The incentives are part of S$3.2 billion (US$1.86 billion) worth of economic and social sweeteners announced by Prime Minister Goh Chok Tong on August 20, and are aimed at stemming declining birth rates and marriages in the city-state of 3.1 million.

Singapore is one of the economic success stories in Asia, transforming itself into a regional financial and manufacturing powerhouse from a tropical backwater in just a span of 35 years.

But that economic success, which has given the city-state a per capita income of S$40,000 and one of the world's highest levels of foreign reserves at S$134.4 billion, have come at a social price.

Alarmed at surveys consistently showing Singaporeans placed career and money ahead of family, the government has embarked on a crusade to drive the message across that raising a family can bring about greater happiness than material wealth and success.

"As a husband, a father and now a grandfather, I can only tell you that a family adds warmth and meaning to our lives," Goh said in a televised speech late August 20.

"The house would be so much emptier without the laughter of children," he said.

"How miserable we would be if we have no children to look after us when we grow old and weak," he added.

While acknowledging he has "no authority to order" Singaporeans to get married or decide the number of kids a married couple should have, Goh voiced his concerns that declining fertility rates could affect the country's future needs for human talent, an increasingly vital ingredient needed for success in the so-called New Economy.

Imported foreign talent -- there are now more than 700,000 foreigners working here -- can complement the country's needs but "they cannot replace us," Goh said.

Singapore fertility rates, currently at around 1.5 children per woman, have remained well below the 2.15 deemed necessary to constantly replace the population.

At this rate, the resident population would fall to 2.7 million from 3.1 million currently in 50 years without immigration, Goh said.

As part of the incentives dubbed "Baby Bonus" to take effect April -- the start of the country's financial period -- next year, a children development account will be opened once a couple have a second or third child.

The government will contribute S$500 a year into the account of the second child and double its contribution to S$1000 for the third.

The payment will stop when the child turns six.

Also, the government will also pay the wage cost of maternity leave for the third child. Under the present Employment Act, mothers get paid maternity leave for the first two children only.

The Baby Bonus incentives will cost the government at least S$260 million a year.

"This is not a small sum. But if it helps more couple to have a second and, then, a third child, the money will be well spent," Goh said.

Even the monetary incentives may not work, the prime minister acknowledged, but he said "not to try is to give up on Singapore."

At the same time, a ministerial committee will be set up under the prime minister's office to oversee the problem of declining fertility, Goh announced.