The Cabinet approved a bill Tuesday to set up deregulated "strategic special zones" that will be a centerpiece of Prime Minister Shinzo Abe's economic growth strategy.
The Abe administration is expected to designate three to five special zones early next year that will be aimed at attracting people and investment from both at home and abroad through deregulation and tax incentives.
The administration will try to get the bill through the Diet during the current legislative session that runs through Dec. 6.
Regulations in the special zones will be relaxed to promote urban redevelopment and make it easier to launch agricultural production corporations.
Other deregulation steps will allow private firms to operate public schools, enable hospitals to increase beds more easily and expand the scope of treatment by non-Japanese doctors and nurses.
Abe is planning to establish and head a new government panel on the special zones.
It is likely to have a strong enforcement capability, similar to the Council on Economic and Fiscal Policy, which helps draw up the budget and crafts key economic policies, the officials said.
Details of tax breaks in the special zones will be decided at the end of the year in discussions about tax reforms for the next fiscal year, they said.