The 52-year-old son of Singapore's founding father, Senior Minister Lee Kuan Yew, 80, is scheduled to take over on August 12 from Goh Chok Tong, 63, who has led the city-state for 14 years.

Goh said Sunday that he had been asked by Lee to stay in the cabinet, reinforcing speculation that Singapore will have two senior ministers to back up the younger batch of politicians now coming to power.

"It means we are moving into a new phase and I am very confident that the new prime minister will take Singapore to a higher level, and you need to have a change from time to time," Goh said of the succession process.

"You need to have fresh initiatives and that's to come from a new person," he added, a day after announcing the handover date.

Lee will be just the third prime minister since his father took power in 1959, when British colonial rulers introduced self-government.

The elder Lee, a formidable authoritarian figure, led Singapore to independence from the Malaysian Federation in 1965 and stayed in power until he stepped aside for Goh in 1990.

The ruling People's Action Party (PAP) prepared for the imminent changing of the guard when it roped in several young professionals to run for office during the 2001 elections and gave them important posts to test their mettle.

However, no major changes in financial and economic policies are expected because the younger Lee has played a central role in formulating national strategy as deputy premier, finance minister and chairman of the central bank.

"I don't expect anything dramatically different for a while. There's a strong continuity for the sake of foreign investors," independent political commentator Seah Chiang Nee told AFP.

The presence of younger ministers, however, could "set certain directions in the way the government would open up in the social area because they are different people", said Seah, who operates the website www.littlespeck.com.

"But do not expect any rapid moves, and any changes will be gradual. The question is, will they also ease up on politics?"

Most of those being groomed for ministerial posts are in their 50s, and like many civil servants and politicians, they had been drafted from the private sector.

Seah expects the elder Lee to run again in the next elections, expected to be called before 2007, to help make sure his son consolidates political power.

K. Kesavapany, director of the Institute of Southeast Asian Studies here, said that while the economy had recovered from the 1997 Asian financial crisis, a recession in 2001, the Severe Acute Respiratory Syndromeoutbreak and the impact of the war in Iraq, the challenges remain formidable.

"Politically, Lee will build on the consultative and participatory style of policy-making initiated by Prime Minister Goh," Kesavapany said.

Lee's bigger challenge is the economy, where Singapore faces 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.

"Lee's challenge would be to steer the ship steadily in a stormy sea not knowing exactly where the safe harbour is, although the direction may be right."

Lee will also have to address accusations that a political dynasty has emerged, a charge he and his father consistently reject.

Lee's wife, Ho Ching, is head of the state investment arm Temasek Holdings and his brother Lee Hsien Yang is chief executive of one of the country's top companies, Singapore Telecommunications Ltd.

And he will inevitably be compared with his father, who was famous for a bare-knuckled leadership style.

"The reality is that the personalities of the two men are quite distinct. Besides, the younger Lee will be operating in an environment different from that of his father," Kesavapany said.

"Accordingly, the style and substance of governance would be different from that of the 'survivalist' times of the sixties, seventies and eighties," he said.

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