TOKYO: Japanese Prime Minister Junichiro Koizumi vowed yesterday to forge ahead with one of his most controversial reforms, postal services privatisation, as his re-election as ruling party chief this week appeared assured.
Koizumi, under fire from rivals for his tight fiscal stance, also touted data showing corporate spending was recovering as proof that the private sector could grow without government help.
Koizumi has made privatising postal services by April 2007 a key plank of his policy platform despite strong opposition from heavyweights in his ruling Liberal Democratic Party (LDP) who say it would rob rural areas of an important service.
“This is a major reform which would reduce the future burden on taxpayers the earlier it is done,” a confident-sounding Koizumi told business leaders.
He added that his main group of economic advisers, the Council on Economic and Fiscal Policy, would hammer out legislation for postal privatisation by late next year.
Koizumi – who sprang to power in April 2001 promising to rein in Japan's bulging debt and fix its ailing banks – is expected to defeat three rivals in Saturday's LDP election.
That would allow him to stay on as prime minister and lead the party into a general election many expect in November.
Attention is already turning to the fate of Economics and Financial Services Minister Heizo Takenaka, an architect of many of Koizumi's economic reforms who has come under fire from LDP critics as a cold-hearted academic who was crushing the economy.
Speculation is rife that Koizumi has promised to deprive Takenaka, a former academic, of at least one of his portfolios in return for support from anti-reform power brokers in the LDP.
“It's looking very unlikely that Takenaka will retain both of his posts, though he should be able to stay in the cabinet as a symbol of Koizumi's reform agenda ahead of a general election,” said Chotaro Morita, a senior economist at Deutsche Securities.
Koizumi played it coy yesterday, telling private TV broadcaster TBS only: “I won't tell anyone until the party election is over.”
Depriving Takenaka of the banking post could dent Koizumi's own reform credentials ahead of a general election.
LDP Secretary General Taku Yamasaki said yesterday that “the time is getting ripe” for an election for parliament's powerful Lower House. No poll need be held until mid-2004.
But Koizumi probably wants to take advantage of his robust popularity, an emerging economic recovery and rising share prices by holding a snap election before the end of the year.
“In terms of the mood, there is such a trend,” Yamasaki told reporters when asked if Koizumi would call a November election.
Koizumi told the business leaders that the private sector was at last showing signs it could keep generating growth.
“The government is keeping its general spending below the previous year's level and yet we are seeing signs of increased activity in the private sector,” he said, noting improved capital investment by firms.
Japan's economy grew at an annualised rate of 3.9% in April-June quarter, beating US growth for the same period of 3.1% thanks to strong capital spending and exports. – Reuters