Introduction

Japan implemented a far-reaching privatization policy of public enterprises in the mid-1980s. Nippon Telegraph and Telephone Public Corporation (NTTPC) was privatized in 1985 and Japan National Railways (JNR) was reorganized as a private company in 1987. Since these public enterprises provide the basic infrastructure for economic and social development, privatization of these giant public entities symbolizes a drastic alteration in the traditional thinking of how to deal with monopolies. The Japanese experiment of privatization is an acid test to determine whether these public services could be supplied efficiently by private organizations. The Japanese privatization policy indicates that privatization is essentially a political issue. Since privatization and deregulation may destroy the vested interests, how to create a favourable political climate for change and who takes the initiatives are the key elements which ensure that the difficult regulatory reforms proceed smoothly.

Japan's privatization policy has not been successful in all respects. Many unresolved questions remain. Moreover, Japan's privatization policy reflects the peculiar economic and social characteristics of the Japanese traditional setting. Japan's experience could not be directly transferable to other countries because of the differences in the development stage and traditional economic system. However, it is also true that there are various economic rationales behind the Japanese privatization policy that are common in any economy. Although Japan's privatization has not been completed, the experience of privatizing Japanese public enterprises could provide many interesting lessons to Vietnam in its attempt to reform its state-owned enterprises (SOEs).

This chapter is organized as follows. Section II explains the major reasons why Japan's public enterprises were privatized. The next sections focus on two case studies of Japan's privatization policy. Section III examines a case study of NTTPC — it discusses the main characteristics of the NTTPC privatization policy and assesses the results of privatization. Section IV considers a case study of JNR — it discusses the major features of JNR privatization practices and evaluates the economic effects on its performance after privatization. Section V outlines some of the political and economic implications of the Japanese experience and applicability for Vietnam.