ECONOMIC SPOTLIGHT - TELECOM IS KEY JAPAN MINISTRY
  Japan's little-known Ministry of Posts and
  Telecommunications (MPT) has emerged as an international force
  to be reckoned with, political analysts said.
      MPT, thrust into the spotlight by trade rows with the U.S.
  And Britain, is in a position of strength due to its control of
  a lucrative industry and its ties with important politicians,
  they said.
      "The ministry is standing athwart the regulatory control of
  a key industrial sector, telecommunications and information,"
  said one diplomatic source.
      "They are a potent political force," the diplomatic source
  said.
      But MPT is finding domestic political prowess does not
  always help when it comes to trade friction diplomacy, analysts
  said.
      "The ministry was a minor ministry and its people were not
  so internationalized," said Waseda University professor Mitsuru
  Uchida. "Suddenly they're standing at the centre of the world
  community and in that sense, they're at a loss (as to) how to
  face the situation."
      Most recently the ministry has been embroiled in a row with
  London over efforts by Britain's Cable and Wireless Plc to keep
  a major stake in one of two consortia trying to compete in
  Japan's lucrative overseas telephone business.
      The ministry has favoured the merger of the two rival
  groups, arguing the market cannot support more than one
  competitor to Kokusai Denshin Denwa Co Ltd, which now
  monopolizes the business.
      It has also opposed a major management role in the planned
  merger for any non-Japanese overseas telecommunications firm on
  the grounds that no such international precedent exists.
      The ministry's stance has outraged both London, which has
  threatened to retaliate, and Washington, which says the merger
  plan is evidence of Japan's failure to honour pledges to open
  its telecommunications market.
      Washington is also angry over other ministry moves which it
  says have limited access for U.S. Firms to Japan's car
  telephone and satellite communications market.
      Much of MPT's new prominence stems from the growth of the
  sector it regulates.
      "What has been happening is an important shift in the
  economy which makes the ministry a very important place," said
  James Abegglen, head of the consulting firm Asia Advisory
  Service Inc.
      A decision to open the telecommunications industry to
  competition under a new set of laws passed in 1985 has boosted
  rather than lessened MPT's authority, analysts said.
      "With the legal framework eased, they became the de facto
  legal framework," said Bache Securities (Japan) analyst Darrell
  Whitten.
      Close links with the powerful political faction of the
  ruling Liberal Democratic Party (LDP) nurtured by former Prime
  Minister Kakuei Tanaka are another key to MPT's influence, the
  analysts said.
      "Other factions ignored MPT (in the 1970s), but the Tanaka
  faction was forward looking and ... Recognized the importance
  of MPT," Uchida said. Many former bureaucrats became members of
  the influential political group, he added.
      The ministry also has power in the financial sector due to
  the more than 100,000 billion yen worth of deposits in the
  Postal Savings System, analysts said.
      MPT has helped block Finance Ministry plans to deregulate
  interest rates on small deposits, a key element in financial
  liberalisation, since the change would remove the Postal
  Savings System's ability to offer slightly higher rates than
  banks, they said.
      Diplomatic sources, frustrated with what they see as MPT's
  obstructionist and protectionist posture, have characterized
  the ministry as feudal.
      Critics charge MPT with protecting its own turf, limiting
  competition and sheltering the former monopolies under its
  wing. Providing consumers with the best service at the lowest
  price takes a back seat to such considerations, they said.
      But many of the ministry's actions are not unlike those of
  its bureaucratic counterparts in much of the Western world
  including Britain, several analysts said.
      "The United States is really the odd man out," Abegglen said.
  "For a government to take the view that it wants to keep order
  in utilities markets is not an unusual and/or unreasonable
  view," he said.
  

