After spending billions of dollars to transform Macau into an Asian Las Vegas, the world's biggest gaming companies are turning their attention to this wealthy city-state, which is in search of the "X-factor" to retain its position as a global tourist destination.

Prime Minister Lee Hsien Loong ended a four-decade-old ban on casinos Monday when he announced plans to build resort complexes that will feature ritzy hotels, family entertainment, restaurants, convention centres and museums at two sites, in addition to gambling.

He said investors are expected to spend up to S$5 billion (US$3 billion) on the two projects, which Lee hopes will add the "buzz" needed to achieve Singapore's ambitions to become a cosmopolitan city.

Trade Minister Lim Hng Kiang said the government will launch a request for proposals in the second quarter and award the contracts by the year's end. The resorts will be operational in 2009.

Economists said the immediate beneficiary of the projects will be the construction sector, which has yet to fully recover from the impact of the 1997-98 Asian financial crisis that bust the property bubble.

Property stocks rose Tuesday, led by companies which have teamed up with foreign partners to bid for the casino projects.

"These are sizeable projects and they will have an impact on the economy, specifically the construction sector and later on hospitality and tourism," said Nizam Idris, deputy head of research at research house IDEAglobal.

Song Seng Wun, a regional economist with GK Goh brokerage, said the integrated resort projects on Marina Bayfront, off the banking district, and on Sentosa island, should be viewed together with other efforts by Singapore to remake itself as an international travel destination.

These include a major makeover of the famous Orchard Road shopping strip at a cost of nearly one billion US dollars.

"As contracts are awarded and progress payment is made, we should see the construction sector at least starting to see some growth," Song said.

"Together, these projects will help stabilise and bring more growth to the sector. After all, the sector has been contracting for the last six to seven years -- but it will take a couple of more years before we can see growth."

Tourism is the other major beneficiary, with analysts saying it could become a key pillar of economic growth, especially as low-cost airlines spark a travel boom across the region.

Tourism currently accounts for 3 percent of Singapore's gross domestic product (GDP). Nizam of IDEAglobal said that for the sector to become a prominent growth driver, it should account for 7-8 percent of GDP.

Tourism growth should help Singapore diversify its sources of economic growth currently dominated by the electronics sector and the nascent, yet volatile, pharmaceuticals segment.

"The decision should be seen in the broader context of the government's efforts to re-orient the economy away from traditional drivers such as electronics," said Deutsche Bank economist Sanjeev Sanyal.

"The government now hopes to turn Singapore into Asia's 'Global City' by taking advantage of the dynamics of urban agglomeration that helped cities like London, New York (and) Boston over the last decade."

Tim Condon of Dutch bank ING agreed, saying that boosting tourism should "diversify the economy away from the global electronics cycle toward regional domestic demand growth."

Tourism earnings totalled almost US$6 billion last year from 8.3 million visitors. Singapore is aiming to triple tourism receipts to $18 billion and double arrivals to 17 million by 2015.

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