It is not just adult Singaporeans. Our young also seem to be worried. In May this year, The Straits Times reported on a dialogue session with junior college, polytechnic and university students. More than three-quarters of the students expressed pessimism about Singapore's future.

They were concerned how Singapore would fare against giant economies like China and Russia, and whether one day, Indonesia and Malaysia would overtake us. They wondered how many Singaporeans would run off to other countries to enjoy cheaper cars and bigger houses.

I too, worry about these things.

However, unlike the students, I am not pessimistic. The benign global climate of the early 90s may have turned less hospitable. But the future is what we make of it.

Our elders faced an even more dire situation in 1965 when we separated from Malaysia. Ask your parents about life in Singapore then. It was worrying and tough, and I say it from personal experience. I lived in a house without electricity or modern sanitation, until my family moved into a 3-room HDB flat. But our elders fought their way up, and built the life we now have.

Today, it is the turn of our young to be tested. This baptism of fire will temper your generation. From your performance in National Service and the workplace, and the way you take to sports, I am confident that you have what it takes to secure your place under the sun.

Remember, we now have more human resources. We have a better educated people, all working in the English language, with higher professional, management and organisational expertise, and technological skills. We also have more material assets, world-class infrastructure, and stronger foreign reserves. This means you have more to lose. But it also means you have more to fight with, and win.

If you do not doubt yourselves, you will prove those worried students wrong. You will overcome the challenges that come your way.

A key challenge will be to meet the growing economic competition. With globalisation, more players have entered the economic arena.

For instance, China has already joined the WTO. Russia will join soon.

Many former Soviet allies in Central and Eastern Europe have also joined the WTO. They have many skilled workers and engineers. Their wages are low, about a third of Singapore's. They are able to produce and sell their products at a fraction of our cost. In time, the quality of their products will also rival ours.

So you see, the highway to the market is getting congested. In the 90s, there were few cars on this highway. Singapore could speed along in our modest 1600cc car. Now, there are many vehicles on the highway - trucks, cars, vans, motorcycles, Volvos, Mercedes Benz, Toyotas, Hyundais. Even if you drive a Ferrari, you cannot zoom around anymore. Everyone is fighting for space. They should have introduced ERP!

Nearer home, our neighbours are building up their airports and seaports, our traditional speciality. Malaysia, for example, has announced that it wants to be a transportation hub.

A foreign diplomat who knows the Malaysian leaders advised me that Malaysia was intent on poaching such business from Singapore. A Johor businessman told our High Commission in KL that Malaysia would build up Johor to compete head-on with Singapore. Money, he said, was no object.

PSA lost shipping line Maersk to Malaysia's Port of Tanjung Pelepas two years ago, because Pelepas made Maersk an offer it could not refuse. This year, PSA lost Evergreen. Evergreen was offered non-port incentives, in addition to very low container handling rates.

Lim Swee Say saw a silver lining in the loss of these two shipping lines to Pelepas. He said that grassroots leaders finally understood the meaning of competition.

We welcome competition.

And we will compete. We will create new strategies. We cannot be locked in old thinking, and continue frozen in the model of yester-year. However successful this old model was, in the changed world, it will not bring us to greater heights.

PSA understands this. It is not taking the loss of the two shipping lines lying down. It is fighting back. And it has the resources, skills and experience to develop new ways to anchor and attract shipping lines to Singapore. It will do whatever is needed to maintain its position as the premier transhipment hub of our region.

PSA will succeed. It has already achieved some results. Korean shipping line Hanjin has opted to stay in Singapore, although Pelepas made a determined bid for it. In the first half of this year, PSA's throughput grew by 9 percent, as compared to a decline of 9 percent last year. For a port the size of PSA, and one facing keen competition, this is a good performance.

Moreover, PSA's investments in the existing 37 berths are sunk costs. And the Government has set aside land for 20 additional berths at Pasir Panjang, for whoever can best run the berths, be it PSA, Jurong Port, other port operators or shipping lines. We are open to all options that will enhance the competitiveness of shipping lines hubbing in Singapore.

There is further good news: PSA is among several ports working with the US on its Container Security Initiative (CSI). Containers from CSI ports will enjoy quick, "green lane" clearance through US customs. Given America’s grave concern over the smuggling of terrorists and weapons in containers, the CSI will enhance the competitiveness of our transhipment port.

We have always been able to meet the competition from Hong Kong, Kaoshiung and other big and well-managed ports in the region. We will work smarter, and stay in the game.

Our bigger challenge is from the rising dragon.

It is not just Singapore which has to adjust to China's entry into the global marketplace. Hong Kong is even more worried. The Washington Post reported in June that five years after the return of Hong Kong to China, the main source of distress in Hong Kong was "not communism, but rather, too much capitalist competition (from China)".

In the 60s and 70s, thousands of Chinese crossed the border in search of a better life in Hong Kong. These days, Hong Kong's businessmen are headed in the opposite direction in search of profits. Even feng shui experts in Hong Kong are rearranging their furniture to improve their luck. They, too, have to ward off competition from China!

China's transformation has indeed been spectacular. Singapore moved from Third World to First in 30 years. The whole of China cannot make it in 30 years. It is a huge country with a large rural base.

But Beijing, Shanghai and the big coastal cities can become First World in 30 years. They have already changed beyond recognition. It is not just the miles and miles of highway, the tall office buildings and the modern factories, but also the people's mindset. I first went to China in 1971. When we left tips on the table, the waiters ran after us to return the tips. Today, every Chinese wants to get rich. They are eager to learn, and they learn fast.

