Lee Hsien Loong, the 52-year old son of the founder of modern Singapore, who has also held key economics and finance posts and was Deputy Pime Minister in the island-state’s government, was sworn in August 12 as the Southeast Asian powerhouse’s third Prime Minister.

In another symbol of the specific leadership system in Singapore and its penchant for continuity, both the elder Lee retains a seat in the cabinet and former Prime Minister Goh becomes head of the Central Bank while the incoming Prime Minister retains the Finance Minister’s portfolio he held in the past Government.

With the accession of the younger Lee, some political analysts in region have suggested that the event is a major step toward the insertion of the state into the type of dynastic politics traditional in some parts of the region, where the Macapagals, Ghandis, Sukarnos and others have become a recurring presence.

The event is another in a long series of political events, elections or generational transitions which have marked Asia in 2004 and which could imply some evolution in not only personalities, but also structures and policies. In Singapore, the long-anticipated transfer of leadership was also being watched especially closely by the regional and international economic community for signs of any accompanying shifts in policies. And even if there may eventually be few major changes associated with the generation of leadership, it is clear that it will be operating in vastly different circumstances than the predecessors.

The prosperity and stability of the state of 4.4 million residents could be tested by the ability of the new leader to diversify the economy and maintain the well-known political discipline handed down to him.

The state’s emergence as a regional and global presence was long associated with both its political stability and its role as a sophisticated industrial and financial centre for the region. This role was, however, somewhat affected and altered by the 1997-98 Asian economic and financial crisis and the rapid rise of China as the regional economic giant which assumed many of these roles and attracted much of the production from other economies in the region. Nevertheless Singapore remained a favourite hub for many international firms and began to develop new niches by further accentuating its advantages and qualities, including a highly-educated work force. It has also emerged as a limited but locally-important investor in other countries in China, the region and even Europe. The highly-planned economy is currently stressing education and biotechnology as it once concentrated on electronics and petrochemicals on which to base its fortunes. Lee's bigger challenge are threats to its position as a high-end manufacturing base, a hub for financial services and a centre for a wide range of industries such as aviation and ports.

Politically, the country has been regarded as a strong internationalist as well as an active regional player. Prime Minister Goh was especially visible in the establishment of the Asia-Europe Meeting (ASEM) process and his initiatives for closer regional integration within ASEAN. Singapore has also been regarded with some hesitation because of its direct attachment with the US and its policies, especially in the struggle against terrorism.

In Singapore, the change was sealed when the heir-apparent Lee was chosen the ruling Peoples Action Party founded by his father which controls all but two seats in the Parliament. Lee Kwan Yew held the posts from before independence as part of the Federation of Malaya from Britain in 1960 to his retirement in 1990 to assume a still-visible presence as Senior Minister when Goh Chok Tong assumed the leadership in another planned succession. Lee, known as an authoritarian figure had seceded from the Federation in 1965.

In another symbol of the dynastic hold on the city-state, the government’s main industrial-holding company, Temasek is managed by the new Prime Minister’s wife, Ho Ching and holds a stake in everything from airlines to banks to the country’s main telecoms firm. (The latter Singtel is, in turn, run by Lee’s brother, Lee Hsien Yang. The elder Lee,80, has also managed the Government Investment Corporation.

The new Prime Minister, who is widely know as BG because of his term as a Brigadier General in the Singapore military, has sought to present a friendlier, down-to-earth image than his austere father, who introduced many of the state’s restrictions which ranged from gum-chewing to political dissent. He has also promised a more relaxed and transparent style in governance. But in fact, many tend to regard him as less accessible than his immediate predecessor. Politically, Goh was said to have introduced a “kinder, gentler” style that also included considerable social advantages for residents. It is believed that the young Lee will seek to build on the consultative and participatory style of policy-making introduced by Goh.

In recent years, Singapore has also struck out to conclude bilateral free trade or other forms of liberal or special trade agreements with various individual partners rather than relying on the benefits of multilateral or regional trade negotiations and accords. These have ranged from the United States or Japan to consideration of such a pact with the European Union. While Singapore commissioned a study on such a accord with the EU, the later has maintained its preference of multilateral agreements and hesitated to embark on this or other such negotiations until the conclusion or obvious failure of WTO talks.

Singapore,the most advanced economy of the ASEAN countries, plays a significant role in trade between Asia and Europe. A large proportion of goods going either way pass through Singapore’s port. In addition, Singapore is a technically advanced nation and an important trading partner by itself. Among the ten ASEAN countries, Singapore is the largest trading partner with Europe. In 2002 total EU-Singapore bilateral trade amounted to € 27.2 billion, which is 27% of total EU-ASEAN trade.

Its GDP in 2002 current dollars stood at € 96 billion. It rebounded from the Asian regional economic crisis in 2000, with a 10% surge in real GDP, and entered into a recession in 2001. Output growth recovered by 2.2% year-on-year in 2002, although real GDP declined in the first two quarters of 2003 due to geopolitical shocks and the SARS outbreak. A combination of fiscal stimulus, stronger industrial production and export growth have helped re-establish growth.

GDP per capita in 2002 stood at € 23,137 – only beneath Hong Kong in Asia and above the EU average. The systems for health care and education are highly developed in Singapore. The literacy rate for the population stands at 93%, with a high percentage of students obtaining university degrees.