BRUSSELS— The telephone directory for this city of just under a million people lists 165 film production companies. A further 102 individuals, perhaps too shy to incorporate, appear under the rubric "Cineaste." Would-be film makers roam the Rue Royale, the dowdy main drag of Belgium's movie industry, with computer printouts of their ideas. And each year, Belgium's state-subsidized film schools turn out another crowd of hopefuls.

Yet so reduced is Belgium's film industry that when a Belgian strikes a hit, as Jaco Van Dormael has done with "Toto the Hero," it is almost as if a fellow worker has won the lottery. A better comparison, one Belgian writer said, might be an escape from Devil's Island that lends hope to everyone still behind bars.

Mr. Van Dormael (pronounced van dorr-MAHL), who spent 10 years struggling in Brussels, knows the reality. Accepting one of his cluster of recent awards, he said he hoped the success of "Toto" would not lead people to think it is easy to make films in Belgium, because it definitely isn't. In recent decades the best-known Belgian directors have been Andre Delvaux and Harry Kumel, and theirs are hardly household names.

"Toto," a sweet fantasy about an old man's memories, was shown in September at the New York Film Festival and is to begin its commercial run in New York on Friday at the Lincoln Plaza. Even before its commercial showing in America, "Toto" has probably earned more than any other Belgian film. According to Variety, in Brussels alone it earned $513,364 last year. This was half the take of "Terminator 2" here, but still, "Toto" was the only non-American film in the Top 10. When "Toto" was shown at the New York Film Festival, Vincent Canby of The Times wrote that Mr. Van Dormael was "a bright new talent to celebrate."

Despite his success, Mr. Van Dormael, 35 years old, does not seem to have abandoned the habits of an unknown. He wears baggy jeans and an unraveling red sweater, and by all accounts he has not forgotten the friends of his hungry days. He still lives in a working-class neighborhood near the Rue Royale, squeezed between the red-light district and the Turkish quarter. He is married and has two daughters, Alice, 4, and Juliette, 1. Iconographers will note that the sister in the film, played by Sandrine Blancke, is named Alice and that the real Alice Van Dormael appears in a nonspeaking part.

Mr. Van Dormael's father was a buyer in Europe for Sears, Roebuck, snapping up boxcar loads of socks to sell by mail order in America. The film maker was born in Brussels but spent his early years in Germany. Like many educated Belgians, he is fluent in four languages -- French, Dutch, English and German. "You can't take a train in this country without speaking three languages," he says.

After high school he was a promising film student, studying cinematography in Paris and at the Higher Institute for Theater and Cinema Arts in Brussels. He credits his teacher there, the Czech screenwriter Frank Daniel, for showing him a technique of preparing with notebooks, scripts and index cards.

Mr. Van Dormael won prizes with his short student film in 1981 and made 10 others in the ensuing years, "trying to be really different with each one, and always making the same," he says. At the same time, he had another career as a clown for children's shows, and in "Toto" more than one critic has found a connection.

"Toto" started out in his notebooks 10 years ago as a film about children and then expanded. "In fact, there is no real idea about 'Toto,' " Mr. Van Dormael says. "The structure came later. It was only a thought about life: we become what we never thought we would become, and we end in a way we never thought we would end. The important thing is that Toto keeps his love."

About 1985 the Belgian producers Pierre Drouot and Dany Geys of Iblis Films took up Mr. Van Dormael's project. It took them five years to raise the $3.5 million budget, minuscule by American standards but huge in Belgium for anyone, much less a first-time director. In the end, the financing, in the form of loans or advances on box-office receipts, was all public money -- an increasingly common procedure in a Europe trying to stave off market domination by Hollywood. Among the contributors were the European Community, the Council of Europe, the Flemish- and French-language cultural authorities of Belgium, and state television in Belgium, France and Germany.

The assemblage of such a complex package left Mr. Van Dormael plenty of time for rewriting, and he estimates he went through eight or nine versions of the script. "Even when I was shooting," Mr. Van Dormael recalls, "sometimes I would catch myself thinking, 'This scene could use some more work.'

"The film is like Brussels," he adds. "It's not one style; it's every style. The identity of Belgium is having no identity. It's being a little bit of everything."

When released last year, the film seemed to touch everyone who saw it, in various ways. "In the United States and England, there was more laughing," Mr. Van Dormael said. "In Japan and Germany, they were more serious. In France, I think they laughed and then cried." The film maker spent nine months traveling to the openings. "It was like learning a new job," he said. "At the beginning I counted every interview I gave, and after 350 I stopped counting."

In the cold rain of a Brussels winter, Mr. Van Dormael has gone back to work. He has been offered many projects but says he wants to develop his own ideas. In the mornings he thinks about his writing, and for three hours each afternoon, five days a week, he sits down at his typewriter, steadily producing three pages a session. On Fridays he shows the output to his wife, Laurette; his former clown partner, Didier De Neck (who appears in "Toto"), and a screenwriter friend, Pascal Lonhay, and they discuss improvements.

"The most difficult thing to get is a good story, and that will be as hard for the second film as for the first," Mr. Van Dormael says. "The only reason to shoot a film is because there is a story that needs to be told."

Photo: Jaco Van Dormael -- "The film is like Brussels," says the 35-year-old film maker. "It's not one style; it's every style." (Triton Pictures)