We are steadily building up our second wing in the external economy. We have become a significant direct investor in all the ASEAN countries, in China, India and Australia, and beyond. If the trends continue for another 10 years, which is not an unreasonable expectation, Singapore's economy will be much larger than our geographical confines.

Even as we expand overseas, we continue to attract substantial foreign investments into Singapore. These investments bring in technology and expertise, expand our international networks and create many jobs. Foreign FDI in Singapore to date amount to $235 b which is high compared to our GDP last year of $159 b.

Of Singapore's total population of 4.19 m in 2003, 3.44 m are citizens and permanent residents, and 0.75 m are non-residents. It is estimated that a hundred to a hundred and fifty thousand Singaporeans live overseas either for work or study. In the coming years, as our natural population ages, we will need more immigrants. At the same time, as our second wing grows, more Singaporeans will live overseas.

All this means that our economy and our mentality will become more cosmopolitan in the future. There will be Singapore, the island city-state, and there will be a Big Singapore which includes Singaporeans and friends of Singapore in various parts of the world, but especially in Asia.

We are like a tree with spreading branches. The more we succeed, the greater will be the spread. However, the tree can only be stable if it has a strong trunk and deep roots. Strengthening our trunk and roots is critical. If we fail in doing this, the branches will break off and damage the entire tree. Or the entire tree itself may collapse.

Thus, even as we encourage Singaporeans to venture overseas, we must make sure that we strengthen our core. As so much has been said about the Singapore economy recently, I will concentrate on the less tangible aspects this evening.

First of all, we must have a strong sense of ourselves. This is fundamental without which the SAF cannot fight and our collective ability to face challenges will be weak. All over the world, Singaporeans are trusted and known to be competent, reliable and honest. We have a good reputation. However, this reputation only reflects our inner character. Developing a strong national character or culture is not something which can be achieved quickly because of our short history and our heterogeneous make-up.

Far from denying our roots, Singapore culture should rejoice in them. If we cut off our roots and remember our important history only from the time we became independent, we will be a weak people. In fact, it will be a disaster. The Chinese Singaporean should always know that he too is a son of the Yellow Emperor and an inheritor of an ancient civilization which is becoming ascendant again. This means not only the preservation of Chinese language and culture, but also their continuing creative development. In the same way, the Indian Singaporean should naturally take pride in India's civilization and its current resurgence. So too the Malay Singaporean should be a proud descendent of Sri Vijaya, Majapahit and Malacca. Strengthening our core requires us to impart to our children the knowledge and values of our ancestors. The teaching of history in our education system and in our cultural life is therefore very important. Preserving heritage buildings and marking heritage sites help make our little island a home filled with memories of how we have become what we are.

Of course, there is a danger that our roots may pull us apart and weaken, not strengthen, us, as indeed they once did in the early years of our nationhood. We must therefore take care to teach young Singaporeans in an inclusive way. Regardless of his own race or religion, every Singaporean student should know at least a little of the rituals and beliefs of all the major ethnic and religious groups which make up Singapore. He should be familiar with the major festivals and visit different places of worship. To be a Singaporean is to be one who is exposed early in life to diversity and who respects diversity instinctively. The Singaporean priest or pastor, the Singaporean imam and the Singaporean monk must internalise this value and reflect it in his thoughts, words and deeds. No claim should be pushed so far by any race or religion that it threatens the space of others.

In the early days of our nationalist struggle, this Malayan ideal of embracing all races and religions was advanced by democrats, socialists and communists alike. After the Second World War, Dato Onn Jaafar wanted UMNO to be a United Malayan National Organisation. Recently, a Malay Malaysian Minister remarked to me that Dato Onn was not wrong; he was only ahead of his times, adding that now is the time to express such an ideal.

The Malayan ideal has become the Singapore ideal which a world troubled by ethnic and religious conflicts increasingly needs. The Singapore ideal of inclusive diversity is at our core and must permeate our cultural life.

