Singapore's founding father and senior minister talks about the future prospects for his small country and the attaches to the Association of Southeast Asian Nations. John Thornhill, Rohit Jaggi and Sheila McNulty put the questions

How prepared is the next generation of political leaders to lead Singapore?

They have got experience now about how different we are from other societies and how differently we have to be organised to make a living. Because of our unusual circumstances - no natural resources, nothing except people on a small island - we must have the imagination and vision to use the technologies that come along and carve out a future for ourselves.

The key to success is something they have learned, which I took some years to learn, and that is the number of talented people we can attract to Singapore.

We do not have enough. Our population base is too small. We have succeeded in the past because we were the education centre of the region. The British created this.

People came here to become doctors, teachers and so on. Quite a few stayed on and became great contributors to our society. Competition is now global.

Singapore International Airlines is not just having to compete against the regional airlines. American airlines are coming in, so are British Airways and Qantas. It's like going to the Olympics, no longer just the southeast Asian games.

Does your son, Lee Hsien Loong, the deputy prime minister, have the right qualities to be leader?

That's not for me to decide. It's a matter for the people of Singapore, and specifically the members of parliament, whose winning or losing of their seats depends on having the right leader.

He's got to prove himself as a man who is able, not only to think up policies and implement them, but also to implement them in a way that will win votes at the end of every four to five years. That's the dynamics of the parliamentary system.

It's different from the American presidential system, where you say,'I'm a peanut farmer, vote for me,' and they did.

Here, you have got to win the confidence of your fellow MPs, who would have many years of sitting down listening to you, arguing with you and forming their conclusions of you.

It's a different system. I think it's a better system.

He's been proving himself for a long time.

Coming on to 17 years. Most MPs have come to certain conclusions. I have not asked them. You ask them.

Is Singapore's future constrained by the region?

There is a certain discomfort that we are different, that we organise ourselves differently and, as a result, we have not fallen down as badly.

That is sometimes held against us, which is difficult. But if we were differently organised, I think we would go down and, unlike them, may never come up again.

So it's a tension that has always existed and will continue to exist, but it's manageable. They have to live with us. We have to live with them.

There is a debate in the media about what it is to be a Singaporean. How would you define that?

It's a luxury we never had. This navel gazing and introspection is a luxury which the younger generation, not knowing it's a luxury, have indulged in.

Where do they belong if they don't belong here? They will soon discover that when they travel or work abroad, and then miss the comforts and things they take for granted at home.

Ask the people who have served in Shanghai, Beijing, Delhi, Bombay, Jakarta, or even Sydney, Melbourne, Perth, what they think of home.

I'm not able to pre-determine what shape the profile of the Singaporean in another 50 years will be. I inherited a polyglot group that was segregated from each other.

Raffles drew lines on the map that here would be the Bugis, there would be Hokkiens, and so on: Arabs, Indians from Madras and Indians from Bengal.

We were encapsulated in separate lots. We did not speak one language. When I made a speech, at no time did the audience laugh or clap together, because, at any one time, only a part of the audience understood me.

Now, we understand each other, the young below 40. The older people still have not got a common language. Where do we go after we have a common language and a common background? I leave that to the next generation to sort out. I sorted out what I could.

Does Singapore represent the globalised future?

One facet of it. Not the whole of it. If you take our European counterpart, say Dublin, which is also growing fast as a centre for multinationals and software, they will represent another facet of that globalisation.

Large numbers of Europeans and Americans will alter the Irishness of Dublin. It's a different result in each particular city, depending on where it is sited, what its basic culture is.

There may be similar characteristics. To become a global city we must have an open welcoming approach, so foreign talent will feel comfortable. At the same time, they should be able to create little niches of their own. If Germans want to get together and sing German songs on their festive occasion, let them. Similarly, the Irish or Americans, or whoever.

For want of a better phrase, we need an open-ended approach to other people's ways of life. So long as they don't impinge on you, leave them to lead their own lives. Certain things, we hope, will remain the same: that we keep this place drug-free and violence-free. That's a plus for our growth.

How essential is it that Asean be united?

It will take time to grow. The financial crisis has been a setback to so many countries and Asean has taken on five new members, who are not completely in the market economy. It will take time for the enlarged organisation to gel. Easily 10 years, I would think. But there's a certain logic to it. (With China in the WTO) unless we get together and without the attraction of a more unified market in Asean, separately we are going to lose more FDIs.

It's already down by about 40 to 50 per cent compared with pre-crisis investment figures, and China's has been shooting up. If we stay as small markets, we will lose. I'm not saying that 500m (people) in a non-integrated market can compete with 1.2bn, but it stands a better chance.

How would you evaluate China's potential?

What Taiwan has done, what Hong Kong has done, there is no denying that China will do and excel at. So you multiply Taiwan's 21m (people) by a factor of 50 and you get an idea of the impact of that over the next 30 to 40 years. Yes, they will be our market. But they are pretty tough competitors.

Do you think China will have to become a democracy?

I do not believe there is only one road to democracy, or only one kind of democracy. They have already gone from a monarchy to a republican system on to a one-party dictatorship. They cannot move backwards to a monarchy. They have to move forward.

The ultimate legitimacy is the support of the people, however it is expressed. While they have large masses in the interior who are not well educated, over the next 30 to 40 years there is going to be a drift into all the cities and the small towns will become big ones, all with access to the internet, access to information.

There is no way you can govern a well informed, large managerial/professional class without taking their views into account. How they take them into account is another matter.

How do you see US/China relations developing under the new US administration?

Republicans have been out of office for eight years. They have taken certain stands. They believe Clinton was soft on China.

What does not being soft mean? I hope that they will take the 12 to 18 months to assess the new situations that have evolved in the last eight years - not just in China, but in Korea, Taiwan, Japan, Asean - and calmly re-analyse the present situations to see what options are still open to move forward America's interest.

This gives them time to consult and discuss with their allies and their friends in the region, who will be affected by their policies. US-China is the single most important relationship, one that will decide the future of the Asia-Pacific region. If relations can remain stable, on an even keel, we could have 20, 30 years of growth.

Do you see China taking on an increasingly bigger role in the region?

One must assume that as they become wealthier, more technologically competent, they will want a bigger voice in how the neighbourhood is run.

We have noted what they have said that they will never be a hegemony. However, it is better to have a balance. That balance has got to depend on a strong America, a revitalised Japan and a vigorous Korea. Then, we will have abalance.

I don't see a balance inherent within Asia itself. China is just too big. You can put the rest of east Asia together - it just would not tip the scales against China.

How difficult is this transition to a more creative, entrepreneurial society going to be?

It's an extremely slow difficult process and will take a long time. But we have got to keep encouraging them, making it easier for them. The final choice will be theirs. You cannot force a man or a woman to take a risk if he or she is risk averse.