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TOKYO, Oct 30 (Reuters) - Prime Minister Yukio Hatoyama’s cabinet approved a bill on Friday to freeze sales of shares in state-owned Japan Post’s financial units, in a retreat by the new government from a high-profile pro-market reform.
Hatoyama’s administration has pledged to shift gears from what it sees as excessive market-friendly changes pushed by the popular Junichiro Koizumi, who made privatising the giant postal system his signature policy as prime minister from 2001 to 2006.
Under a previous plan aimed at more efficient investment of the 330 trillion yen ($3.6 trillion) in assets held by Japan Post’s banking and insurance arms, the mail carrier was to float those units on the stock exchange as early as next year and sell the rest of them by 2017.
The government is expected to submit the bill freezing the share sales to the current session of parliament, while working out broader legislation on the future of the postal system, Jiji news agency reported.
Japan Post named a former senior finance bureaucrat as its new president this week after the cabinet agreed last week to have the postal network provide uniform services nationwide.
The appointment was criticised by Japanese media as counter to the ruling Democratic Party’s pledge to end the practice of “amakudari”, or “descent from heaven” in which former officials parachute into cushy jobs after retirement.
The Democrats promised to revise the privatisation plan in their campaign platform ahead of the Aug. 30 election in which they trounced the long-dominant Liberal Democratic Party on a platform that promised to “put the people’s livelihoods first”.
But many analysts have criticised the change in course.
“This will be a symbol of how Japanese finance and economic policies as a whole are regressing from reform,” said Kazuo Ishikawa, a senior research fellow at thinktank Tokyo Foundation.
Ensuring nationwide services would be a positive step, but investors may worry that Japan Post will invest funds in often wasteful projects through quasi-public corporations, Ishikawa said. “Doubts will grow that this is a return back to government-ran banking,” he said.
Japan Post’s banking and insurance arms used to account for as much as one-third of Japan’s total financial assets in the mid-1990s, but has fallen to around one-fifth, experts say.
“You open it (Japan Post) up to pork barrel politics in one way or another, but it is not the mammoth feeding trough it once was,” said Jesper Koll, CEO of investment consultancy Tantallon Research Japan.
A huge chunk of Japan Post’s investments, including about 80 percent of the banking units’ assets, are in Japanese government bonds and the government’s revision plan -- which has yet to be fleshed out -- has raised concerns over a tacit agreement that Japan Post to buy even more bonds.
Finance Minister Hirohisa Fujii said this week that Japan Post should lower its investment in government bonds and lend funds to smaller firms.
But he added the shift would take time and experts foresee no major change in how Japan Post invests in the near future. ($1=90.72 Yen) (Additional reporting by Linda Sieg)
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