To compete, we need a change of mindset to encourage innovation and creativity. We cannot teach creativity, but we can remove bureaucratic obstacles to new enterprises.

Over the past few decades, the way forward was clear. It meant catching up with more developed economies.

Choosing enterprises that fit Singapore -- small, clean industries such as electronics, computers and computer peripherals -- we have built a vibrant economy.

That phase is over. The digital revolution and the convergence of communications, computers and the media require more from us than simply copying the software innovations of the developed countries.

Our enterprising young people must be given the space and scope to create businesses for themselves. The government must facilitate the venture-capital funds.

We have followed a safe, structured approach. Now, our talented young have to dispense with the safety net as they go on their own. Many will stumble and fall, but they must pick themselves up and try again.

The process of opening up may make our society more unruly. The gravest challenge will be to protect the values we cherish.

We can allow a bohemian quarter where creative people do their thing, but our whole city does not need to be that way.

Hitherto, we have managed to fend off baneful influences on our young. The uncontrollable flood of the good and the bad on the Internet may nurture a generation that does not know the difference between right and wrong.

The pornography and sadism on the Internet pose a threat to the young in all societies.

I am not worried about political ideas; they are expressed in words. Political chatter on the Internet may encourage more defiance, but is not as morally devastating as pornographic pictures.

Eventually, I hope there will be international conventions to govern deleterious material on the Net.

There is no reason to abandon our values. Confucianism must adjust and change with changing structures of the economy and society.

The young will be more knowledgeable than their parents and should speak up to point out the changes brought about by technology, but it is not necessary to be disrespectful.

The basic human relationships, those between husband and wife, children and parents, extended family members and friends, and between a citizen and his government -- these do not change. They have made for order and civility.

Confucius exhorted the individual to aim to be a ""gentleman'' (junzi). If you are a gentleman and bring up your family in a proper way, society will look after itself.

A Confucian epigram says of a woman, cultivate yourself, look after your home and all will be well.

It is different from Western individualism, where the individual is glorified as the freewheeling, unrestrained creative agent of progress.

The icon is the sheriff in ""High Noon'' with six-shooters at his hips, keeping bad hats down. That has not been the ideal in Asia, and the Internet will not change that.

There are those who say that the Internet will flood Asia with democratic ideas. Does it follow that these American ideas and practices will take root in Asian societies that have different histories and cultures?

Many Western commentators extol democracy, free elections and a free media as the way to the future. The record in Asia has not been impressive.

Taiwan's elections, for example, have been denounced for ""black gold'' (corruption) and gangsters.

President Chen Shui-bian won because the ruling Kuomintang was split -- not because of a democratic groundswell. But corruption is deeply embedded in the system and will test his stamina and political skills.

In the Philippines, President Ferdinand Marcos is gone, but cronyism and corruption are not.

President Abdurrahman Wahid in Indonesia faces an even more daunting problem of ""corruption, collusion and nepotism''. Indonesia's more or less free vote (with much vote buying) and a free press are not enough to make it a democracy.

Democracy needs more than freedom of the press and freedom of association. The necessary preconditions are near-universal education and a large middle class that can stabilise voting patterns.

Leaders are the decisive factor, people imbued with ideals who have the moral and political authority to bring about change.

Asia's prosperity will be especially influenced by developments in China. The flood of information into China will present new challenges and opportunities.

In the next two decades, more economic and social structures will be formed as numerous Chinese entrepreneurs become successful, and not dependent on the government for patronage.

China's political system will have to accommodate these profound changes. If the leaders try to stem this change, there may be economic turbulence and social upheaval.

Recent Asian history shows that if you do not roll with the force of change, change will be less than peaceful.

The Philippines faced ""People Power'' because the Marcos government did not adapt to changes in their society.

Indonesia got rid of President Suharto but, if corruption persists, there will be more disorder.

China must attract into government its educated young, the best of whom have studied abroad and are familiar with different ways of ordering society.

This generation better understands the challenges posed by this globalised world.

Will China go wholeheartedly into the Internet era, or will the leaders try to check and control the flow? The Taiwan issue is a wild card.

If China's leaders see Mr Chen moving towards independence, conflict -- which could range from political and economic pressure to outright military attack -- is unavoidable. Washington may be obliged to support Taiwan.

A peaceful solution can be achieved only on the basis that eventually there will be a rejoining of the two parts of China.

I believe Mr Chen is more pragmatic and less dogmatic than his predecessor, Mr Lee Teng-hui. However, Beijing's leaders do not think so.

If there is no major conflict between China and the United States, East Asia will be transformed in this century. It will be a wrenching change.

The Japanese will adapt and upgrade their enterprises. The Koreans are capable of doing the same.

There are large pockets in South-east Asia that will benefit from the new technologies and the new economy.

We in Singapore are going to adapt to the new world. We are not going to be left out. If you want to thrive in the modern world, then you must not be afraid.