SINGAPORE -- Politics is heating up here now that a former presidential candidate has announced the formation of a political party to challenge the ruling party's dominance, igniting speculation about an early general election that could take place this year.

The announcement on Friday by Tan Cheng Bock, a former stalwart of the city-state's ruling People's Action Party, caused a political earthquake. Tan revealed a plan to form Progress Singapore Party, which is to include "some" ex-PAP cadres.

"We want to build a compassionate and truly democratic Singapore, where good values and people matter," he said on Facebook. "Freedom of choice and free speech without fear must be defended."

Tan, 78, was a longtime member of parliament and the PAP. In 2011, he ran for the country's mostly ceremonial job of president; he lost by a razor-thin margin to former Deputy Prime Minister Tony Tan.

The retired doctor made headlines again in 2016 by announcing another run for the presidency but failed to follow through after the government changed the electoral process to keep the post from being dominated by ethnic Chinese, who make up the majority of Singapore's population.

With the popular politician back -- this time in the opposition camp -- Singapore's political scene has become fluid. Tan has called on other opposition parties to collaborate. "We still look forward to working with others in the opposition who are passionate about putting country first, before either party or self," he said.

Chee Soon Juan, secretary-general of the Singapore Democratic Party, was quick to react. "We look forward to the formation of [Tan's] new party," he said, "and to working with him to strengthen the opposition and bring our nation one step closer to democracy."

The city-state has been governed by the PAP since its foundation in 1965. In the last elections, in 2015, the PAP won 83 of the 89 seats contested.

"Tan Cheng Bock's entry will surely galvanize enthusiasm for his and other opposition parties," Meredith Weiss, professor of political science at the State University of New York in Albany, told the Nikkei Asian Review.

For the ruling PAP, an increasingly active opposition camp could grow into a serious challenge.

"Singaporeans will have to decide on who can serve them better, and I will leave Singaporeans to make that judgment," Finance Minister Heng Swee Keat was quoted as saying by the Straits Times. Heng was appointed as the first assistant secretary-general of the PAP in November -- a position that is seen as a step to becoming the party's next leader, and hence the prime minister of Singapore.

With the economy slowing and political dynamics rapidly changing, speculation is growing regarding an early election. The city is set to hold general elections by April 2021. But there are signs that Prime Minister Lee Hsien Loong is eyeing an election for this year.

Lee said at the annual party convention in November that "this may be the last party conference before the next general election."

Economic uncertainties surrounding Singapore give the ruling party advantages in an early election, experts say.

"Singapore's heavy dependence on international markets and no likely resolution in sight to friction between China and the U.S. over trade means that Singapore's economy could slow even more dramatically after 2019," said Garry Rodan, director of the Asia Research Center of Australia's Murdoch University. "The PAP may not want to chance that -- especially as the next election has been declared by Prime Minister Lee as an opportunity for the party's fourth-generation leaders to shine."

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Singapore's economy is expected to grow 2.6% this year, slower than last year's 3.3%, according to economists' forecast compiled by the Monetary Authority of Singapore. Additional headwinds for the ruling party include a widening income gap and rising taxes.

Opposition parties have begun preparing for early elections as well.

On Jan. 13, The Workers' Party, the only opposition party that has seats in parliament, held a forum, with Secretary-General Pritam Singh calling on party members to prepare for battle. "Singapore must aspire towards a genuinely diverse parliament with at least one third of the elected seats in opposition hands, regardless which party is running the country and which party or parties are in the opposition."

The question is whether the opposition camp will be able to generate a tide and deliver the city's first regime change -- just like Mahathir Mohamed's coalition did in Malaysia's last general election, in May.

Weiss of the State University of New York said an overall win by the opposition is "unlikely" but noted that "if they find ways to collaborate so they're competing only against the PAP, the opposition could make meaningful further headway." She cited various factors such as the rising cost of living and uncertainty over the ability of next-generation leaders to guide the nation that could spell trouble for the ruling party.

Said Murdoch University's Rodan: "The opposition movement in Singapore needs more cohesion, not more parties. The prospect of a larger vote share by opposition parties, but no more seats at the next election, is a genuine prospect."

Nikkei staff writer Justina Lee in Singapore contributed to this story.