The tiny island state of Singapore -- which has Indonesia and emerging Malaysia as its nearest neighbors -- has an international presence that belies its geographical size. The country was guided to its current political and economic status by former Prime Minister Lee Kuan Yew, who was convinced the former British colony could and should be a vibrant modern, English-speaking city. Singapore has achieved that -- and more. Its next goal is to become a major hub in the Internet age, taking advantage of its highly literate, computer-knowledgeable workforce. But manufacturing is still vital to Singapore. In 1998 it accounted for 22% of the country's GDP, just behind the financial and business services sector. To encourage foreign investment in manufacturing, Singapore has a S$1 billion (US$588 million) cluster development fund, which enables the government to share risks with partners in strategic projects. There are currently more than 5,000 multinational companies located in Singapore, including a strong representation among electronics and petrochemical producers. Major semiconductor companies have facilities in Singapore, including American Fine Wire and Kobe Steel Ltd. Major disk-drive manufacturers include Seagate Technology Inc., IBM Corp., and Western Digital Corp. Texas-based Compaq Computer Corp. has a large motherboard facility in Singapore and developed its Armada line of notebook PCs, used by so many road warriors, in the Lion City. Top pharmaceutical companies have a major presence. Glaxo Wellcome PLC has investments estimated at S$600 million (US$353 million), while Schering-Plough Corp. has a S$300 million (US$177 million) finishing factory for its dry-powder inhalers. In recent years Singaporean entrepreneurs have been encouraged to take their production expertise overseas, in particular to emerging countries such as China. Singapore-backed factories can be found in the developing countries of Vietnam, Indonesia, and Malaysia, which also has aspirations to be a major information-age player. "Pursuing consistent, rational policies and maintaining cost competitiveness will give a strong signal to investors that Singapore continues to be a good place to operate," says the current prime minister, Goh Chok Tong. "Singapore must adopt world-class standards and benchmark its businesses against the best globally." Singapore's great advantage, like its close rival Hong Kong, is its deep-water port, one of the world's busiest, which undergoes regular upgrades and expansion. It also has a superb airport, Changi, frequently cited in executive-travel polls as the world's best. All this excellence can breed smugness and arrogance -- a criticism that is regularly leveled at the country, although not on its own shores. The Singapore government allows little dissent: Its tame press rarely carries any serious criticism of leaders or their policies. On the other hand, the government can make tough decisions and implement them quickly. When the Asian economic crisis occurred in mid-1997, the Singapore government quickly formed a competitiveness committee, comprising industry, unions, and the government. A result: a reduction in wage costs, factory rent, and utility rates. Foreign residents can find the nannyish tendencies irritating. A bell rings in taxis when the speed limit is reached; chewing gum is banned; smoking is prohibited virtually everywhere; caning still takes place; foreign magazines with any hint of raunch are censored; and high taxes on alcohol and cars make both expensive luxuries. But whatever the drawbacks, Singapore works well. It is clean, green, modern, efficient, international, English-speaking, and overwhelmingly business-friendly.