A government advisory panel on deregulation has proposed creating special deregulation zones and compiling an interim report as early as June.

Orix Corp. Chairman Yoshihiko Miyauchi, who chairs the Council for Regulatory Reform, told reporters Tuesday that he thinks special zones could be established as models for groundbreaking regulatory reforms to spur the economy.

The panel, which advises Prime Minister Junichiro Koizumi, was discussing its activities for the year starting in April.

Deregulation that encourages business enterprises to run hospitals and that allows manufacturers to hire workers from job placement agencies could be among measures allowed in zones dedicated to medical or employment reform, government officials said.

Such reform plans have to date met with strong resistance when taken up as nationwide policy, Miyauchi said.

The government has so far only allowed Okinawa to set up a special financial zone and an information technology zone, in part to compensate for the prefecture hosting its heavy U.S. military presence.

In a bid to realize its recommendations in the upcoming report as swiftly as possible, the panel will enhance coordination with the government's key policy-setting Council on Economic and Fiscal Policy, Miyauchi said.

Regulatory reform is expected to be a key factor in the government's efforts to rev up the slumping economy as it requires few fiscal outlays, he said.

The government has bound itself with a limit on the issuance of fresh government bonds, which prevents it from taking additional fiscal measures in fiscal 2002.

Among other issues the panel will address are deregulation to make it easier for entrepreneurs to raise funds, reform of public or semipublic businesses and the introduction of competition in the utility sector.

Measures to promote the legal and judicial service markets and to upgrade the use of inner cities will also be discussed as issues that crosscut the six service areas the panel selected for priority reform last year.

The six areas are medical services, elderly and child care, personnel training and employment, education, the environment and the revitalization of urban areas.

In the day's meeting, panel members also held final discussions on how the government could employ their report, submitted to Koizumi in December, on updating its three-year deregulation program by the end of this month.

The government plans to submit bills to the ongoing Diet session, based on the panels recommendations and the six priority sectors, for enactment as early as possible, the officials said.