Tan Kin Lian of NTUC Income went to Shanghai recently to sell them insurance know-how. He got a shock. Instead of buying from him, the Chinese offered him computer software for managing his insurance business! The product was good, and he bought it.

So how should we respond to the China challenge?

My response is: see China as an opportunity, not a threat. If we view China as a threat, we will be immobilised by fear. But if we see it as an opportunity, we will come up with creative ideas to ride on China's growth.

We have built up a good relationship with China. In the early years, we shared our developmental experience with China. Even today, hundreds of Chinese officials visit Singapore every year, on study or training visits. In turn, we hope to benefit from China's growth - not only Chinese Singaporeans, but also Malay, Indian and other Singaporeans.

For example, China's growing middle class, expected to reach 400 million by 2010, will travel widely. We now receive half a million Chinese tourists every year. We will make it easier for Chinese nationals to visit Singapore.

Also, China has stepped up its "Venturing Out Policy". The stock of China's outward investments is now more than US$27 billion, up from almost nothing just 25 years ago. We should try to get a fair share of these investments.

Some Chinese companies are using Singapore to reach out to our region. One company uses Singapore to re-export its sewing machines to India. Another uses Singapore to sell washing machines, air-conditioners and motorcycles to ASEAN. Singapore businessmen should position themselves to partner such Chinese companies as they go overseas.

But to be able to take full advantage of these opportunities, Singaporeans should be proficient in Chinese. Already, some 25 million people outside China are learning Chinese, motivated by the enormous economic opportunities.

Our bilingual policy has given us an advantage which we should not lose. If we neglect the Chinese language, while others are picking it up, very soon, we will have no edge over them in doing business with China. I have therefore asked Teo Chee Hean to re-examine how we can improve the teaching of Chinese, and develop a core group of bilingual Chinese elite who understand China's culture, history and contemporary developments. This will help Singaporeans when they do business with China.

Indeed, a Chinese tour guide expects more Singaporeans to work and live in China in future. One evening, he took a Singapore tour group to see the Suzhou Industrial Park. My brother-in-law was in the group. The tour guide told the Singapore tourists,

"This Park was built by your government. Look around you. Who knows? One day, your children and grandchildren may settle here!"

Whether they do or not, more of our students, especially scholarship holders, should be sent to study in the top universities in China. This will allow them to network with future Chinese leaders, officials and businessmen.

That is why Vice President Hu Jintao and I agreed on an exchange programme for bright university students. The first group of 50 Singapore students will visit China in June next year. The first group of 50 PRC students from top Chinese universities will come to Singapore two months later. This exchange programme could include dialogues with Ministers and senior civil servants, and visits to government agencies and industries.

If we are proficient in English and Chinese, if we understand China as well as we understand the West, we will be in a strong position to benefit from China’s growth.

So a rising China is not gloom and doom for us. It offers abundant opportunities.

Furthermore, no matter how attractive China is, foreign investors will not put all their eggs in one basket. They will want to hedge their bets, in case things go wrong with China. Also, they will want to take advantage of the many opportunities in the rest of Asia, such as India and ASEAN. They will, therefore, want another place in Asia to base their factories and regional HQs.

Our FTA partners will give Singapore preferential treatment when we sell them our goods and services. For instance, we will not need to pay any import duties on many products we sell to their market. In contrast, countries without FTAs would have to pay import duties. These FTAs will therefore give Singapore a big advantage in exporting to our FTA partners. They will also help us attract more investments here.

Investors are also reassured by our political stability and social cohesion. They can see how our workers, employers and the Government are able to take hard decisions together to meet the changes in the world.

All these are important reasons why EDB has been able to attract investments into Singapore right through the Asian financial crisis and last year’s global economic downturn.

Our reputation for reliability is another major asset. In fact, Singapore is seen by many international businessmen as a safe and secure location for their disaster recovery centres. Today, many global companies like banks and airlines are very dependent on their IT systems. Their business will come to a halt if their IT systems stop functioning. They therefore have back-up IT facilities in disaster recovery centres in alternative sites, sometimes in a different country. These disaster recovery centres function as a parallel system, and will take over the IT operations in the event that a disaster hits the primary IT facilities.

Several MNCs, including American firms like IBM, have located their disaster recovery centres in Singapore.

And when Narayana Murthy called on George Yeo three weeks ago, he advised that Singapore can also serve as a major disaster recovery centre for Indian software companies. Narayana Murthy is the chairman and founder of Infosys, one of India's largest software companies. He said that Singapore is ideally positioned for such a role. We are only a few hours by air from India. Our telecommunications links are also excellent. If we can attract a few dozen Indian companies to set up disaster recovery centres in Singapore, we will be able to create a few thousand well-paying jobs for Singaporeans.

So you see, while our external environment today may be the toughest since independence, we have many strengths that will bring us through these difficult times.

Singaporeans can also take heart from our track record. At every critical point in our history, we have risen to the challenge. We have been nimble and bold enough to make tough adjustments. We have moved swiftly to seize the opportunities.

We can, once again, overcome the challenges, and continue to provide a high standard of living for our people.

Let me tell you how.

We must remake the Singapore economy.

The Economic Review Committee has already announced important changes to our tax structure and the CPF.

The changes may bring some pain. But better for us to bear some pain now, than to suffer a terminal decline later. We will, of course, minimise the pain through measures like the Economic Restructuring Shares. However, you must also try to understand the rationale for the changes, and why it is essential for us to move now.

We need to bring down our tax rates to among the lowest in the world, in order to attract investments and talent to Singapore. With increasing competition among countries for MNCs, tax rates have become a key element of competitiveness.

