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UPDATE 2-Singapore's leader-in-waiting steps aside as future PM in succession setback

(Adds economist’s comment)

SINGAPORE, April 8 (Reuters) - Singapore’s Deputy Prime Minister Heng Swee Keat is stepping aside as the country’s designated future leader to let a younger person take over when current premier Lee Hsien Loong retires, according to his letter published on Thursday.

“I would have too short a runway should I become the next prime minister then,” Heng said in the letter posted on the website of the prime minister’s office.

“We need a leader who will not only rebuild Singapore post-COVID-19, but also lead the next phase of our nation-building effort,” he added.

Heng, who turns 60 this year, is also set to give up his portfolio as finance minister in a cabinet reshuffle expected to take place in about two weeks, local media reported.

Succession in the wealthy Southeast Asian city state - which has been governed by the People’s Action Party (PAP) since independence in 1965 - is normally a carefully planned affair.

Lee, 69, has flagged that he may have to delay his plans to hand over to a successor by the time he is 70 because of the COVID-19 pandemic.

Heng will continue as deputy prime minister but will step aside as leader of the ruling party’s fourth-generation team, a term used to describe a group of members seen as future leaders.

“This unexpected turn of events is a setback for our succession planning. We recognise that Singaporeans will be concerned. We seek your support and understanding, as we choose another leader,” the 4G leaders said in a separate letter.

Heng - who steered the central bank through the global financial crisis - has doled out billions of dollars in stimulus to help carry the country through the country’s worst-ever rececession caused by the pandemic.

But questions were also raised about his health after he suffered a stroke and collapsed during a cabinet meeting in 2016.

“For such an announcement to be made this early, it seems that the leadership is pretty confident that the economy is in a far better shape today than a year ago and they are on top of the situation,” said Song Seng Wun, an economist at CIMB Private Banking.

“I always saw Heng as a bridge between the older and newer group of leaders.” (Reporting by Aradhana Aravindan and Anshuman Daga; Editing by Martin Petty)

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