SINGAPORE -- In the years since becoming independent in 1965, Singapore has blossomed into a modern city-state and an attractive market for foreign investors. But it has proved less hospitable as what one of its most powerful officials has called "my marketplace of ideas."

New legal restrictions and a series of court cases highlight an enduring feud between foreign news media and Lee Kwan Yew, the long-serving prime minister who stepped aside last month in favor of a younger successor. Although Lee, 67, resigned his post, he was retained as a "senior minister" in the new cabinet and remains a powerful political force on this island of 2.7 million people.

Lee has justified his restrictions on the press as a legitimate response to "foreign interference in the domestic politics of Singapore" by some regional publications. "Regardless of the pontifications of foreign correspondents and commentators, it is the values of the elected government of Singapore that must and will prevail," he said in a recent speech.

For its part, the Singaporean media practice self-censorship, with "virtually no independent commentary and no criticism of government policies," according to one Western diplomat. "The {domestic} press is a tool of the government."

In the latest measure to rein in the foreign press, the government on Dec. 1 implemented the Newspaper and Printing Presses (Amendment) Act, which requires certain foreign publications that report on "the politics and current affairs of Singapore and other Southeast Asian countries" to post bond and obtain a permit to circulate here.

Initially, 17 publications were listed as subject to the act, but the government later exempted 14 of them. Three -- Asiaweek magazine owned by Time-Warner Inc.; Yazhou Zhoukan, the Chinese-language version of Asiaweek; and an advertising-industry journal called Media and Marketing News -- each were required to put up $118,000 as security bonds in case of lawsuits.

But perhaps the most unusual case has arisen from a dispute between Lee and the Far Eastern Economic Review, a weekly regional news magazine based in Hong Kong and owned by Dow Jones & Co. of the United States.

The feud between Singapore and the Review came to a head three years ago when Lee sued for libel over a story that suggested he had bamboozled Singapore's Roman Catholic hierarchy in justifying the May 1987 arrests of 22 religious and political activists. Among them was Vincent Cheng, a Catholic lay worker accused of using religious organizations as a cover in plotting a Marxist takeover of the government.

As a result, the Review in December 1987 was slapped with what Singapore calls a "gazetting" order, reducing its circulation in the country from nearly 10,000 copies to only 500. In addition, the magazine had to halt printing in Singapore of more than half its total circulation of about 70,000 copies.

The gazetting order would have restricted distribution to "a mailing list approved by the government, with priority given to Singaporean instrumentalities," such as government offices, said Ron Richardson, the Review's managing editor. "We declined to allow an outside body to decide who our subscribers would be."

So the Review stopped sales here entirely in January 1988, and Singapore retaliated by authorizing a state-controlled trade union to print pirate copies of the Review, with advertisements deleted, and sell them to the public on a nonprofit basis.

The pirate printing of the copyright magazine, now estimated to number more than 1,000 copies a week, was allowed by an amendment to Singapore's own copyright law. But questions remain as to whether the action contravenes international law.

"It's theft pure and simple, sanctioned by the government," said Karen Elliot House, a Dow Jones vice president for international operations. She noted that while Singapore has never subscribed to an international copyright convention, it signed a 1987 bilateral accord with the United States that protects each country's copyrights in the other nation.

An attorney for Dow Jones in New York said, "It is our view that Singapore's pirating of the Far Eastern Economic Review is a violation of both the bilateral agreement between the United States and Singapore and general principles of international law with respect to intellectual property."

At a news conference in Hong Kong in October, Lee said that while he had subscribed to international trade agreements: "I have not agreed that you should enter my political process and participate in my marketplace of ideas. I am giving it to you as a privilege, and I am asking that the privilege be on conditions."

One condition is Singapore's "right of reply," and some publications have run afoul of Lee for refusing to print his government's entire lengthy rebuttals to critical articles.

While they condemn the pirating, both the Review and Dow Jones say there is little they can do about it. Challenging it in Singaporean courts is seen as a waste of time, and the case is not considered weighty enough to justify a recourse to international law, sources at the magazine and parent company said.

"It has to be settled at a political level," Richardson said.

A separate dispute arose in 1987 between the government and the Asian Wall Street Journal, which also is owned by Dow Jones, when a Journal article described the establishment of a second stock exchange in Singapore as part of a government ploy to sell off overvalued shares in companies it was trying to privatize.

A gazetting order cut the Hong Kong-based newspaper's circulation here from 5,000 copies to 400. Then, on Oct. 15, the paper stopped distribution entirely in the city-state in response to the new licensing requirement.

"We cannot accept the Singapore government's implicit bargain and practice self-censorship" as the price for circulation, the paper said in an editorial.