We also need to cap the employer's CPF contribution for older workers, to enhance their employability.

This matter was vigorously debated in Cabinet. Not all the Ministers agreed at first that we should do so. They felt that the problem was not immediate, and that the proposed solution would cause unhappiness. We were making too many changes this year, they added.

But Lim Boon Heng argued for making the change now. He had discussed this with the union leaders. He was confident that workers would understand why it was necessary. I gave weight to Boon Heng’s judgement. He deals with unions and workers every day. He knows their concerns, and what is in their long-term interest.

These tax and CPF changes are by no means the last changes in the remaking of Singapore. We will have to make further changes over the next few years. But whatever changes we make, I give you my assurance that the Government will look after you, especially lower income Singaporeans.

Meanwhile, we will intensify our programmes to help workers upgrade their skills.

I announced the establishment of a $5 billion Lifelong Learning Endowment Fund two years ago. Currently, the Fund stands at $1 billion, with an annual income of $40 million. The Government will increase the Fund by $500 million over the next two years. This will provide another $20 million of income annually for skill upgrading and retraining, to tackle the rising structural unemployment.

The Economic Review Committee is also discussing ideas to improve the capabilities of our workforce. One recommendation is to expand Singapore’s infrastructure for adult training, and set up a Centre for Adult Learning. The Centre will bring together expertise in curriculum development, training approaches, and funding support for programmes.

The 2001 off-budget enhanced training support under the Skills Development Fund expires in October. However, since unemployment will take a while to come down, the Government will extend this enhanced support for another year. These enhanced measures pay for 100% of course fees for older workers, and 90% of course fees for certifiable training. The enhanced programme will generate 180,000 training places in the next one year.

When the economy picks up, those Singaporeans who have gone for upgrading will have an advantage over others in getting a job.

I know that Singaporeans are unsettled by the many changes we are making, including the bus and MRT fare increases. Many have complained that the timing is bad. They felt that these changes have come too close, too soon.

I take a different view. Now is the right time to take the medicine we cannot avoid. Our economy is turning around, and recovery in the job market should follow.

But not all Singaporeans accept this rationale. NewsRadio 93.8 runs a programme in the morning - AM NewsTalk - where listeners are invited to give their views on issues of the day. One topic in July was about giving feedback to the Government.

For 20 minutes, caller after caller complained that the Government was not sincere in asking for feedback. They said that after the public had expressed negative opinions against the increase in bus and MRT fares, the Government had proceeded anyway. One caller felt that "this is not my country anymore". Another said that the Government should be worried if Singaporeans do not speak out anymore, because that could be the start of a "revolution".

The callers are wrong. The Government does listen to the people. When the going was bad, such as in 1998 and last year, we had deferred price increases, and doled out generous financial assistance. In good times too, we distribute surpluses, especially to help the weaker members of our society. CPF Top-Ups, New Singapore Shares, Economic Restructuring Shares, Economic Downturn Relief Scheme, off-budget measures, utilities rebates, S&C rebates, Edusave grants and awards, Medisave Top-Ups - have you forgotten them?

Singaporeans must also understand how feedback works. The Government factors many considerations into a decision. After listening to feedback, if we find new arguments that tip the balance of considerations, then we will revisit the matter.

Take the example of Chek Jawa. Chek Jawa is a natural beach on Pulau Ubin, with rare plants and marine life. The Government had earlier earmarked Pulau Ubin for land reclamation, which would have destroyed these ecosystems. Last year, many Singaporeans urged the Government to reconsider the matter, and preserve Chek Jawa. After listening to the appeals of the people and their reasons, the Government did a further evaluation. And eventually, Mah Bow Tan reversed the earlier decision, and put on hold plans to reclaim land at Pulau Ubin. Chek Jawa was saved.

Who says the Government does not listen to feedback from the people?

But we cannot run a country based just on feedback. On any one issue, there are a hundred and one opinions, and many involved parties. The Government must consider all views, the impact on every Singaporean, the balance between short and long-term interests, and then decide on one course of action that benefits the majority of Singaporeans. We will not satisfy everybody. But we will always act in the overall interest of Singapore.

In a sense, the Government works like a doctor.

Suppose your friends tell you that slimming pills have worked for them, and you give this feedback to your doctor. Your doctor disagrees. He advises you that slimming pills may have dangerous side effects, and instead, tells you to eat less and exercise more. Is he correct in not prescribing you slimming pills, or should he have listened to your feedback and not worried about your long-term health?

Surely the doctor must exercise his expert judgement, and not blindly follow feedback.

The Government, like a good doctor, must therefore apply its own knowledge and experience, consult experts, take in feedback, and then prescribe what, in its considered opinion, is the best treatment.

Singaporeans should continue to give feedback. Your views are important for policy formulation and implementation. However, please understand that the Government has to take into account many factors and considerations.

It would be so easy for the Government to simply follow the wishes of the public, and never do anything unpopular. But at the end of five years, if this results in failed policies and no growth, you are not going to re-elect the Government. So we must do what is necessary, even if it means some unhappiness. I trust, however, that when you go to the polls, you will understand that this Government has your interests at heart. I hope that you will vote on the basis of our overall track record, which is the result of policies that from time to time, cause unhappiness.

For the remaking of Singapore to succeed, we have to go beyond feedback and the policy recommendations of the Economic Review Committee. We must change those attitudes and mindsets which are holding back progress.

Last year, I spoke on the importance of attracting international talent to Singapore. This is crucial for our growth and development.

I was therefore disturbed by the negative comments over our medal haul in the Commonwealth Games. Some Singaporeans claimed that they felt no pride in those achievements, because they were by foreign imports.

