Some advice for the Education Ministry: ban entrance exams, provide low-interest loans to all students and require that school principals be licensed.

That's the educational reform program that an independent committee of business leaders, consumer groups and researchers is calling for to be implemented immediately.

The committee, which is under the auspices of the non-profit Japan Productivity Center for Socio-Economic Development, proposed in its final report Friday that school admissions be based on school grades and essays only.

"The current entrance exam system is dysfunctional and unnecessary," said research committee chief Daisaburo Hashizume, a professor of sociology at the Tokyo Institute of Technology.

Headed by Masao Kamei, senior adviser to Sumitomo Electric Industries, the Tokyo-based center has been calling for the application of free market principles in the school system and for increasing competition between schools by opening up enrollment and expanding the use of scholarships to attract promising students.

The report recommends that principals hold graduate degrees in school management, wield greater budgetary power and be obligated to report to a school board, which will evaluate the principal's performance.

The report will be submitted to the Education Ministry, local school boards and Diet members next week, the group said.

"We were extremely disappointed in the ministry's failure to grasp the main points of reform (when we made earlier proposals in July 1998)," said Hashizume. "We hope to provide public debate with some alternative ideas."