Temasek chairman S. Dhanabalan said the group, which holds stakes in companies from Singapore Airlines to DBS Bank, would invest in high-risk but promising sectors, such as biomedical sciences.

Leading Singapore companies also would be encouraged to become regional or global players in their fields, Mr Dhanabalan said yesterday in a meeting with foreign media.

"We have just made a review of our strategic plan for the next five years or so and have concluded that our way forward should revolve around . . . [having] control or influence of projects with strategic importance. For example, water as a resource, projects related to Singapore as an international communications and route hub," he said.

Temasek would also "participate in high-risk growth sectors. For example, in risky life-sciences investments and efforts, and - this will absorb quite a lot of our efforts in the coming years - nurture global or regional leaders from the stable of Temasek or other non-Temasek Singapore companies," he said.

The strategic vision represents a formal restatement of several policy announcements by government ministers in recent years. These have emphasised the need for companies in Singapore to grow beyond the confines of the small home market of four million people, coupled with partial privatisation of selected state assets.

At present, an ad hoc government committee under Deputy Prime Minister Lee Hsien Loong is reviewing all of the country's economic policies and it is unclear whether Temasek's plans will be affected by the outcome of the study, due next year.

The trade-reliant economy is mired in its worst recession in a generation.

"Outside these [three strategic] themes, we will continue to reduce our participation, through our divestment policy," he said.

Mr Dhanabalan's route-map suggests that the government could ultimately retain substantial or majority stakes in Singapore Telecommunicatons (SingTel), the port authority PSA Corp, Singapore Airlines and Singapore Technologies, which holds many defence-related industries.

Government-linked companies from the city-state have been striking out abroad, although these efforts have run into some opposition because of the companies' links with the Singapore administration.

This year, DBS Bank boosted its overseas presence with the purchase of Hong Kong's Dao Heng Bank Group while SingTel bought Cable & Wireless Optus, Australia's second-largest telecoms player.

Both of those deals, however, were criticised in some circles as being too costly, a charge rejected by Mr Dhanabalan, who is also chairman of DBS Bank.

Temasek has long maintained - and Mr Dhanabalan repeated yesterday - that neither it, nor the government, interfered in the day-to-day running of its companies. All decisions were taken on a strictly commercial basis, he said.

Set up in 1974, Temasek groups many of the companies that were founded by the government in the years after independence as it sought to redirect the domestic economy. Temasek companies listed on the local stock exchange account for a quarter the market's total capitalisation.

"We are not divesting because of ideological reasons against government participation in business," he said.

"We have and will continue to divest in order to focus our financial and management resources in a few areas where we think that Temasek can make a distinct contribution to the development of the Singapore economy."