These Singaporeans need to change their negative mindset. If we gripe, instead of honouring our foreign-born Singaporeans for their success, we are giving the wrong signal to other talent who want to make Singapore their home.

Our table-tennis and badminton stars may have been born outside Singapore. But they have now all become Singapore citizens. Some have their families here, and have sunk roots here. They trained hard and played their hearts out for Singapore. They did us proud - first medals in the Commonwealth Games after 16 years; first gold medals after 40 years. How can anyone now be so ungracious, small-minded, and mean, to deride their success?

Not so long ago, our parents and grandparents came from China, India and elsewhere. Did anyone question their contributions to Singapore?

Of course, we should develop our Singapore-born sportsmen and women. We are doing so, even to the extent of getting international coaches for them. And we will see what more we can do to develop them.

But we should also welcome any international talent who decides to sink roots in Singapore. If they feel enough for Singapore to want to make it their home, let us embrace them warmly. We need to send a clear signal to all those who can raise our standards whether in sports, music, dance, the theatre, literature, the economy or politics, that they are welcome. We have become what we are because we have attracted international talent.

Indeed, the strength of a country does not depend on the size of the population, but on its quality and organisation. The US has only 5 percent of the world’s population, much smaller than China and India. But the US is the world's undisputed superpower, not only in the political and economic arenas, but in many other fields. This is because the US has always warmly welcomed foreign talent to its shores. Albert Einstein was born in Germany. Andrew Grove, co-founder of the highly successful Intel Corporation, was born in Hungary. Investment guru George Soros was also born a Hungarian. Henry Kissinger, former US Secretary of State, was born in Germany. They all became US citizens later in life, and made remarkable contributions to US society and economy. In sports too, Monica Seles now plays tennis for the US, even though she was born in Yugoslavia.

Americans have accepted all these foreign imports as one of their own.

If a huge country like the US has embraced foreign talent, we, with only 3 million people, must be crazy not to do so. Because of the quality of our people, and our economic success and social progress, we are taken seriously by other countries. We enjoy an influence disproportionate to our size. But if we now shut our doors to talent, we will soon become like any other Third World city of 3 million people. Then we will find life quite different. We will become a small fish - a guppy - in a small pond.

To swim among the big fishes in the ocean, we have to top up our population with international talent.

Let me now touch on worker attitude.

This year, Singapore workers topped yet again the annual labour force evaluation by the Business Environment Risk Intelligence, or BERI.

BERI assesses the competitiveness of the labour force in four areas - the legal framework of the economy, the productivity of the workers, the technical skills of the workers, and worker attitude.

We were ranked first among all the economies surveyed in the first three categories. For worker attitude, we came in third, behind Japan and Switzerland. Not bad, but there is room for improvement.

In June, our media reported the results of a survey of the Singapore workforce by the Gallup Organisation. Gallup found that 12 percent of the workers surveyed were "actively disengaged" from their jobs. In case you are wondering what "actively disengaged" means, it means "bo chap". These "bo chap" workers complain about virtually everything. They affect the productivity, growth and profitability of their companies.

Contrast this "bo chap" attitude with the positive, motivated attitude I hear of many workers in China.

A Singapore businesswoman recounted this story. While in Shanghai, she went shopping with a group of ladies one night. They were returning to their hotel when they passed a hairdressing salon which was still open. It was 11 pm. They went in to have their hair washed. But there were only two hairdressers. Instead of grumbling that it was late, the two hairdressers rang up their colleagues, who turned up promptly. And the hairdressers did not just wash the hair of the Singapore ladies. They set their hair, and provided facial massage and manicure. In the end, the Singapore ladies stayed till 2 am, and happily parted with their money!

Fortunately, Singapore workers who have poor work attitudes are in the minority. I highlight the problem of this minority, in order to nip it in the bud. They must be more engaged in their work.

Some of our workers who have been retrenched have unrealistic attitudes. The Ministry of Manpower gave me these stories.

First, there are those who are fussy about working hours.

A hotel recently offered an executive position to a lady. She insisted that she would only work till 1pm on Saturdays. As all hotel staff are rostered to work on some weekends, she did not take the job.

Then there are those who are unwilling to travel. I don't mean travel overseas. There was this job seeker who found travelling from Bedok to Pan Pacific Hotel too far!

Others have dainty reasons to turn down jobs. A café recruited a woman retrenched from a factory to be a kitchen-help. In the first two days, she was taught to cut vegetables and make salads. On the third day, she was asked to wash some dishes. On the fourth day, she quit. Her reason? Washing dishes was not good for her pretty hands.

Some job seekers cannot get their priorities right.

The New Paper carried a story in June about a retrenched man who used to work as a cargo officer on a tanker. He claimed that he could only afford to feed his three children instant noodles and plain bread. His wife was in jail for drug offences, and he himself skipped meals.

When asked whether he would take on a cleaner's job which could pay $600-$800 a month, he replied,

"Of course not! Why should I lower my expectations?"

Meanwhile, he survived on a $240 handout from a self-help group, and by borrowing from friends. And his children continued to suffer.

Singaporeans should adopt a more realistic attitude in looking for work. They should be more flexible and less demanding. With the restructuring of our economy, the job you want may not come by for some time. Take a job that is available, because it will earn you some income, put food on the table, and buy clothes for your children. Whatever the work, it is certainly more dignified than welfare.

Be like this man the Ministry of Manpower highlighted to me. He was formerly a foreign currency trader, earning up to $10,000 a month. After he was retrenched, he willingly took on various temporary jobs, until he landed a permanent job offering $1,300 a month. A big pay cut, but he was realistic. He understood that another $10,000 job would not come by so easily.

