Singapore should sharpen its edge in exportable services to meet the rising challenge from Hong Kong, Bangkok and other cities in the region, a government minister has said. Summarising recommendations from a government-appointed task force, Senior Minister of State for Information Khaw Boon Wan said yesterday that local regulations often stifled the sector's development. 'Traditionally, our service industries are targeted at our immediate neighbourhood,' Mr Khaw said. 'We should raise our sight and target the whole of Asia.' The government should also press on with privatisation, he said. Government-linked firms account for about 13 per cent of gross domestic product. The services group was formed under the auspices of the Economic Review Committee (ERC), a senior-level body set up after last year's recession to 'remake' Singapore's economy. ERC has spawned many sub-committees, of which the services group is one of the most important. Recommendations from Mr Khaw, who chaired the services group, have been handed to the government, which will decide next year which to accept. Singapore's service sector has expanded rapidly since the 1980s but growth has been reversed since the Asian financial crisis in the late 1990s. In 1980, services accounted for 60 per cent of GDP and 61 per cent of employment. These days services contribute 67 per cent of GDP and 74 per cent of jobs. According to data from the World Trade Organisation, Singapore's service exports declined 11 per cent to US$26.4 billion in the five years to last year amid lacklustre economic growth in Southeast Asia. The fall pushed Singapore's global ranking in service exports to 15th place last year from 12th in 1996. By contrast, Hong Kong saw a 12.3 per cent growth in service exports over the same period to US$43 billion, according to the WTO. The SAR held its global ranking of ninth. Mr Khaw said that much depended on continued stability in Southeast Asia, highlighting the risks from events such as the weekend's deadly bomb attack in Bali, Indonesia. 'Clearly any terrorism attack is a negative for the economy, whether it is directly for Indonesia or all of us in Southeast Asia,' Mr Khaw said. 'In terms of damage, it depends. If it is a one-off incident then the damage will be less. But to the extent it is symptomatic of many other subsequent events or tragedies, then it will have a major impact on all of us.' Meanwhile, Singapore Trade Minister George Yeo Yong Boon struck a cautious note in Bangkok yesterday, warning of the slowdown that may follow a United States-led war in Iraq. 'We can expect oil prices to spike when that happens. There is a danger that the global economy may go into a double-dip [recession], which means another round of difficulties for all of us.'