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Japan to postpone lifting

ban on holding firms

TOKYO: A bill to repeal an almost 50-year ban on holding companies is unlikely to reach the current Japanese parliament session due to political infighting, government officials said on Wednesday.

They said the three parties which make up the ruling coalition have been unable to agree on the content of the bill so parliament can discuss it before the expected end of the current session on June 19.

"It's difficult to see the bill passing the current session of parliament. There are still some things to be solved," said one government official, who declined to be identified.

An official at the powerful Keidanren (Japan Federation of Economic Organisations) business lobby said: "At best, the coalition parties will work out an outline of the bill before the end of the current session and submit it to an extraordinary session of parliament expected to start sometime in the autumn."

Holding companies are firms which control one or more companies, often through a majority stake, but do not themselves engage in a specific business.

U.S occupation forces introduced the ban on holding companies in 1947 to break up powerful conglomerates, known as "zaibatsu", which Americans said had contributed to Japan's war effort.

Big business has been demanding for years that the ban be lifted, and the pressure on the government has increased recently as many companies push for deregulation to help them streamline and compete with overseas rivals.

The Finance Ministry and big banks are also interested in repealing the ban to help reorganise the banking industry, which is saddled with massive problem loans.

In January, the Fair Trade Commission, the nation's anti-monopoly watchdog, drafted a plan to broadly relax the ban.

The government had earlier pledged to review the ban in line with Japan's deregulation efforts.

But the Social Democratic Party, the second-biggest party in the coalition, has objected to any broad relaxation of the ban, insisting it be only partially lifted, the sources said.

Resistance also comes from big labour unions which oppose repealing the ban unless a labour law is also revised, the sources said.

Kiyoharu Matsuura, an executive with Rengo, Japan's biggest labour union, said last month the union would not support a lifting of the ban without also revising a law to allow workers to directly discuss labour issues with management of the holding companies.

A government official said the ruling parties would ask the Labour Ministry to discuss the issue, separating it from the broader repeal question.

"One big hurdle to formulating the bill will be cleared if the labour issue goes to the Labour Ministry," he said.-Reuter