Singapore targeted its financial sector for stardom in 1997, easing up on draconian banking regulations and allowing foreign institutions more scope to compete with indigenous banks and fund managers.

In combination with business services, the financial sector currently accounts for 17 percent of GDP.

Now the ERC's services subcommittee is contemplating what Deutsche Bank's Stein calls a "paradigm shift": identifying just one or two financial services specialties that Singapore can pursue "to put it in a position of regional and global dominance," as he puts it.

Stein, who heads a working group within the services subcommittee, cites Switzerland in private banking, Dublin in back-end processing and Delaware in company registration as examples of places with dominant financial services activities.

"There is no globally relevant financial ser-vice in Singapore currently to put it in a strong regional and/or global position," points out Stein.

"The approach of the committee is to examine in which niche or niches Singapore has a sustainable comparative advantage."

Singapore has traditionally focused on the front-end, capital markets aspects of financial services. But the subcommittee is studying opportunities in back-end processing to capitalise on the city- state's technology platform and accounting and legal skills.

The committee also envisions expanding Singapore's role as an upmarket health clinic for the region.

Raffles Medical Group, a provider of hospital and outpatient medical services, estimates that of the 85,000 patients admitted to Singapore's 13 private hospitals in 2000, 40 percent were from outside the city-state.

In all, Singapore has 26 hospitals, with 11,798 beds, for a population of just 4.3 million.

"The potential is great - half the population of the world is within seven hours of Singapore and these people are becoming more affluent by the day. And they want to have better health care," says Economic Development Board chairman Teo Ming Kian.

The connection between providing hospital care and manufacturing drugs and medical devices is an obvious one, and Singapore is already making a brand name for itself in biomedical sciences.

Such pharmaceutical giants as France's Aventis, and American companies Merck & Co., Pfizer and Schering-Plough Corp. have established pill plants in the city-state. The US's Eli Lilly and Co. has made Singapore its regional hub for clinical trials, and Germany's Siemens has begun researching new medical products there.

The biomed segment received S$900 million in mostly foreign investments last year, up slightly from 2000's S$845 million, and accounted for 5 percent of Singapore's manufacturing output, or S$6.6 billion.

The development board aims to double the biomed contribution by 2010.

Singapore's ambitions in education are even more audacious. It wants to be nothing less than Southeast Asia's Ivy League, Oxbridge and Tokyo University combined.

By becoming a world-class teaching center with a reputation for cutting-edge research, the city-state figures it can draw the most talented professors as well as (tuition-paying) students.

Moreover, Singapore-based companies - particularly the knowledge- driven enterprises it is seeking to cultivate - should benefit from the insights of local think tanks, not to mention a deeper talent pool of graduates.

The city-state has made an impressive start on this academic- industrial complex.

The University of Chicago Graduate School of Business and Paris-based Insead have set up minicampuses in Singapore. The Massachusetts Institute of Technology, the University of Pennsylvania's Wharton School, the Georgia Institute of Technology and Johns Hopkins University are all offering courses locally in conjunction with Singaporean universities.

This is the easy part. The great challenge for Singapore's paternalistic leaders is how to breed entrepreneurs.

The notion of a government planning entrepreneurship is, of course, a tad weird, as co-deputy Prime Minister Lee acknowledges. "If you believe in the free market," he says, "then you'd say this is none of our business."

But this isn't the first time that the government has sought to put more venture in its capitalists.

Initiatives to encourage entrepreneurial activity date back almost a decade and include such things as tax incentives, amendments to the harsh bankruptcy law, awards and government-sponsored venture funds.

Yet according to the Global Entrepreneurship Monitor - a joint project of the London Business School, Babson College in Massachusetts and the Kauffman Center for Entrepreneurial Leadership in Kansas - Singapore stubbornly remains one of the least entrepreneurial societies in the developed world.

The project's 2001 study of entrepreneurial activity in the world's top 29 economies measured how many people out of 100 were trying to start a business or were running one that was less than 42 months old.

Singapore placed 27th, fractionally ahead of Japan and Belgium. Mexico came first, with 18.7 entrepreneurs per 100, while the U.S. ranked 11th, with 11.7. The number for Singapore: a mere 5.2.

The study concluded that, in Singapore's case, the biggest barrier to entrepreneurship was not antipathetic laws or lack of capital but an unsupportive culture.

