Malaysian ban puts planned Rolls venture on hold: Partner fears link-up will preclude it from power contracts - Aim is to bring in work for Reyrolle

A PLANNED joint venture between Rolls-Royce and Malaysia's EPE Power Corporation has been suspended because of the ban by the Malaysian government on British firms winning contracts in Malaysia.

Jamaludin Jarjis, EPE's managing director, confirmed after his company's annual meeting that the plan to bid to build and manage power transmission systems was on hold. He said that he feared the partnership would preclude EPE from obtaining contracts with Malaysia's privatised power industry.

No value had been placed on the Rolls-Royce and EPE's joint venture.

A spokesman for Rolls-Royce said that the aim was to bring in more work for Reyrolle, part of its industrial power arm based in Newcastle.

He said that the suspension of the deal would not have any effect on jobs at Reyrolle, which employs 2,000 people, as the joint venture had not yet been formed. EPE and Reyrolle continue to work on a pounds 25m contract to build 11 electrical substations in Malaysia and upgrade a further two.

The Rolls-Royce spokesman added: 'We are confident that we can resume discussions once the overall situation has been resolved. This is a political issue, not an industrial one.'

The ban on British firms came in February after allegations in the British press of corruption among Malaysian politicians. Finance ministry officials in Malaysia have said that the ban also extends to some privatised companies.

Richard Needham, the trade minister, said that he was confident the issue would soon be resolved following his visit last month to Kuala Lumpur. However, there now appears to be uncertainty in Malaysia over lifting the ban and an unwillingness to be seen to give in to pressure from the British government.

Should the ban continue, British firms may lose millions of pounds worth of business and an estimated 25,000 jobs may be threatened.

Airbus and Boeing yesterday announced dollars 10.5bn (pounds 7bn) worth of orders from Singapore Airlines. Airbus, whose partners include British Aerospace, Deutsche Airbus, Aerospatiale of France and Casa of Spain, said that the airline had committed to take a further 30 Airbus A340 aircraft worth dollars 5.4bn. The A340 entered service last year.

Airbus said that the A340s would be the first to have a higher maximum take-off load of 271 tonnes, enabling them to fly non-stop from Singapore to European destinations with up to 271 passengers on board. The 30 aircraft are in addition to seven A340s ordered by Singapore Airlines in December 1992.