This is the transcript of Prime Minister Lee Hsien Loong's National Day Message 2016 delivered yesterday.

My fellow Singaporeans.

Half a century ago, when we embarked on our nation-building journey, we could not yet call ourselves "one people". We found it hard to imagine how we would survive on our own, let alone progress together.

But despite the odds, we made it. Last year, in SG50, we celebrated how far we had come. Singaporeans now own and live in beautiful homes. Our incomes and our lives have improved year after year. Our children receive good education and have bright futures.

Most importantly, our different races and religions live together in harmony. We share common spaces, and celebrate one another's festivals. In January, I celebrated Pongal with my Indian friends. At Chinese New Year, I exchanged mandarin oranges with non-Chinese friends. During Ramadan, I joined many iftars and enjoyed the bazaar at Geylang Serai.

Only in Singapore.

But we did not start out as "one people". Never forget how rare and precious this harmony is, how much courage and toil went into creating it, and how much effort it takes to sustain this miracle. What we have here is remarkable, especially considering the state of the world today.

FRESH CHALLENGES

Our journey to become ever more united continues. While we have made great strides, new challenges lie ahead. Let me name three of them.

One, we have a harmonious multiracial society, but extremist terrorism can tear our society apart. In recent months, terrorists inspired by ISIS (Islamic State in Iraq and Syria) perpetrated attacks in the US, Europe, Turkey, Bangladesh and, closer to home, in Malaysia and Indonesia. There will be more.

We know Singapore is also being targeted. We have detained self- radicalised Singaporeans and foreign workers. If a terrorist attack were to occur here, will we stand together, or will we fall apart?

Two, economic growth has benefited us all, but our economy is at a turning point. Globalisation and technological change are disrupting our work and our way of life. Entire industries are being forced to innovate or perish. Our workers worry about their jobs. They face competition not only from workers elsewhere, but also from computers and robots. Can we continue to progress together, and share widely the fruits of growth? Will our children have a brighter future?

Three, our political system has thus far delivered good government, stability and progress. But our society is changing, and our unity will come under new strains. How do we make sure Singapore continues to have clean and constructive politics, and effective and stable government? How do we avoid the pitfalls of populism or political gridlock?

Other countries, facing similar challenges, have run into trouble. In multi-religious societies, terrorism has caused distrust and tensions. In many advanced economies, growth is disproportionately benefiting a minority of the population. In cities across the world, graduates struggle to find jobs and young couples can't afford homes.

As a result of all these challenges, politics in many countries has become divisive and angry. Voters lose faith in moderate parties in the political centre. Extreme views and parties gain support - not by offering better solutions, but by expressing voters' anger at their leaders, and frustration with the way things are. The Brexit referendum was a vivid example.

How can Singapore be different?

Can Singapore resist these forces? Other countries have more resources and bigger hinterlands, longer histories and stronger identities. And yet they have run into trouble. Can Singapore be different? I believe that we can.

First, with terrorism, we acknowledge the threat honestly. Muslim Singaporeans are not afraid to take a forthright stand, to condemn terrorist attacks and the perverted ideology of the perpetrators. And non-Muslim Singaporeans distinguish clearly between their peaceful Muslim fellow citizens and jihadist terrorists. Thus we stand together, and strengthen trust in our multi-religious society.

Second, to enable us to prosper together, we are investing in every Singaporean. We are expanding and upgrading pre-schools, to give every child a good start in life. Our schools cater to different talents so that every student can realise his potential and dreams. SkillsFuture will help everyone to upgrade themselves and master valuable new skills. We support companies' efforts to transform themselves, and to innovate through R&D, so that we can create new jobs in a changing world economy.

To help us cope with more uncertain conditions, we have strengthened our social safety nets. Hence the Pioneer Generation Package, Workfare, MediShield Life, CPF Life and, now, Silver Support. We will ensure that our schemes are sustainable, because our children must not be burdened with debt.

Finally, to ensure good government, we are keeping our politics constructive and updating our political system. Singaporeans are coming together to solve problems and get things done, from developing Pulau Ubin to charting our future economy. We are fine-tuning our electoral system, to make GRCs (group representation constituencies) smaller and create more SMCs (single-member constituencies). The Constitutional Commission is studying improvements to the Elected Presidency, to make it a more effective unifying institution and a stabiliser.

However, the most fundamental factor in keeping Singapore exceptional is not good plans or adequate resources; it is whether we remain united. It is our shared resolve to tackle challenges together that determines whether we succeed, and whether our children have a brighter future.

I am confident that we will hold together and succeed. SG50 strengthened our sense of identity and nationhood. Our tripartite partners are working closely to upgrade our workers and our economy. Our housing estates are integrated communities where people not only live together, but also know their neighbours, celebrate each other's festivals, and keep an eye out for one another. Many Singaporeans spend time with the elderly and the disadvantaged, and help the disabled get around.

This year, many Singaporeans have participated in SGfuture and launched projects to make Singapore better - to become a more caring community, to encourage one another to learn and share skills, to build a cleaner and smarter home. These projects all reflect the spirit of service, the willingness to commit time and energy to make a better home for all.

This is what unity means. It's more than a warm, fuzzy feeling. It's the iron resolve to hold together, despite the challenges, despite the sacrifices we have to make. It was our forefathers' determination to be "one united people, regardless of race, language or religion", that drove them to transform Singapore over the last 50 years. This same resolve will carry us through the next 50.

This National Day, I hope each of us will reflect on what this unity means. Here, at Safra's new Punggol clubhouse - where I am speaking - you can see the Singapore that we are building together. The HDB homes, the Punggol Waterway, the NSmen and their families, the community - all testify to how much we can achieve when we work as one.

Let us renew our commitment to Singapore and to one another. This is where our families and friends live. This is where our future and hopes are. They are precious to us. They are worth defending with our lives.

Happy National Day!