Business

RABAT – Moroccan authorities have blocked the opening of IKEA's first store in the North African kingdom planned for Tuesday because it lacked a "conformity permit", a statement from the interior ministry said on Monday.

A news website close to the Moroccan palace said earlier on Monday the store was blocked because of Sweden's plans to recognise a republic sought by the Polisario Front in the Western Sahara.

The government did not elaborate on the store's permit problems. IKEA's Moroccan subsidiary told local media that the opening of the 26,000-square-metre store was canceled.

The store is based in Morocco's largest mall near the city of Mohamedia. The mall was built by a joint venture including Dubai-based Al Futtaim Group, Moroccan supermarket chain Marjane Holding and Portuguese Sonae Sierra.

Morocco has controlled most of Western Sahara since 1975 and claims the sparsely populated stretch of desert, which has offshore fishing, phosphate reserves and oilfield potential, as its own.

However, the Algeria-backed Polisario Front seeks independence, and a United Nations mission was formed more than 20 years ago ahead of an expected referendum on Western Sahara's political future which has never taken place.

Sweden and other Scandinavian countries have been supporters of Western Saharan self-determination, while France and Spain have been accused by activists and human rights organisations of supporting the Moroccan side.

Polisario's planned Sahrawi Republic was recognised by some countries mainly from the African Union, but none of the Western powers had recognised it.

The Swedish government and IKEA could not be immediately reached for a comment.

It was unclear if the block was temporary or if permits would be granted for the store in the future.

MOSCOW – Russia hopes that financing and technology from Arab states and other countries will help its firms weather the fallout from Western sanctions imposed over the Ukraine crisis, Russia's Minister of Natural Resources Sergei Donskoi said.

US and EU sanctions have hit Russian individuals and companies, including energy champions Rosneft and Gazprom, preventing them from accessing long-term financing and high-end technology.

One way that Russia, one of the world's top oil and gas producers, has tried to offset the sanctions is to boost ties with China, the global leader in energy consumption, in the hope it can wean itself off its dependency on European markets.

But Donskoi, in an interview for the Reuters Russia Investment Summit, said Moscow was also exploring other avenues.

"We have already talked about Asian countries, and of course we are also looking at European countries, which have not imposed sanctions but which have technology and equipment that could be purchased," he said.

"[But] Arab countries should be mentioned too. They have funds and, in many cases, technology."

Donskoi declined to name potential projects Arab companies were interested in, citing the sensitivity of such talks.

However, the Kremlin has said that Rosneft, the world's top-listed oil company by output, had been in talks with the UAE's Mubadala Petroleum to jointly develop two east Siberian projects, Tass Yuriakh and Verkhnechonskoye.

Sanctions have hit Rosneft's plans to tap uncharted icy Arctic waters, beneath which billions of barrels of oil and gas are thought to be hidden.

It was forced to halt its work in the Kara Sea on Russia's Arctic shelf, and ExxonMobil also had to withdraw from drilling exploration wells there. The energy ministry says it estimates Russian companies will only relaunch oil exploration drilling in the Kara Sea in 2020-2021.

Donskoi said it would be hard to judge the precise impact from sanctions on new Arctic projects, where the first oil is not expected to be pumped before 2025-2030.

While he said there had been some impact from the measures, he said minerals exploration had not yet significantly slowed.

Total investment in exploration was seen declining by 10 per cent this year, he said, down from 340 billion roubles in 2014, its highest level in 15 years.

But low oil prices meant companies were adopting a more cautious approach to long-term projects, said Donskoi, with some shifting their focus onto additional exploration work at existing sites to boost their reserves.

DUBLIN – Ireland may bring in legislation to link residential rents to the rate of inflation and temporarily control soaring rental costs, the country's environment minister said on Monday.

A severe shortage of housing in urban centres has become a big political issue ahead of elections due by early 2016, with rents in Dublin almost back at levels seen at the height of Ireland's property boom a decade ago. The spectacular bust that followed in 2008 wrecked the country's banks and economy and pushed Ireland into a now-completed international bailout.

"It's certainly something I'm in favour of as an interim measure while supply is coming up in relation to housing, and reports linking it to CPI would be accurate," Environment Minister Alan Kelly told Irish national broadcaster RTE.

"What we need to do is ensure people have certainty in the future, that there can't be immoral rent rises, and there are immoral rent rises taking place — somebody who pushes the rent up by 10, 15 per cent."

The Sunday Times newspaper said the government planned to link rents to the consumer price index (CPI) for a four-year period. Inflation was flat in Ireland on an annual basis in August after falling for eight successive months.

Ireland was left with an overall surplus of houses after a construction boom that ended with the crash, but the wrong stock was built in the wrong places, leaving property scarce in cities while out of town housing estates lie empty.

Kelly said the plan was part of discussions between his department and finance minister Michael Noonan on a package of measures in the October 13 budget to boost housing supply.