Last year, we set up the Economic Downturn Relief Scheme, or EDRS. The EDRS helps retrenched Singaporeans cope with their living expenses. As at July this year, some 12,000 cases have been approved, and $5 million disbursed.

Some Singaporeans see the EDRS as a source of free money. Lim Boon Heng told me that a young woman came to ask for an EDRS grant, to help pay for her HDB, Power Supply and handphone bills. Her handphone bill was over $800 in arrears. When Boon Heng asked her to give up her handphone, she replied, "Cannot, must talk lah".

Our people’s attitude towards public assistance is changing. Lee Boon Yang said that when he first became MP in 1984, the poor and jobless who went to see him asked for help to get a job. They did not want to be referred to social welfare. But now, even able-bodied young men ask him for monetary help.

We must reverse this changing attitude towards public assistance. Singaporeans have to pick themselves up when they fall, and not expect the Government to come to their aid. They have to be more self-reliant.

The Government will, therefore, let Singaporeans do more for themselves, and not jump in too quickly to help. Temporary assistance will be given to those least able to help themselves - the low income and the vulnerable. Even then, the Government's safety net will only be a backup to the individual's own savings and the family safety net. Also, the objective of the Government's help will be to help Singaporeans help themselves. We must not erode our work ethic, which is what has made Singapore succeed.

Making Singaporeans more self-reliant is also an essential step in our efforts to promote entrepreneurship. If we have too many safety nets, people will have no incentive to go forth and achieve great things by themselves. This is the problem in Europe today. Europe has much less entrepreneurial buzz than the US, because the US has a less extensive social welfare system, and Americans have a stronger tradition of fending for themselves.

Senior Minister thinks that another cause of our dearth of entrepreneurs is "an East Asian reverence for scholarship", that is, an over-emphasis on rigid, structured education. This can stifle creativity and risk-taking.

Jennie Chua of Raffles Hotel agrees with this. She told some friends that her scholarly training robbed her of a golden entrepreneurial opportunity early in her working life. Over twenty years ago, she and two friends were invited to bid for the Singapore franchise of an international hamburger chain. Like a good graduate, she did a feasibility study, and concluded that the hamburger business would not succeed in Singapore. Her logic was simple. As Singaporeans were rice-eaters, there would be no place in their stomach for hamburgers!

Jennie Chua now laughs at herself for being a "bng tang" (rice-bin). Otherwise, she could have retired ten years ago!

One can debate whether entrepreneurs are born, or can be nurtured. I take the view that entrepreneurial instincts and skills can be developed from young.

We have started to restructure our educational curriculum and methods of teaching to produce Singaporeans who can think creatively and non-conventionally. We are also encouraging the spirit of enterprise and doing business in our schools.

Many schools host student-run co-operatives. Students from Fuchun Primary School grow vegetables using hydroponics, and sell them to teachers and parents. Some JCs have started Young Enterprise Clubs. The ITEs and polytechnics have included entrepreneurship education and business-related curriculum in their courses.

At the university level, NUS has set up the NUS Enterprise, which co-ordinates the various entrepreneurship programmes on campus. NTU similarly has the Nanyang Technopreneurship Centre. Over the last few years, they have produced over 20 start-ups. Modest, but a good beginning.

I am encouraged by these programmes. If we keep up with these efforts and change our society's attitude towards risk-taking, we can become an entrepreneurial people.

We are making good headway. For example, the number of new establishments in Singapore in high tech industries has been rising. Between 1996 and 1998, we registered 180 such establishments a month. Last year, the number rose to 290.

And when I asked MTI for some examples of entrepreneurial Singaporeans, they gave me a long list of successful enterprises, including BreadTalk (bakery), Accord Express (transport and logistics), and Kingsmen International (communications design and production). Their founders had very interesting stories to tell, of how they started out, overcame obstacles and failures, and grew.

To support our entrepreneurs, we need to develop an overall environment that encourages people to discover, create and experiment. Studies in the US have shown that entrepreneurship is closely correlated with the level of cultural vibrancy.

Norio Ohga, Chairman of Sony, has made the same point to me. He advised me to spend more to promote cultural and artistic activities. Ohga was awarded our Public Service Star this year. He is a member of EDB's International Advisory Council.

Ohga speaks with authority. He is an accomplished opera singer, a musician, and a conductor. He invented the Compact Disc (CD), and other products. Now, the story goes that the engineers from Philips and Sony originally proposed a CD of 60 minutes playtime. But Ohga insisted that it should be 75 minutes. You know why? Because that is the length of Beethoven's 9th Symphony! And that is how we have 75-minute CDs today.

Studies have shown that the arts can help individuals to become more creative, in areas beyond the arts. They are an important source of inspiration and a powerful avenue for individual expression.

Furthermore, a culturally vibrant city attracts global creative talent. Creative people are highly mobile. They do not slavishly go to where the jobs are. They choose where they want to work based on their lifestyle interests, and the jobs and prosperity follow them. They want an authentic street and neighbourhood environment, a thriving music and arts scene, openness and diversity. Singapore needs a few little "Bohemias" like Holland Village, Siglap, and Club Street, where they can gather, soak in the ambience, and do their creative stuff.

To encourage creativity, we have built the Esplanade arts centre. It is a big investment. But it is a clear signal that we understand the importance of arts and culture in making Singapore a cosmopolitan city. If we are to prosper economically, we cannot focus on the economy alone.

