Japanese Prime Minister Yoshihiko Noda vowed to move quickly on a bill to let the government sell shares in the massive postal savings system, aiming to raise up to $78 billion for post-disaster reconstruction, but fierce political opposition is expected to thwart any near-term action.
Analysts said the pledge appeared to be a gesture to bolster support from Noda's tiny ruling coalition partner, which is keen to derail a postal reform programme, while they were doubtful of the prospects for any contribution to raising funds. The legislative roadblocks for the share sale show just how hard it will be for the government to find assets to sell so it can minimise the tax burden for rebuilding from the March 11 earthquake.
Noda reached an agreement on Wednesday with Shizuka Kamei, head of the People's New Party (PNP), on selling up to two-thirds of state-owned Japan Post Holdings Co, which runs the country's largest savings institution as well as its postal system and an insurance arm.
The government and ruling coalition expect that they could raise some 6 trillion yen ($78 billion) from such a sale. The government held 9.6 trillion yen worth of shares in Japan Post as of the end of March 2010. A sale of two-thirds or less would require legislation to scrap a 2005 law enacted under former Prime Minister Junichiro Koizumi, as a cornerstone of his market-oriented reforms, to completely privatise Japan Post.
That law's privatisation provisions have since been put on hold, and Kamei and others want it abandoned entirely, replaced with new legislation so the government can retain at least a one-third stake and keep control over key management decisions. "I would like to make the utmost efforts to realise early enactment (of the legislation)," Noda told a parliamentary budget committee on Thursday.
The political manoeuvring had little impact on markets and was considered unlikely to bear results anytime soon, with the main opposition Liberal Democratic Party, which Koizumi led, and other opposition parties that control parliament's upper house poised to block the bill.
"The agreement was made apparently out of consideration for the PNP, although it may be nothing but a political gesture given that the postal bill is unlikely to pass," said Takahide Kiuchi, chief economist at Nomura Securities. Shinichi Ichikawa, chief market strategist at Credit Suisse Securities, said the market was not reacting to the news because "there is a big political hurdle to make that happen".
The government faces obstacles in other efforts to sell assets to fund reconstruction, which members of the ruling Democratic Party see as one of their best means of keeping unpopular tax hikes to a minimum. On Tuesday, the government and the ruling party agreed to draft another extra budget for this fiscal year worth about 12 trillion yen for post-disaster projects, and to raise taxes by 9.2 trillion yen over a 10-year period.
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