Quote:SINGAPORE (Reuters) - George Lucas, creator of blockbuster films such as "Star Wars" and "Raiders of the Lost Ark", has announced plans to bring his creative empire to Singapore in the first overseas foray by his entertainment group.

Lucasfilm is setting up a venture with Singapore's government to produce digital animation for films, TV, and video games -- its first government collaboration and reflecting the growing popularity of animation in Hollywood and Asian films.

Some of the highest-grossing films in recent years -- from "Shrek 2" to "Finding Nemo" -- have been based on computer-generated animation. In Asia, the genre is led by Japanese anime, a style born out of Japan's love affair with comic books.

Lucasfilm aims to blend those genres -- Western animation and Japanese-style anime -- at the new Asian studio, Lucasfilm Animation Singapore, which is 75-percent owned by Lucasfilm Ltd. The remainder is held by a Singapore state-led consortium.

The Hollywood studio's arrival comes as Singapore is embracing creativity to sustain its economy. Arts now form a cornerstone of government policy -- a radical shift in nation known for its strict censorship and tight social controls.

"We look to Lucasfilm as a queen bee of sorts to help develop our industry," Teo Ming Kian, the chairman of Singapore's Economic Development Board, told a news conference on Tuesday.

"As an investor, we look to very good returns from this investment but we see far more strategic returns to Singapore."

The Asian animation unit, which is looking to hire about 300 people in Singapore, will focus on production work while the design and script-writing will continue to be done in its Marin County, California headquarters.

In Hollywood, competition for digital animation is growing.

DreamWorks SKG, which created the "Shrek" series, plans to spin off its animation studio to raise $650 million (358 million pounds). Other rivals include Pixar Animation Studios Inc., whose films include "Toy Story" and "Finding Nemo", and Walt Disney.

But a Singapore office could lead to Asian collaborations. Japanese game makers Koei and Genki will set up game development studios in Singapore by the end of the year, a Singapore government official said.

Under a "Media 21" policy rolled out last year, Singapore plans to double the size of its media, design and arts industries to contribute to 3 percent of its $93 billion economy by 2012.

Micheline Chau, chief operating officer of Lucasfilm, said Singapore was picked ahead of many competing Asian countries because of its strong intellectual property rules.

"What was very important to us was the commitment to protect intellectual property rights since we are a content producer." Under the U.S.-Singapore Free Trade Agreement that took effect in January, the wealthy city-state's intellectual property laws were harmonised with those of the United States.

The government said last month it had set aside about S$200 million over five years to develop Singapore into a "vibrant Asian creative hub".

In December, Singapore earmarked S$100 million to develop documentaries and films, with a goal to produce up to five low-budget films a year. A new city neighbourhood designed for media companies, dubbed "Fusionpolis", is now being built.