Many Singaporeans are highly creative. But some apply their energy in idle pursuits. For example, they have cleverly changed the lyrics of our national songs to reflect the economic mood. "Stand Up for Singapore" becomes "Fare Up for Singapore". "Count On Me, Singapore" has become "Count Money, Singapore". And, "We are Singapore" has been turned into "We are Chin Kang Kor".

Why not be like Jack Neo? He has applied his creative energy to produce three movies. Two of them were highly successful – "Money No Enough" and "I Not Stupid". I watched "I Not Stupid". I can understand why it touched many parents’ heart. My wife liked it so much that she watched it three times. She felt that Jack Neo deserved a National Day award. But I told her, "Two No Enough"!

Now, I want to discuss a no-laughing matter – trends in the Islamic world and how they affect us.

I know that our Muslims are uncomfortable with the recent focus on their community. They do not want to be the centre of attention again.

But Singapore Muslims, like other Muslims around the world, are caught up in the global resurgence of Islamic fervour. Within the Islamic world, some religious leaders are pushing Muslims down an extreme path, while others urge a moderate path. Which path Singapore Muslims choose will have an impact on the cohesion of our country. It will also decide the community's future development - whether the community continues to progress, or stagnates.

For these reasons, I felt that it was important for me to touch on the subject tonight.

I have been reading more extensively about the Islamic world since September 11. I wanted to have a deeper understanding of what was happening.

For many centuries - from the 8^th to the 13^th - the Islamic world was at the forefront of human civilisation. During this "Golden Age", Muslims actively pursued knowledge and innovation. They were militarily strong, and economically wealthy. Their arts and sciences blossomed.

Unfortunately, this desire to pursue knowledge and innovation weakened after the 13^th century. The Islamic civilisation started to decline. In 1258, the invading Mongols captured Baghdad, and destroyed Islamic centres of learning. This created an overriding desire among Muslims to preserve the Islamic heritage. It made their societies more inward-looking. Education became focused on preserving past achievements, instead of fostering ingenuity and curiosity. Pupils in madrasahs memorised the old texts. They were not encouraged to acquire new knowledge.

According to Islamic scholars, conservative religious leaders also contributed to the intellectual stagnation of the Islamic world. These scholars include 19^th century Muslim reformists Sayyid Jamaludin al-Afghani (1838-1897), Muhammad Abduh (1845-1905), and Quranic translator Muhammad Marmaduke Pickthall (1875-1935). They regretted that religious leaders who sought knowledge from all sources had disappeared. In their place had come leaders who sought knowledge solely from the Quran and the Hadith, and without the inquiring spirit characteristic of early Islam.

As a result, science and mathematics were neglected, and Muslims' knowledge base became narrower.

Of course, this was not the only reason for the decline of the Islamic civilisation. Other factors such as internal political decay also played a part.

Muslim thinkers are divided on the way forward for the Islamic world to recapture its past glory. Muslim reformers believe that modernisation is necessary, but Westernisation is not. They wish to harness science and technology to improve the economic well-being of Muslims, while rejecting the perceived evils of Western culture, such as sexual promiscuity.

On the other hand, extremists insist on a narrow and rigid interpretation of Islam. They preach that the Syariah, which was developed by scholars many centuries ago, should be accepted in toto, without question or modification. They are reluctant to practise ijtihad, which allows Muslims to find new solutions to problems, and which will help make Islam relevant to the changing times and circumstances. Some extremists even advocate violence and force to realise their interpretation of Islam.

This struggle between moderate and extremist Muslims is going on in Egypt, Turkey and many other Muslim countries. The moderates want to embrace modernity, worldly knowledge and openness, while the extremists want to adopt a narrow and rigid interpretation of Islam.

In Iran, Ayatollah Khomeini's theocratic state has not worked. The conservative clergy has alienated the younger generation, because of the severe restrictions it has imposed on life in Iran. In addition, the economy is not doing well. Young Iranians find it difficult to get a job after leaving university, and the cost of living is high. The BBC, in a series called "Waiting for the Dawn", reported that "the mullahs have failed to find a formula for running a modern country". The reformists, meanwhile, have started to introduce modern ideas. The BBC correspondent saw women in Teheran wearing make-up, jewellery, and colourful headscarves far back on the head, in open defiance of the Ayatollahs.

In Saudi Arabia too, a debate has started over Islam's intolerance towards non-Muslims. Radical clerics in Saudi Arabia have long been preaching a message of hatred towards unbelievers. However, a small group of intellectuals is now suggesting that change is needed. The managing director of the Al Madina daily newspaper said:

"Before September 11, it was just an opinion: 'I think we should hate the others'. After September 11, we found out ourselves that some of those thoughts brought actions that hurt us, that put Muslims on trial."

Muslims in Southeast Asia are more tolerant and open-minded. Even so, many have been influenced by developments in the Arab world, and want to adopt a more severe version of Islam.

For example, in Malaysia, the opposition Islamic party is pushing for the introduction of hudud law in Terengganu. The hudud provides for punishments such as stoning to death for adultery and amputation of limbs for theft. And in Indonesia, some Muslim political parties want the Syariah to be incorporated into the Indonesian Constitution. They did not succeed in their attempt earlier this month, but they will surely try again.

Some Singapore Muslims too, have become more rigid in the practice of their religion.

The episode over the wearing of tudung in schools is one example. The inclination of some Muslims to eat separately from non-Muslims is another example. An MP told me that some Muslim grassroots leaders had declined to join a dinner function in a restaurant, even though halal food would be served. The reason? The restaurant served alcohol.

