Japan's parliament approved the privatization of the country's postal service Friday, setting in motion the creation of the world's largest private bank and delivering a crucial victory in Prime Minister Junichiro Koizumi's reform program.
The upper house passed the closely watched legislation on a vote of 134 to 100, paving the way for its enactment. The powerful lower house overwhelmingly passed the package on Tuesday.
The bills are for splitting up and selling off Japan Post's delivery, savings deposit and insurance services by 2017. The system controls some 330 trillion yen (US$2.9 trillion; Ђ2.42 trillion) in savings and insurance deposits.
Koizumi has argued the change, which is the centerpiece of his reform platform, is needed to put the system's massive deposits at the disposal of private investors. Those deposits had long been used by the ruling party as a fund for wasteful, but politically useful, public works projects.
"It's a miracle in the world of politics," Koizumi told a group of reporters after the bills' passage. "The public who supported Koizumi let the miracle happen."
Heizo Takenaka, economic minister and architect of the reform proposal, told an upper house committee meeting before the full chamber vote that the government was determined to do all it can to push through reform.
Under the plan, the division of the different services of Japan Post would start in late 2007 with shares sold to the public in gradual stages over time.
Aside from insurance holdings, the system has more than 200 trillion yen (US$1.75 trillion; Ђ1.46 trillion) in savings deposits. That's more than the world's largest private bank, the recently formed Tokyo-based Mitsubishi UFJ, which has total assets of around 190 trillion (US$1.66 trillion; Ђ1.39 trillion).
U.S.-based Citigroup Inc. has US$1.55 trillion; Ђ1.29 trillion) in assets, based on the most recent company figures.
Proponents argue the reform will make more efficient use of Japan Post's massive deposits, while streamlining the country's enormous delivery service.
"It's the beginning of a new era in Japanese economy," Takenaka said.
Reform opponents, however, fear the bills will lead to job losses and would put ordinary people's savings in the hands of untrustworthy private investors.
They also argue that privatization will lead to a reduction in delivery services in sparsely populated rural areas, the AP says.
"This legislation in no way deserves to be called privatization," said Kenzo Fujisue, a main opposition Democratic Party of Japan lawmaker, shortly before the vote in the upper house.
"If you let a powerful Japan Post enter businesses such as convenience store chains and real estate, it is possible the existing businesses will be forced to close down," he said.