Economic growth is slowing down, revenue sources are shrinking, manufacturing jobs are migrating and tourism growth is levelling off. But, in one go, the country has come up with two aces to reinvent itself and revitalise its economy.

In the process, it has slain a sacred cow, raised the level of political debate and shown once again that it is not averse to making tough decisions.

The country's leaders are quick to stress that the casinos are but a component of the two integrated resorts to be developed at Marina Bayfront and on Sentosa island.

To be running by 2009, the resorts will boast theme parks, hotels and convention facilities, shopping centres, restaurants and theatres, but it is the casinos that will pull the crowds and rake the cash in.

'We are losing ground in tourism,' Prime Minister Lee Hsien Loong said in announcing the decision to proceed with the resorts.

'Tourism in the region is growing phenomenally, especially the traffic from China and India. Singapore's traffic numbers are up, too, but we see warning signs of problems ahead.'

For the warning signs and cues, Singapore has only to look at Macau, where 17 casinos attracted billions of tourist dollars last year - and more gambling palaces are on the way as an indication of what the city state stands to lose if it does not get with the programme.

Tourist arrivals in the enclave surged 40 per cent to 16.7 million last year, thanks largely to visitors from the mainland. Singapore's tourist arrivals of 8.3 million last year were only half of Macau's.

Tourism earnings were S$9.6 billion. The republic aims to double annual tourist arrivals to 17 million and triple tourism revenue to S$30 billion by 2015. Alarmingly though, its market share in the Asia-Pacific region is declining - from 8 per cent in 1998 to 6 per cent in 2002.

A two-pronged offensive should arrest this slide: making the move now will mean an early-mover advantage, and going for two casinos may pre-empt external competition.

With international casino operations from Australia to Las Vegas beating a path to Asia, there is a small window of opportunity to stay ahead of the game.

Merrill Lynch forecasts that casino operations will spread to Japan, Taiwan, India and Thailand, which is moving to legalise casino gambling by 2007.

In Hong Kong, a casino might also be a possibility with Liberal Party legislators pushing for it.

Merrill Lynch forecasts that an integrated resort in Singapore could draw an annual 13.5 million visitors to its casino and 26.1 million people to its non-gaming facilities.

The contenders for the resort projects, a few of whom have now been ruled out - including New Century Group Hong Kong - see the Lion City as ideal for an Asian foothold outside Macau.

Were Singapore to say no, the likes of Las Vegas Sands, Genting and Kerzner would take their Guggenheim Hermitage museum, Universal Studios theme park, and Atlantis resort to its neighbours. The loss would be more than economic.

Minister Mentor Lee Kuan Yew said: 'To say 'no' after worldwide publicity for a year, Singapore will be sending out the wrong signal that we want to stay put, to remain the same old Singapore, a neat and tidy place, like Switzerland - better than Switzerland, with no chewing gum, no smoking in air-conditioned places, no this, no that - not a fun place.

'If we reject these integrated resort projects, the world's investors and players will mentally scratch us off.'

Analysts are positive that the integrated resorts will pay off for Singapore.

'We think the impact of large integrated resorts could add a buzz to Singapore and could have positive spin-off effects such as attracting tourists, business travellers and creating jobs,' UBS Investment Research said in a report.

Merrill Lynch is maximum bullish. In a report issued last month, it said that one integrated resort could have an enterprise value of about US$4.8 billion and bring in US$2.1 billion a year in revenue - about 30 per cent of this from foreign visitors - and US$865,000 in tax income annually.

The government estimates that the two resorts could add about S$1.5 billion annually to gross domestic product.

As Singapore's economic growth slows, the additional revenue of 1 per cent to 2 per cent of GDP would be a welcome booster.

Last year's economic growth of 8.4 per cent is hard to repeat in a maturing economy. This year, growth is forecast to slow to 3 per cent to 5 per cent as high oil prices exacerbate a slowdown in global demand.

Growth may slow further as the manufacturing sector declines. Boosting the services sector that includes tourism with the integrated resorts is a step in the right direction.

As for employment - 10,000 positions directly at the resorts and 35,000 incrementally, which is at best a ballpark figure - it will take years, but these service-sector jobs should go a long way towards replacing the industrial jobs lost and easing the average unemployment rate of 4 per cent last year.

Jobs aside, saying yes to casinos is a seminal idea in the remaking of Singapore, a process that has been a steep learning curve.

You lose when you play safe, sometimes.

One big loss that Minister Mentor Lee rues was the 'stupid decision' not to build a Formula 1 circuit for fear that it would encourage reckless driving. It was a wrong call 'that had cost the country money'.

But a defining moment has been reached in Singapore's makeover and more bold initiatives can be expected.

As Prime Minister Lee said: 'We want Singapore to have the X-factor. There will be more buzz of the kind that you get in London, Paris or New York.'

So, perhaps a new pitch for the Formula 1 plan may be on the cards next. And did someone say bring in Paris' Crazy Horse revue?

The casino debate has been contentious, with the cabinet and the populace divided, but the approach, amid much soul-searching, has been hard-nosed and business-like. Both the elder Mr Lee and Senior Minister Goh Chok Tong had declared that casinos would never see the light of day on their watch.

However, a government that is in touch with the real world and in tune with the times can do nicely from an inspired paradigm shift.

Having played its casino card in a gamble fraught with political, social and economic risks, Singapore cannot but come up trumps. You can bet your bottom dollar on that.