My concern is not the increased piety of our Muslims. Our Christians and Buddhists too, are becoming more pious. Being more pious does not mean that they will work against the interests of the country. In fact, the large majority of our Muslims are moderate, open-minded and inclusive. They believe in integration with the other communities, and get along well with our non-Muslims. They have contributed much to building our harmonious multi-racial, multi-religious society.

My concern is whether our Muslims will increasingly choose to interpret and practise their religion narrowly and rigidly. This will stifle the community's economic development.

Recently, a group of Arab intellectuals spent a year analysing what went wrong with the Arab world, and why it is so stuck behind the times. The United Nations published their findings in the "Arab Human Development Report 2002".

The report found that the Arab region was "richer than it is developed". It concluded that the barrier to better Arab performance was not a lack of resources, but three critical weaknesses: the lack of political freedom, the marginalisation of their women, and their under-emphasis on education.

The report lamented that because of poor education, Arabs were now dropping ever further behind in scientific research and IT. The Economist article which reported this Arab study observed,

"Most secularists believe that the pervasive Islamisation of society…. has played a significant part in stifling constructive Arab thought. From their schooldays onwards, Arabs are instructed that they should not defy tradition, … that truth should be sought in the text (of the Quran) and not in experience…. (This is) discouraging critical thought and innovation and helping to produce an army of young Arabs, jobless, unskilled and embittered…"

Adopting a narrow and rigid interpretation of religion could also discourage critical thinking. This could open opportunities for radical clerics to exploit susceptible minds. Many members of the Jemaah Islamiyah (JI) terrorist group were led to believe that participating in a jihad could atone for their sins. They became quite willing to kill innocent people and do harm to Singapore. Hashim Abas, the JI member who gave the commentary in the Yishun MRT tape, told the ISA Advisory Board,

"If a foreign country attacks Singapore, I've to protect myself. If they claim it’s for Islam, I'll join them."

I must point out that Hashim Abas and the other JI members are the exception. Our Muslims do not think like them. They are loyal Singaporeans who will defend Singapore.

We should not doubt them. We must not allow our view and attitude towards them to be coloured by the extremists.

Nevertheless, we should take steps to ensure that there will be no other Hashim Abases, and that our Muslims do not take a path which will adversely affect the community's future.

Last month, Guntor Sadali, editor of Berita Harian, exhorted moderate Muslims to come forward to make their views heard. He said that the narrow and rigid perspective of extremists was tarnishing Islam's image. Moderates must be the dominant voice, not otherwise. Guntor said that practising moderation did not mean sacrificing principles. Muslims should focus on the substance of the religion, and not its form. Guntor added that there was enough flexibility in Islam which enabled Muslims to make adjustments to Islamic practices.

This was a courageous and highly significant statement. It showed a moderate Muslim leader who felt strongly about the dangers to his community, and had the conviction to speak out publicly. I strongly urge our Muslims to respond to Guntor's call, and speak up against developments which threaten the harmony of our multi-racial, multi-religious society. They must stand up against those who advocate intolerance and extremism. They should not allow the extremists and militants to set the Islamic agenda. They should not accept extremist views propagated in some other Muslim societies, as those are aimed at achieving political goals.

I would like to see our Muslim leaders from MUIS and influential organisations like Jamiyah, Muhamadiyah, Pergas and Perdaus, take the lead in this, and guide the community away from extremism, fanaticism, intolerance and inflexibility. They could, for example, propose ways and means to protect the community from religious teachers who spread extremist views.

For the same reasons, I fully support Yaacob Ibrahim's vision of a community of excellence for our Malays. Yaacob wants the community to embrace modernity and development, while drawing its strength from Islam and Malay traditional values. He wants them to do better in education, especially science and maths. He wants them to be good Muslims and loyal Singaporeans.

Let us commit ourselves to building a Malay/Muslim community of excellence which is well integrated into multi-racial, multi-religious Singapore. You can become a model Muslim community, progressive and economically developed. This model Muslim community will contribute to the remaking of Singapore.

The remaking of Singapore goes beyond economics. It is also about making changes to our society, to make Singapore the kind of home that Singaporeans will want to live in. Vivian Balakrishnan heads the Remaking Singapore Committee - the social and political counterpart of the Economic Review Committee. He and his committee have met a broad spectrum of Singaporeans to understand their wishes and aspirations. They will be putting up their recommendations soon.

One of the core issues Vivian's committee is looking into, is how to root Singaporeans to Singapore.

While working on this issue, Vivian told Parliament in April that his son had asked him why we should fight for Singapore if there was a war. This question sparked a national debate. It made Singaporeans look into their hearts, and ask what Singapore meant to them.

One Singaporean wrote to The Straits Times,

"If we expect the citizens to die for their country, there must be something beyond material things that is worth dying for".

He is right. Economic competitiveness alone will not build us an enduring Singapore. It may give us material wealth. But if a major recession comes along, how many Singaporeans will leave for greener pastures?

Lee Huay Leng of Lianhe Zaobao wrote a thoughtful piece on this question in July. She was the Chinese paper's correspondent in Hong Kong for three years, and had just returned to Singapore. In her article, Huay Leng described the changes she saw in Singaporeans. She noted that Singaporeans were now used to living in a comfortable, somewhat surreal world, disconnected from the harsh realities of our regional neighbourhood. She wondered therefore if the current generation of Singaporeans could bear hardship. She noted too, that Singaporeans now measured a government by whether it met their infinite material wants, and that the Government had to deal with voters who were prepared to migrate. If the Government failed to meet the material expectations of Singaporeans, would they stay around?

