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CAN Singapore censorship survive the Internet revolution? For decades, the island republic's government, led by Lee Kuan Yew and his People's Action Party, muzzled Western critics by limiting freedom of speech and of the press. The government controlled the country's TV stations and newspapers. The ruling party won almost every election that mattered. Opposition politicians who got out of line found themselves subjected to crippling lawsuits.

Rights advocates shuddered, and multinationals shrugged. Enamored of the island's political stability and friendly business climate, foreign companies like Hewlett-Packard and Seagate made Singapore a top destination for investment, helping to turn the tiny enclave into one of the world's wealthiest countries.

The Internet, of course, is a threat to Singapore's model. For starters, the Net provides ordinary Singaporeans a chance to get around government censorship. It's impossible for government officials to censor completely the vast amount of material available on the Internet.

EXCITING CONTENT?

Just as important for Singapore's ambitious technocrats, most of the companies that have dominated the dot-com economy are entrepreneurial. Singapore, which struck gold thanks to multinationals and government-linked companies (GLCs), isn't exactly known for its entrepreneurial culture. Since GLCs have long enjoyed monopolies over TV and broadcasting media, Singaporeans are more hard-pressed than Asian rivals in Hong Kong to generate the kind of online content that excites Web users -- and stock investors.

The technocrats know that the country needs more freedom of speech and the press if it hopes to fulfill the government's goal of becoming Asia's Internet industry hub. So Singapore is taking some baby steps, creating more of an opportunity for Singaporeans to express themselves and dismantling the monopolies on broadcast TV and the press.

But the moves show that Singapore's leaders don't intend to make any major reforms. For instance, they soon will allow citizens to express themselves more freely -- but in one spot, a special "Speakers' Corner" in the city, where Singaporeans will be able to sound off, without getting a police permit, on just about anything. This being Singapore, such freedom will still be limited, of course. Religious and racial subjects will remain sensitive. And people taking advantage of the ability to speak their minds at the Speakers' Corner still need to be careful speaking their minds anywhere else in town.

FAMILIAR BEDFELLOWS

When it comes to the media, the government is taking a similar approach, liberalizing just a bit but keeping things under control. In early June, Singapore officials announced plans to open the media market, exposing the government-owned Singapore Press Holdings (SPH) to competition for the first time. SPH, which has long enjoyed a monopoly in the island republic, will soon have a competitor.

And surprise! The new rival is another state-owned company: Media Corp. of Singapore (MediaCorp). The newcomer has won permission to launch an alternative to SPH's newspapers. MediaCorp plans to unveil a free newspaper, which the company will distribute in the city-state's spanking-clean (what else would it be in Singapore?) subway system.

Don't worry too much about SPH, though. In return for having its government monopoly turned into a duopoly, SPH wins permission to operate broadcast-TV channels, an area that had been MediaCorp's domain. It's a cozy arrangement, one that the government has tried in other industries in the past. The formula: Allow a small amount of competition but ensure that the state doesn't surrender its control. For instance, when Singapore ended the monopoly of Singapore Telecoms, a top GLC, newcomers were backed by other GLCs.

"ONE" FOR ALL?

That approach had limited success. It guaranteed that the telecom sector opened in a slow and controlled way, something that no doubt appealed to the country's bureaucrats. But Singapore consumers paid the price, especially compared to their counterparts in the more freewheeling Hong Kong.

Still, there's reason to doubt that this strategy as applied to Singapore's media will work. Singapore prides itself on being a broadband pioneer, and the government very much wants citizens to sign up for the government-backed broadband network, grandly titled Singapore ONE (One Network for Everyone). Can cautious GLCs be trusted with the task of creating Web content compelling enough to make people want to sign up for Singapore ONE?

The US embassy in Singapore isn't so sure. It recently released a report (called "State-led Creative Destruction: Singapore Plans for a New Knowledge-Based Economy") that questioned whether Singapore-style liberalization can work in the Internet Age. The report says "many see the continued dominance of GLCs and the government's tight control over the local media as significant barriers" to the development of a more advanced economy. "The government may have to reexamine its stand and policy toward GLCs and the media monopoly," the report continues, "and adapt accordingly to ensure that its economy makes the transition successfully and stays competitive thereafter."

The Singapore government isn't likely to pay too much attention, of course. Over the years it has gotten quite used to criticism about its media policies -- and managed to enrich its citizens anyway. But with Singapore's main rival, Hong Kong, tolerating a far livelier press, it will be interesting to see just how much longer Singapore can afford to stifle its media. Simply taking a government-controlled monopoly and turning it into a government-controlled duopoly may not work this time.

Einhorn covers Asia from Business Week's Hong Kong bureau