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Is the sun setting in the East?

Competition for consultancy work in Hong Kong has intensified as the Asian economic crisis has taken hold. Many consultants have drafted in staff from other parts of the region because it is the only place looking likely to generate work in the near future.

But if long term prospects look good, the short term outlook is less so. Major projects generated before Britain returned Hong Kong to Chinese control have come to an end. China's own construction programme - including a massive infrastructure element - has still to kick in, leaving many consultants and contractors fighting for what workload is left.

For those with a strong reliance on the private sector the climate is bleak. A slump in the property market and the government's recent block on land sales for nine months to preserve property prices, are giving structural engineers a lean time.

'Economic downturn has hit private sector housing projects. Building development and associated infrastructure has tailed off to almost a standstill and there have been redundancies,' says Maunsell Consultants Asia Holdings chairman Francis Bong.

Expatriate engineers in Hong Kong are pessimistic about their prospects for 1999. 'We had a lot of involvement in the airport railway but many engineers on those projects have gone back to the UK and there is not the same availability of working visas for the future. On new government projects there will be many more indigenous engineers on site,' says one British contractor.

The residential area at Discovery Bay on Lantau Island, once brimful of British engineers and their families, now has a 40% vacancy rate and rents have tumbled. A source at one of Hong Kong's local contractors says: 'There are a lot of engineers taking lower paid jobs for the next six or seven months before contracting work kicks in. Hong Kong is a very expensive place to hang around and not earn money. A lot of people are going home instead.'

Conflicting forecasts for expatriate firms have been fuelled by uncertainty over the future of the Hong Kong dollar's exchange rate peg to the US dollar.

Hong Kong's economy shrank 2.8% in the year's first quarter but the Hong Kong government is determined not to devalue. Last weekend it added $7bn to the $18bn of its $96bn reserves it has already spent to prop up the local currency.

Removing the Hong Kong dollar peg would send the currency into freefall, probably resulting in a 30% devaluation. Many engineers are converting their wages into more stable currencies as a precaution. 'Any loose currency is quickly changed in to US dollars or Sterling,' said one.

But not everyone is pessimistic. Fears that economic downturn in Hong Kong will spell disaster for its construction industry have been tempered by plans to use public infrastructure investment to tackle unemployment - running at 5%.

Hong Kong's Bureau of Works claims that the level of forthcoming investment will match that of the recently completed Airport Core Programme.

'There is big investment planned for railways, highways and land formation projects for new town development,' says CS Tang, assistant to Bureau of Works Minister HS Kwong.

With Hong Kong's population set to rise from 6.5M to 8M by 2006, the long term infrastructure demand is there and firms with an established working relationship with government are sanguine.

Hyder has one of five major design contracts for the 30km Kowloon Canton Railway and other contracts for the Mass Transit Railway. As a result it has increased its Hong Kong staff from 320 to 400.

Hyder HK chairman Edmund Leung said: 'We are bringing in a lot of engineers from other offices. The outlook for the next year depends on our ability to secure more work over the next six months, but we are very optimistic for the next four years.'

Leung guards against short term hysteria and predicts a bright future for the British civil engineer in Hong Kong. 'In our business there are peaks and troughs, but we are proud of the fact that we always use the best professionals and a lot of them happen to be British.

'Local people are being trained to do work but there's a limit to how quickly they can be trained, and English remains the language of construction in Hong Kong.'

Damian Arnold

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