Japan moves to disband public sector


Koizumi wants to sell or close down most state companies, and slash their budget 1 trillion yen next fiscal year

By staff and wire reports

TOKYO, Japan - Japan has cleared a plan to reform seven of its state-backed corporations as the country's leader seeks to shrink the government.

Two panels charged with overseeing reforms decided on Tuesday to privatize the vast Japan Highway Public Corp. by fiscal 2005.

They also settled on privatizing three other road-related companies: the Metropolitan Expressway Public Corp., the Hanshin Expressway Public Corp. and the Honshu-Shikoku Bridge Authority.

The groups also decided that the Housing Loan Corp., the Urban Development Corp. and the National Oil Corp. should be shut down, with their roles being taken over by the private sector.

The move comes as Koizumi, who rose to power in April backed by support for his reform agenda, seeks to streamline Japan's public corporations.

However his efforts to rein in profligate spending and do away with pork-barrel politics have pitted him against the old guard in his own ruling Liberal Democratic Party, which has sought to water down his reform proposals.

A privatization push

Prime Minister Junichiro Koizumi has kept his sights on selling off as many as 70 of Japan's 77 state corporations.

Chief Cabinet Secretary Yasuo Fukuda called Tuesday's plan a "breakthrough," but cautioned that Japan still has to review the remaining 156 government-affiliated agencies by the end of the year.

Koizumi had already proposed scaling back these seven companies' roles, including privatizing the highway company and rolling it together with the other entities.

He has also advocated scrapping the Housing Loan Corp., which performs mortgage functions that private industry can also handle.

Though the plan sets out the final goals for the seven companies, many of the details have yet to be settled.

The Nihon Keizai Shimbun business daily notes that the wording on dismantling the National Oil Corp. is ambiguous.

There is a dispute between Taro Aso, policy chief of the Liberal Democratic Party, who favors forming a separate private company out of good assets, and LDP General Council Chairman Mitsuo Horiuchi, who favors outright liquidation of the whole company.

"What should be liquidated will be liquidated, and what should be sold will be sold," the reform plan states.

On Tuesday Koizumi also reiterated calls for his ministers to slash spending on public corporations by 1 trillion yen ($8.3 billion) next fiscal year.