The Japanese government has completed its third divestment of Japan Post Holdings Co. shares. The government's investment share has fallen to the legally defined 33% limit, a critical milestone for the business' privatization process.

       More investor-conscious, efficient management is needed from Japan Post Holdings. It must indicate a clear plan to improve its profitability, while maintaining its business offering a universal level of products and services on a national scale.

       The biggest issue it faces is how to move away from its structural dependence on its financial arms. The ongoing privatization process will be completed once Japan Post Holdings sell off all its shares in group firms Japan Post Bank Co. and Japan Post Insurance Co. Its total ownership stake in Japan Post Insurance is already under 50%. This means more freedom for the group's financial businesses, but the current structure funneling income from the two companies to prop up the mail business needs reviewing.

       Mail volume continues to fall as society becomes increasingly digitalized. Although price rises and other plans to improve profitability have been introduced, these amount to nothing but stopgap measures. A sustainable business model must be established.

       Japan Post Holdings has sketched out a scenario in which it partners with Rakuten Group to improve its freight business, and uses measures including buyouts to establish and develop new ventures.

       But it cannot be hasty. The holding company has a history of repeating failures every time it appoints new top personnel who then rush to get results. Complacency in deals to consolidate its delivery business with parcel delivery firm Nippon Express and acquire a major Australian logistics firm led to enormous losses.

       At the Ministry of Internal Affairs and Communications, debate is underway on using private information such as postal delivery addresses for a new data business. Precisely because there is a risk of the information being used dishonestly, or it leaking, careful consideration is needed.

       To improve its income streams, Japan Post Holdings will need to mull over the reorganization of the nearly 24,000 post offices across Japan. Around 80% of Japan's post offices today are what used to be small community-based postal service offices held over from the days of the government-owned postal business, and they may not be able to avoid closure or consolidation.

       Such post offices held strong political influence as voting bases for the ruling Liberal Democratic Party (LDP). And Japan Post Holdings' managers have also avoided a thorough review of the business. If this relationship has served as a barrier to improved efficiency, it's a problematic practice as a major listed company.

       At the post office, there have been numerous scandals, including whistleblowers reporting power harassment by managers and embezzlement by employees. The work to regain trust lost in illegal product sales by Japan Post Insurance is also unfinished.

       What should be prioritized is appropriate corporate governance and structural improvement. Japan Post Holdings has a responsibility to review its outdated organizational culture, and indicate what path it will take to ensure stable growth.

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