Restructuring of the domestic economy to reduce the cost of doing business and preparing key sectors for tougher competition should also help Singapore weather emerging challenges, the city-state's founding father said in a speech late Thursday.

Singapore's economy is expected to grow between eight and nine percent this year and slowdown to three and five percent in 2005, according to official government forecasts.

"Now and again Singapore will be challenged by new players, often with improved infrastructure and the latest technology. An average growth of four to six percent for the next decade is sustainable," said the 80-year-old Lee, father of the new Prime Minister Lee Hsien Loong, 52.

"Singapore is situated between China and India and will be pulled up by these two huge engines," the elder Lee added.

China and India, the world's two most populous nations, are expected emerge as key economic dynamos for global growth in the coming decades.

Singapore companies such as Singapore Airlines (SIA) and shipping giant Neptune Orient Lines must prepare early to face tougher competition in the global field by cutting costs and at the same time offering premium services, Lee said.

He warned there were "younger long-haul airlines out there, all eager to overtake SIA and eat its lunch" while other countries were positioning to challenge Singapore as a regional aviation hub.

"SIA cannot afford to let up in its efforts to become more competitive, cut costs and yet satisfy customers' expectations for premium quality," he said.

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