The Posts and Telecommunications Ministry repeatedly stressed the need June 11 to keep postal, postal savings and insurance services in the hands of the state, saying that privatization would strip rural, unprofitable areas of their basic postal services.

During a meeting of the Administrative Reform Council, the ministry said privatization of the three services would make it impossible for people living in remote areas to be adequately served because some villages which do not have any private banks or insurance companies would be deserted, according to officials of the panel's secretariat.

Posts officials cited an estimate by the ministry's advisory panel that privatization of the three postal services would create a combined deficit of 660 billion yen. The ministry released the results of the estimates June 10 -- one day before Prime Minister Ryutaro Hashimoto's blue-ribbon panel on administrative reform was due to meet.

The ministry also opposes a plan to take the three postal services out of the ministry's jurisdiction and create a separate corporation-like body similar to Britain's executive agencies. One member of the panel said it is "natural" that the business environment will be worse off if the three postal services are privatized because taxes would be imposed on the services' profits. Under the present system, no tax is imposed on the three services' profits.

Other panel members asked why the ministry is expressing such strong opposition to privatization of the services, despite being well aware that privatization of telephone services has worked well. The ministry officials replied that telephone and postal services are different because the postal service is not a rapidly-growing market like telephone services.