The Diet has approved controversial legislation for privatizing the nation's deficit-ridden highway system. The need for privatization is widely recognized, yet doubts remain about the ways and means of achieving it. The fundamental question is whether the new system will really serve the purpose of privatization, given that the government will continue to hold a firm grip.
The legislation calls for reorganizing the four existing highway corporations, including the flagship Japan Highway Public Corp, into six new companies, beginning around the autumn 2005. The new companies, however, will transfer their assets (toll roads and bridges) and their debts to a quasi-public agency that will have effective control over them.
Whether the privatized companies can become efficient and effective under these circumstances is much in doubt. In particular, the plan clouds the prospects for debt cleanup, the main rationale for privatization. The combined debt of the four corporations already exceeds 40 trillion yen. If the debt continues to pile up, privatization could end up as an empty slogan.
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