This is a predicament for Singapore. The more the Government provides for Singaporeans, the higher their expectations of what the Government should do. The more we educate Singaporeans, and the more economic opportunities we create for them, the more internationally mobile they will become. The more they gain from subsidised HDB housing, the more money they have to buy cheaper houses in Australia. Will Singaporeans be rooted to Singapore? Will enough Singaporeans stay here, to ensure our country's long-term survival?

The answer depends on whether they feel deeply for Singapore, and for their family, friends, colleagues, and fellow NSmen in their army units. It depends on whether they see this place as home for themselves and their children, or whether they treat Singapore as a hotel.

If they feel Singapore is home, then they will stay and fight for Singapore. Even if they are overseas, they will return and fight. They will work with passion and conviction for our future. They will make sure that Singapore continues to progress and prosper.

For me, this is home because my family, my friends, my people are here. My memories are here. My hopes are here.

This is home because we built it. Every Singaporean has given a part of himself, big or small, to the country. Singapore is the sum of our dreams, our fears, our sweat. It reflects who we are, and what we want to be.

When we proclaim that we are Singaporeans, we are expressing our belief in the Singapore way of life and in our shared values - a multi-racial and multi-religious society, meritocracy, compassion, justice, equality, hard work, determination, and excellence in whatever we do. We are proud of our achievements, and grateful for the opportunities and the good life that the country has given us.

And every dollar that we donate, every feedback that we give, every idea that we offer, reflects our dreams for a better Singapore.

You will not feel this same sense of belonging anywhere else. You may enjoy a physically comfortable life. But only at home here in Singapore, can you control your destiny. As Jack Neo explained in his recent interview,

"Here, I'm the No. 1 wife. Elsewhere, I'm the concubine."

Unfortunately, not all Singaporeans feel like Jack Neo. I shook my head when I read some of the responses to a poll by Streats. Streats asked Singaporeans if they were prepared to lay down their lives for Singapore if it came to a crunch. One respondent said that he would "run at the drop of a hat". Another said that he would not stay, because "with the global economy, we needn’t be in Singapore to earn money". A third felt "no sense of belonging here."

These people are fair-weather Singaporeans.

I hope they will have a change of heart when they think over their remarks. The English students of Oxford University, in a famous debate just before World War Two, voted that they would not die for King and country. Ironically, a few years later, when the war broke out, many of them did fight bravely against Hitler and the Nazis.

I was disturbed too, by two letters published in Streats in July. The writers are also fair-weather Singaporeans. They said that if life is less stressful elsewhere, for example in Australia, and less costly, why not emigrate? They believed that life would be even tougher for the next generation in Singapore, as shown by the recent decision to increase bus and MRT fares. In Australia, on the other hand, the cost of living was very low - property was cheap, cars were cheap, and parking in most places was free.

Are these two potential emigrants so sure that the cost of living will never go up in Australia? Which other country will they run off to next, when bus fares go up in Australia?

Fair-weather Singaporeans will run away whenever the country runs into stormy weather. I call them "quitters".

Fortunately, "quitters" are in the minority. The majority of Singaporeans are "stayers". "Stayers" are committed to Singapore. Rain or shine, they will be with Singapore. As we say in Hokkien, "pah see buay zao".

"Stayers" include Singaporeans who are overseas, but feel for Singapore. They will come back when needed, because their hearts are here. The Singapore nation is not just those of us living here, but also the thousands of loyal Singaporeans who live around the world.

Let me stress that I am not criticising all Singaporeans who have emigrated. But I take issue with those fair-weather Singaporeans who, having benefited from Singapore, will pack their bags and take flight when our country runs into a little storm.

Our founding fathers did not give up when Singapore had to fight the communists and communalists in the 50s and 60s, when the racial riots erupted in the 60s, when we faced the oil crisis in 1973 or our first recession in 1985. If the founding generation were faint-hearted, and had run off at the first sign of trouble, there would be no independent Singapore today. Their never-say-die, can-do spirit gave us the peace and prosperity we enjoy today.

Has the younger generation of Singaporeans gone soft? Look yourself in the mirror and ask, am I a "stayer" or a "quitter"? Am I a fair-weather Singaporean or an all-weather Singaporean?

I believe the large majority of our youths are "stayers", and have not gone soft. The men do National Service. The women support them. We can see that our NSmen take their duties seriously. When they participate in exercises with other armed forces, or when they volunteer for UN missions, they do the SAF and Singapore proud.

One Singaporean posted on The Straits Times Interactive web-site,

"To love one's country, to fight and die for one's country, is the duty of every citizen. It is an honour as well."

Another Singaporean in Canada said that if war were to break out, he would fly back to fight, simply because he wanted to "fight for my home, my family and friends".

Yet a third Singaporean declared,

"I would die for the people who contribute to this country, like the cleaner who sweeps the road, the people who drive the buses."

I am not asking anyone to die for Singapore. I want them to live for Singapore. If you are a "stayer" and are committed to Singapore, we will more than survive.

In 1965, when we separated from Malaysia, Singapore was not given much of a chance to survive. Unemployment was high, and the future was bleak. We were a tiny island. We had no natural resources. But our parents stayed, worked hard, and built up the country.

Today, no one doubts that Singapore will survive. We are respected internationally. Every Singaporean has a roof over his head. He enjoys quality education and healthcare. Our streets are safe and secure. Our environment is green and beautiful. Our arts, sports, leisure and entertainment scenes are vibrant.

Yes, the future is uncertain. The journey will be tough. But let us press on. We may not be able to change the world. But we can remake Singapore. We will make tomorrow brighter than today. Let no challenge stand in our way.

Good night!

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