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Consultants reel as Asian meltdown hits jobs

ECONOMIC TURMOIL in South East Asia is forcing British consultants to repatriate staff rapidly as infrastructure projects are axed and fears grow that fees will not be paid.

Firms in hard-hit Malaysia and Indonesia said this week they expected to feel the effects of project cancellations, property developer collapses and weakening investment, with some having already written off chances of a recovery before 1999.

Malaysia has already shelved high profile projects such as the Bakun dam and a regional airport in the north of the country. But the government has now also launched a campaign to encourage employers to sack foreign staff and replace them with locals.

Hyder Consulting said this week that it had sent two of its staff back to Britain after secondments to a local Malaysian firm were terminated.

Problems in Indonesia increased on Monday as President Suharto added another 15 projects to the 156 toll roads, power stations, ports and office buildings - worth an estimated £22.6bn - already postponed or under review. Projects added included the £2bn Tanjung Jati A and C power projects to be built by American-owned Consolidated Electric Power Asia.

In London the Department of Trade & Industry has warned British firms to account for major currency fluctuations when pricing work in South East Asia, and said that economic stability was unlikely to return to the region for three to five years.

Maunsell has already relocated half of its 12 strong team of expatriate engineers in Indonesia to other countries after the government axed projects accounting for 25% of its workload. 'For us it has meant that maybe a quarter of our projects have been cancelled,' said Maunsell regional director Mike Worrell. Among these is the £125M Semeng to Solo toll road for which Maunsell was producing engineering designs.

He added that another 25% of the firm's Indonesian projects were still under way but that clients were not paying fees.

Prospects for work on existing and future development projects also look uncertain as many Indonesian commercial developments could be on the brink of collapse. Developers have failed to predict the downturn in property demand caused by the current economic crisis and face ruin as short term loans become due over the next few months.

While some privately financed infrastructure projects are still going ahead in Indonesia, these are starting to slow down as clients hold back finance.

This problem has hit the £62M plus Bekasi-Chawang-Kampung-Melaya toll road project for which Robert Benaim & Associates is designing a 26km viaduct. 'It's not officially on hold, but it is moving much more slowly than expected,' said regional managing director Dr Mark Raiss.

Hyder's country manager for Malaysia Derek Kemp said his team of a dozen expats would shrink this year. He said he was expecting Hyder Consulting's turnover in Malaysia to fall from £5M last year to around £1.25M this year.

Even the British consultants that appear to have escaped the worst of the clampdown on infrastructure spending fear the current crisis will delay new projects and force them to cut back their operations.

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