AL-IMAN INTERNET CAFE (KIMANGA): Singapore ruling party rebuked in by-election as disquiet rises

SINGAPORE (Reuters) - Singapore's long-dominant People's Action Party (PAP) lost heavily in a single-seat by-election on Saturday, a barometer of how the government is dealing with discontent in the wealthy Asian country over immigration and the high cost of living.

The result in the Punggol East ward - 54.5 percent of the vote for the Workers Party and 43.7 percent for the PAP, with the rest split by two others - does not alter the balance of power in parliament, where the ruling party will still hold 80 of 87 elected seats.

But the rebuke in the relatively young and affluent constituency sends a signal to the PAP about the level of dissatisfaction in the city-state of 5.3 million people that is a hub for banks and multinational companies.

"I want a difference," said Nita, a woman in her 30s. "If the Workers Party can do well in Punggol East, the other constituencies are also watching."

Some analysts had expected the PAP to eke out a victory, especially if the three opposition candidates diluted the anti-government vote. The next general election is due in 2016.

The seat in Punggol East, won by the PAP in 2011 with 54 percent of the vote, was vacant after the speaker of parliament quit in December over an extramarital affair. Other recent scandals include last year's arrest of the civil defense chief and head of the police anti-drug unit on corruption charges.

"I respect the choice of Punggol East voters," Prime Minister Lee Hsien Loong said in a statement. He called on people to refocus on national issues including the 2013 budget and a new population and immigration plan the government is preparing to deliver.

"The PAP will continue to improve the lives of Singaporeans, and present our report card for voters to judge in the next general elections," he said.

The PAP - founded by Lee Kuan Yew, Singapore's first leader for three decades and father of the current prime minister - has won every national election since independence in 1965, transforming the post-colonial port into a major financial centre by keeping the economy open and society regimented.

But the 2011 election was its worst showing ever, prompting the government to engage more openly with increasingly vocal citizens over their concerns about property prices, public transport and immigration. Foreigners now make up about 38 percent of the population, up from about 25 percent in 2000.

Rolling out measures to help Singaporeans, it has raised the levy on foreigners buying property and boosted spending on housing grants, subsidized childcare and cash gifts for babies to try to raise one of the world's lowest fertility rates.

But as Saturday's by-election shows, many people expect more from the government, or at least a bigger say for the opposition.

"The PAP forgets us after the elections - only gives candies during elections and terms and conditions after," said Daniel Chua, a 58-year-old consultant. "The Workers Party has the heart to serve."

(Additional reporting by Jion Chun Teo; Editing by Doina Chiacu)