Many of us knew Brother Joe McNally. His life was an inspiration to many of us. He came to Singapore from Ireland in 1946 and dedicated his life to education, the arts and the promotion of religious harmony. In 1985, he became a Singapore citizen. He touched many lives among the students he taught in Singapore and Malaysia, among those in the arts community including those who studied at LaSalle-SIA College of the Arts, and among the many who are active in inter-religious work. One day, I met Malek Mattar, a currency broker who turned to furniture design. His modern mahogany furniture has a growing market in many countries. When I asked him why he changed his career, he attributed it to Bro McNally. Bro McNally was a proud Singaporean who never forgot his Irish roots. When he was given the Mont Blanc Award for the Arts, he invited a Chinese and a Malay as his principal guests.

Prof Tommy Koh is chairing a committee to raise funds and erect one of Brother's sculptures at the grounds of a museum in County Mayo where he was born. The sculpture is to honour Brother and to thank the Irish people for giving him to us. Last year, when Liu Thai Ker and I and some others visited Brother's sister and relatives at his home town, we discussed this proposal with the county officials. They have been very helpful and supportive. Our plan is to do an official unveiling of the sculpture later this year and to bring from Singapore a sizable contingent of Singaporeans of difference races and religions for the ceremony. I mention Brother's work this evening, firstly, in the hope that you will support Tommy and his committee when they ask for your help and, more importantly, because it represents so much of what we stand for in Singapore as a multi-racial and multi-religious community.

Strengthening the Singapore core is crucial to our efforts in remaking Singapore and expanding the Singapore economy beyond our shores. It is paradoxical but we can only be cosmopolitan if we have a well-defined centre. Take this plan to turn Sentosa and the Southern Islands into an international resort and residential development. If our own sense of self is weak, having an international community deep in our midst can weaken us as a people.

But I believe we do have a hard kernel in our heartlands and in our institutions which we must continue to protect and nourish.

One serious problem we face is the low birth rate and the ageing of our population. Yes, we can bring in foreign workers and international talent to keep the economy going but, without a strong Singapore core, the system cannot be sustained. If our core is weak, internationalisation will erode it further. The demographic challenge that we face in the next 20 years is a huge one.

Producing more citizen babies is therefore a matter of grave importance. Hence procreation was the No 1 topic in this recent budget debate. But human beings don't produce babies mechanically or in response to government orders. For many babies to be born, there must be a strong nesting instinct among Singaporeans and a wholesome environment. We need nests everywhere in Singapore and eggs in those nests. We must do nothing to weaken this instinct and everything to strengthen it. Of course, this is a complex problem for which we need a multi-faceted solution. The fact is we can never be happy if we live only for ourselves. To be a full human being, one must belong to a community which has a past and a future. It is families and children which connect the past to the future. Faith and hope in the future of a community has a direct effect on the reproductive behaviour of its members.

Grandparents play a vital role. They help to look after the nest and, in some ways, do more to transmit values to children than their parents. Generational depth gives society its stability and continuity. In Chinese society, clans are an integral part of the civilization. The Icelandic people, who number just over a quarter million, maintain their genealogical records with astonishing care so that most Icelanders are able to trace their ancestries back hundreds of years. In the age of genomics, this genealogical record has become a treasure trove for research into the genetic causes of many diseases. Like Iceland, Singapore is also a small community. Preserving the memories of those who preceded us and remembering what they have done help us define ourselves. It is not only political leaders whom we must remember but also those who contributed in intellectual and other fields.

We must also bring in new citizens like Brother McNally who believe in Singapore and want to contribute to our development. Too many of our PRs stay as PRs because, for many of them, that's a comfortable intermediate position. Becoming a citizen means a deeper level of commitment to the community which some are not prepared to make. We have to do more to encourage more PRs to take up citizenship. Citizenship has its own rewards and gives living here a different emotional quality. But in doing this we must respect individual choices and not put negative pressure on anyone. Instead what we have to do is to establish more clearly the importance of citizenship. Citizenship is as much a responsibility as it is a benefit. For example, voting is a sacred duty to be exercised in a solemn way. Extending it progressively to overseas Singaporeans who maintain their links to the home island helps us bind Singaporeans together worldwide.

Being Singaporean earns us respect when we are overseas. The Singapore passport is highly regarded everywhere. Our little red passport opens doors overseas including to high-security destinations like the United States which Singaporeans can visit without a visa. At many airports, a line of Singapore passport holders at the Immigration counter gets cleared faster than many other lines. An individual Singaporean traveller should always look ahead at the composition of the various lines before deciding which to join. I always remember Dr Tan Cheng Bock's advice that in the male toilet, avoid queueing behind older men.