The researchers found that Singaporeans have a preference for working with large, established organisations, along with a fear of failure and not enough familiarity with or respect for the entrepreneurial community.

They singled out a paucity of existing entrepreneurs to serve as role models and an educational system that fails to foster creativity and personal initiative.

The government acknowledges that Singapore suffers from an entrepreneur gap.

Minister of State Raymond Lim, who oversees the ERC's subcommittee on entrepreneurship, contrasts Singaporeans with Taiwanese:

"People say that if you are a chap working for a multinational company in Singapore and you leave to start up your own company, your friends will ask you, 'What went wrong? Why are you doing this?' In Taiwan if you start a career in an MNC and after a certain time you are still there, your friends ask you, 'What's wrong? Why are you still there?'"

Perhaps Singaporeans have become too comfortable under a paternalistic government that panders to their needs, suggest others.

Asked why Singaporeans aren't more entrepreneurial, Singapore Airlines chairman Koh responds, "In Singapore the problem is people aren't hungry."

China, like Singapore, has a Confucian culture, Koh notes, but entrepreneurs thrive there. "The people are hungry," he says.

Minister of Trade and Industry Yeo goes so far as to voice doubts about whether the government should even be in the business of trying to hatch entrepreneurs.

Singapore, he suggests, should follow the example of Venice, Milan and Florence.

"How did they bring in talent?" he asks. "By opening the doors, not by scouring for the odd Venetian, Florentine or Milanese entrepreneur. If you really want those few odd individuals who make a big difference wherever they are, I think it is better if you reduce taxes, you reduce the hassle factor, you make it easier for people to make money and do the things they want to do, and they will come."

Singapore has always welcomed talented foreigners - working papers are easy to obtain if you're educated or accomplished - and Yeo sees this tradition as intrinsic to Singapore's strategy.

Indeed, he regards it as a key competitive advantage, noting that "not many countries can open their doors the way we open our doors." Singapore plays host to some 750,000 foreign workers.

All the same, Minister of State Lim, a former managing director of DBS Securities, hasn't given up on homegrown entrepreneurs.

He argues that relaxing business regulations would help promote entrepreneurship, and his subcommittee is studying a "sunset clause":

All regulations on the books would have to be reviewed after a certain period before being renewed.

"It's not for the person who is being regulated to explain why he should not be regulated," Lim says. "It's for the person who wants to regulate you to make the case why it is necessary to regulate your business. This is the mind-set change we need."

Lim also proposes that entrepreneurs ought be able to become "fabulously rich" and be held up as role models for society.

The ERC is almost sure to advocate tax incentives of some kind.

Senior Minister of State for Trade and Education Shanmugaratnam, meanwhile, has urged that the committee look into a government fund to finance and coinvest in promising start-ups.

But lower taxes and ready capital don't deal with the biggest impediment to letting a thousand entrepreneurs bloom: Singapore's controlling, top-down political culture.

As Lim concedes, it can be a deterrent to "greater creativity, greater willingness to do things in a different way, a greater willingness to challenge the orthodoxy."

The minister of State himself exhibits the independent-minded streak of an entrepreneur, and that has gotten him into trouble in the past.

The founder of Roundtable, a discussion group that has dared to take up civic policy issues, he has been described by newspapers as a "renegade" and a "radical."

In April last year he and several other Roundtable members were peremptorily summoned to a police station to explain why they hadn't applied for a seminar permit, a plain instance of harassment.

So when the Lees' ruling party invited this uppity outsider to run in last November's elections, it shocked political observers, but also cheered them as further evidence that Singapore's politics continue to evolve.

The debate in government-controlled papers has become more robust, and co-deputy Prime Minister Lee said in February that there will be "a progressive opening of political space."

This isn't to suggest that the government brooks serious opposition. But it has shown, from time to time, that it is capable of change.

"If this government had closed minds, we wouldn't have got anywhere," says Senior Minister Lee. He launches into a discourse on how entrepreneurial creativity enabled the US to make a comeback from the dark days of the 1980s, when it was being "overtaken by the Japanese and the Germans, who produced better products than Americans did, whether cars, televisions sets, computers, whatever."

That was "quite a feat," says Lee, and the lesson has not been lost on the senior minister: "We have to somehow incorporate part of that [creativity] into our culture, into our mind-set and our values."

In a recent speech he listed 23 successful local start-ups and boasted that for a small economy like Singapore's, it was "not a bad start." But only a start.

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