International Postal Update — April 2010

POSTS ADAPT BY EMBRACING NON-POSTAL PURSUITS

TAX EQUALIZATION FOR DEUTSCHE POST

Deutsche Post lost its fight to keep its exemption from Germany’s value-added tax (VAT). The upper house of parliament approved legislation scrapping the exemption March 26. Beginning in July 2010, DP must begin paying VAT. German media had claimed that the tax break grants DP an advantage of up to 500 million euros ($679 million) over its competitors.

NON-POSTAL ACTIVITIES TO PROLIFERATE IN RUSSIA?

Vneshekonombank (VEB), a large state-owned bank, is looking to create a new postal bank. VEB is seeking private partners for a partnership between Russian Post and the troubled Svyaz-Bank, which nearly collapsed during the recent global economic downturn. The deal could be worth between $5 billion and $10 billion, depending on how many of Russian Post’s 41,000 outlets would begin offering banking services. VEB owns 99.47 percent of Svyaz-Bank.

Russian Post also plans to start selling low-cost mobile phones at its branches. It already sells mobile phone contracts.

POS MALAYSIA MAKING MAJOR INVESTMENTS

Pos Malaysia announced that it would invest RM 250 million ($75 million) in a parcel and mail hub as part of its effort to raise its level of automation from 20 percent to 70 percent. It also revealed plans to offer financial services on behalf of two Malaysian banks. Both announcements were made at a ceremony to commemorate a newly signed statement of cooperation between Pos Malaysia and Egypt Post.

INDIA POST INCREASING INVOLVEMENT IN FINANCIAL SERVICES

The Indian government has announced plans to launch the Post Bank of India. Officials seem intent on using the Post to expand the availability of banking services in rural areas.

Meanwhile, the Central Bank of India is negotiating with India Post about enlisting postmen as business correspondents (effectively banking agents). In this capacity, postmen would be allowed to accept cash deposits and collect payments. The State Bank of India has already “covered about 5,200 post offices as part of its plan to adopt them as outlets” for its banking correspondent model.

JAPAN POST REFORM REVERSAL

The Japanese government adopted plans to halt the privatization of Japan Post. Minister of Financial Services and Postal Reform Shizuka Kamei secured support for the plans March 30. Critics have called Kamei’s policy a “renationalization” of Japan Post.

Japan Post will now be permitted to take deposits of up to 20 million yen per customer — double the previous limit. JP will also be allowed to raise its life-insurance coverage limit by 12 million yen to 25 million yen.

International Postal Update