Prime Minister Junichiro Koizumi urged his Cabinet on Tuesday to consider the hundreds of proposals by local municipalities nationwide seeking to create special deregulated zones.

Koizumi's deregulation drive is in line with a law enacted in December to create special zones to promote rapid decontrols in specific regions and stimulate community-level economic activities.

"Give them a try and don't be afraid of failures. I want you to negotiate by considering what needs to be done to realize the proposals," he told his ministers.