Pergau Dam Affair: Industrialists say embargo had little impact: Analysts warn boom in orders is unlikely as construction firms eye lucrative airport contracts. Mary Fagan reports

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The Independent Online
CONSTRUCTION and engineering companies expressed delight that the ban on British participation in Malaysian government work has been lifted. However, they said the ban had had limited impact.

Although some potential contracts have been lost, companies said much of their work in Malaysia had been unaffected.

The Confederation of British Industry said it was pleased that friendly commercial relations had been restored, but added: 'In reality they had never gone away as the embargo did not affect private business.'

A CBI spokesman pointed out that UK exports to Malaysia for the first six months of 1994 rose by 83 per cent to pounds 667m from pounds 364m in the same period last year. The ban was imposed on 25 February.

Among the major projects closed to British firms as a result of the ban was the pounds 2.5bn airport south of Kuala Lumpur. BICC, whose subsidiary, Balfour Beatty, had been in pole position to manage the construction project, said that it has lost that opportunity. However, the company said that there still a great deal of civil engineering work to be awarded, including runways and terminal buildings.

A spokesman for BICC said: 'There is still a great deal to go for. Commercial relations have remained good throughout this process. In that sense I am not sure there is any truth in suggestions that there are fences to build.' He said that work had already begun on a pounds 70m civil engineering contract which was awarded to Balfour Beatty and Trafalgar House in relation to the airport before the ban.

GEC, also hoping for a slice of the action at the airport, said that the contracts it hopes to win have yet to be placed. Lord Prior, GEC's chairman, said that several billions of pounds of business for Britain had been jeopardised by the ban. 'This is very good news for Britain and for GEC. But we still need to be very competitive to win contracts,' he said. Lord Prior had been among those to have talked of a potential 'jobs catastrophe' during the early days of the row.

Rolls Royce, the power and engineering group, said it hoped to revive a lucrative joint venture to market electricity transmission systems which was suspended because of the Malaysian row. The joint venture, signed only days before the imposition of the ban, was with a local firm, EPE Power Corporation. EPE feared its relationship with the British group would prevent it tendering for government work.

Rolls Royce also hopes that its Newcastle-based power subidiary, Parsons, is well placed to win a pounds 100m power station contract at Port Klang near Kuala Lumpur. A spokesman for the company said: 'We have been talking (to the Malaysians) throughout.'

The National Grid Company, which transmits electricity throughout England and Wales, is now privately hoping that it can participate in a major transmission project in Malaysia which it was thought to have lost.

Companies warned, however that the lifting of the ban does not mean that extra work will drop into their hands. Richard Grant, head of the Asia programme at the Royal Institute for International Affairs, said that there was unlikely to be a sudden boom in orders.

'When Malaysia goes out to tender for major contracts, it is not just British companies which will be bidding and, although the ban has been lifted, there may be hesitation on the part of officials and ministers to give work to British firms. There could be a lag before British companies are considered politically correct,' he said.

(Graph omitted)

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