◇Unreasonable relationships of dependency had formed between urban and sparsely populated rural districts as well as between passenger and freight transport operations that were harmful to management efficiency.
4 An Outline of Restructuring JNR
In 1987, the Japanese government, in order to solve the two problems of the public corporation system and the single nationwide management system, determined to privatize JNR and break it up into seven JR companies (six passenger companies and one freight company).
Privatization is defined as "the conversion of a public corporation into a private company, and the sale of company stock on the market."
The problem in accomplishing this was just how to organize the seven new companies so that they would present a profitable future worth investing in.
◇The government lifted considerable regulations on JNR in order to allow the seven JR companies to run their operations as freely as other private rail companies.
◇The government worked out a plan for handling a large portion of the long-term debts of JNR smoothly.
(1) Handling of Long-Term Debts
The government established the JNR Settlement Corporation (JNRSC) to assume roughly 2/3 of the JNR debts, and assigned the remaining 1/3 to four out of the seven JR companies.
JNRSC was to sell its assets (the JR stocks and the land succeeded from JNR which was not to be used by the JR companies in their railway operations) in order to dispose of these long-term JNR debts. Whatever debts remained after the sale of these assets could only be covered by government tax income, and would finally be borne by taxpayers.