Singapore society is now entering a creative phase. Because we are small and organised, we are responding more quickly and effectively to changing global trends than most other societies. Our international reputation is now at an all-time high. We are positioning ourselves well for the new currents. Both China and India will become much more important to us in the future. Our links to both countries are broadening and deepening.

But our immediate region, where we are right in the middle of, is Southeast Asia. If Southeast Asia does well, we will fly. The overwhelming victory by BN under PM Abdullah Badawi’s leadership is a big plus. Although terrorism has become a serious problem, Southeast Asian countries are responding to it with varying degrees of determination. Seven years after the start of the Asian financial crisis, many parts of Southeast Asia are on the move again.

Younger Singaporeans will inherit a Singapore with all kinds of new opportunities both here and overseas. With the opening of the new campuses for SMU, NAFA and LaSalle College in the City, and more facilities for cultural activities like the Old Parliament Building, the entire downtown area on both sides of the River will be lively throughout the day and night. Beyond our island, Singaporeans will enjoy easy access to most parts of Asia and the world. In many cities, communities of Singaporeans will be organised in local networks all linked back to the home island.

However, our most profound links to China, India and Southeast Asia are not the economic ones but the cultural ones. We are connected to them not only by commerce but by history, culture and blood. And these connections must be constantly refreshed. Should one day we lose our sense of being Chinese, Indian and Southeast Asian in Singapore society, we will lose everything including our economic position. Our multi-channel capability is what defines us as Singaporean. Our knowledge of different languages and of cultural nuances is what gives us the advantage in many areas. That is the core we must strengthen. If our cultural roots are well-nourished, our economic trunk will be strong and our branches will spread wide in all directions. That is the Singapore ideal, the Singapore idea, which others are intrigued by. Singapore will increasingly become a venue for the dialogue of religions and cultures.

Last week, I attended the closing ceremony of the World Chinese Buddhist Sangha Conference. The Singapore organisers put up an excellent show which laid out the richness of Singapore's multi-racial and multi-religious heritage. Ven Ming Yi got Iskander Ismail to do the musical arrangement of the Buddhist hymn sung at the end of the ceremony which he did brilliantly.

The Singapore National Wushu Federation chaired by Ang Mong Seng is now experimenting with a new lion dance based on the lion which gave Singapore its name. In Sejarah Melayu, Sri Tri Buana 'beheld a strange animal. It seemed to move with great speed; it had a red body and a black head; its breast was white; it was strong and active in build, and in size was rather bigger than a he-goat.' The Singapore Lion will not replace the traditional Northern and Southern Lions in our Chinese culture but it will add something to what we have in Singapore as we grow in self-confidence. It will be a lion dance which Malay Singaporeans can also be associated with, and one directly connected to the history of old Singapore.

In whatever we do, we must be authentic. If our diversity is plastic and merely put on for tourists to gawk at, we will not like ourselves and we will instead be laughed at. The work of our artists is important to the development of our cultural soul. What they express in different forms should emanate from our inner self and not cranked out according to some marketing formula. As we mature as a people, we should allow our artists more space to experiment with.

Above all, we must be a trustworthy people. If we distil everything which makes us what we are, it boils down to one word - trust. We trust each other as fellow citizens though we may be different. We trust the government because it is clean and acts in the overall interest. Foreigners trust us because we honour our agreements and disputes are dealt with fairly. Investors trust us because we don't change our rules suddenly to disadvantage them. We protect their properties including their intellectual properties. I am not saying that we are 10/10 but we rank high. Overseas, Singaporeans are welcome precisely because they are trusted. That trust cannot be put on. It must emanate from deep within. Recently, two Singaporeans were appointed to high positions in international organisations. R. Ramachandran of the National Library Board has been named the new Secretary General of the International Federation of Library Associations and Institutions in the Hague, Netherlands. Another will be announced shortly. They are appointed not only because of their individual capabilities but also because they led organisations in Singapore which are held in high regard internationally. The Singapore name enhances the international value of each and everyone of its citizens.

I congratulate in advance the winners of the Singapore Business Awards this evening. Each in his own way has achieved success by leveraging on the core strength of Singapore. By your success overseas, many of you here have helped to make Singapore bigger.

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