as continued monopoly status.
It wants the post office to be relieved of its universal-service requirement. But politicians are unlikely to accept such a policy, given the public anxiety that a privatised post office will not offer services in remote areas now served by a comprehensive network of 24,000 branches.
The ACCJ also wants the savings and insurance units of the post office to be regulated by the Financial Services Agency, not the ministry of public management, the current regulator, which it says is less strict than the FSA.
Mr Conrad said it was ludicrous to allow a third of the financial services industry in the world's second-biggest economy to operate under a different set of rules from its competitors.
US business, as well as many advocates of post office privatisation in Japan, is also demanding that the post office be split into four separate companies covering mail delivery, savings, banking and over-the-counter services.
These businesses should not be allowed to cross-subsidise each other, the ACCJ says.