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Asian crisis hits major European investment

The South Korean conglomerate LG has not been able to raise the money to complete a huge micro-chip plant in South Wales which was expected to employ 1,700 people.

And another major South Korean project is also hanging in the balance.

The Hyundai company said its plans to construct a semi-conductor plant in Scotland were also being reviewed.

That project, involving 800 jobs has been delayed once already because of the financial crisis in Asia and is now likely to be postponed again.

LG is in the process of building a computer chip plant at Newport in South Wales.

It was meant to be the centrepiece of Europe's biggest inward investment, worth £1.3bn and creating almost 2,000 jobs.

The plant was due to open next summer but LG concedes it could be much later. So far the firm has only managed to raise £0.25bn of the £1.25bn it needs.

Dr Chong Sik Lee, Senior Managing Director at LG, said: "Hopefully it will open sometime at the end of next year if everything goes well."

Britain suffers from Asian flu

Of all the Asian tiger economies South Korea's growth has been most spectacular.

But that growth was paid for with borrowed money and now the debts are being called in.

A bridge which was meant to be part of the world's fastest railway due for completion in time for the World Cup finals in 2002 has had to be abandoned. Like many other projects it has run out of cash.

Hyundai is another Korean firm facing problems. Motor sales in Korea have collapsed and Hyundai's shipyard, the biggest in the world, has seen demand from East and South-east Asia evaporate.

The company is struggling under a mountain of debt and is having to slash its investment overseas.

At Dunferminline in Scotland, Hyundai is building a computer chip plant costing over a billion pounds and bringing 800 jobs. Because of the troubles back home the project has already been delayed by six months.

Now Hyundai says that further delays are likely.

Kye-Ahn Lee, Executive Vice-President of the Hyundai Group, said: "To continue with the project we need to seek some money from domestic capital markets."

Hyundai and LG are urgently seeking new partners to share the cost of their British investments.

The firms are hoping the delay will only last months but the fact remains that finance is still not in place for either project and the Asian crisis is hitting British jobs.

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