With house building at less than half the level of the 1970s when Ireland was a much poorer country, prospective buyers are stuck in the rental market as the economy recovers, pushing rents up as high as 10 per cent year-on-year in Dublin.

The rising rental costs come as the effects of Ireland's financial crisis are still being felt through high unemployment, higher taxes and lower wages.

Noonan has introduced policies to try to kickstart the housing market in his last three budgets, but they have had little impact on construction. Fewer than 7,000 homes were completed in the first seven months of this year compared to at least 21,000 the government estimates is needed to meet demand.

"The Government is currently grappling unsuccessfully with policy solutions for Ireland's ongoing housing supply shortage," Goodbody Stockbrokers wrote in a note on Monday.

"Speculation that a form of rent control is on the agenda does not bode well in our view, although we believe the limited time frame will go some way to assuage concerns."

UNITED NATIONS – As world leaders brandish a hard-fought new set of global goals designed to improve lives in all countries, the question of who foots the trillion-dollar bill remained open on Saturday as financial pledges started rolling in.

The United Nations 193 member countries on Friday adopted 17 Sustainable Development Goals (SDGs) as a roadmap to end poverty and hunger, fight inequality and conquer climate change over the next 15 years, or 800 weeks.

The goals tackling issues in both rich and poor countries replace an earlier UN action plan, the Millennium Development Goals, which focused mainly on poverty in developing nations.

While aid funds and debt relief were key for the millennium goals, there is wide recognition of the need for other sources for the estimated $3 trillion a year needed to enact the SDGs.

The World Bank, with other development banks, coined the phrase "Billions to Trillions" to illustrate the challenge.

Organisation for Economic Cooperation and Development Secretary-General Angel Gurria said private sector participation was critical while governments need to strengthen tax and regulatory systems to encourage investment.

"Without the private sector, it is not going to happen, as we have budgetary constraints in every country," Gurria told the Thomson Reuters Foundation in an interview.

"You'll have a lot of pledges but you'll need a framework to allow the flows [of finance] to then happen naturally."

A July conference in Addis Ababa addressing SDG funding issues made clear that private sector as well as philanthropic foundations had a major role to play, with private enterprise the main source of economic growth and job creation, outsizing donor nation funds.

Meanwhile, the world's richest nations again committed to a target of earmarking 0.7 per cent of gross national income for overseas development assistance — although few meet that level in practice — which now stands at about $135 billion a year.

Pledges of funding started to roll in during the UN three-day SDG summit that ends on Sunday.

UN Secretary-General Ban Ki-moon announced more than $25 billion in initial commitments over five years from 40 countries and more than 100 international organisations to help end preventable deaths of women, children and adolescents.

Contributions to boost funding for gender equality powerment included $5 million from Chinese e-commerce giant the Alibaba Group and $1 million from the Bill & Melinda Gates Foundation.

Chinese President Xi Jinping unveiled an initial pledge of $2 billion with aims to increase that to $12 billion by 2030.

Helen Clark, administrator of the United Nations Development Programmeme, said the agenda would not be achieved without business — and that meant ensuring stability and good governance in countries to support big partnerships.

"Business is attracted to where there is a solid and able environment and basic rule of law, commercial law, dispute resolution, peaceful and inclusive societies," said Clark, the former New Zealand prime minister.

"For us, it's fundamentally not about financial contributions that business makes to UN agencies. It's about shared values ... the way business does business. Is it inclusive, and is it sustainable?"

Centrepiece to funding talks has been a focus on helping countries boost their domestic resources by improving tax collection and attacking tax evasion and illicit cash flows.

While some criticise this as tinkering with a broken global tax system, Gurria said SDG funding does not need new initiatives but can build on and improve existing structures.

He called for a team of "tax inspectors without borders" to build trust in countries' systems and boost investment.

"If you get it right, you can get trillions," Gurria said.

But it is agreed that funding alone was not enough to achieve the global goals, with policy changes needed to support the priorities.

Michael Green, executive director of the Social Progress Imperative which analyses countries' progress on social measures, said economic growth alone would not meet the SDGs, which deal with subjects ranging from energy subsidies to developing genebanks.

"The SDGs are about political will and inclusion," Green told the Thomson Reuters Foundation. "We have the resources if we use them properly for this is not just about money."

JAKARTA – Indonesian teacher Nina Ramadhaniah hopes for "blessings from Allah" by opening a Sharia bank account — the sort of pious customer the world's most-populous Muslim-majority country is praying for as it launches an Islamic finance drive.

Indonesia, Southeast Asia's biggest economy, has a Muslim population of around 225 million, but this huge number of faithful has not translated into success for Sharia banks, institutions required to do business in line with Islamic principles.

Now regulators have launched a plan aimed at growing the sector, which currently accounts for less than five per cent of banking assets, compared to a quarter in neighbouring, more developed Muslim-majority Malaysia and around half in Saudi Arabia. 

Authorities believe it is a good moment, with many Indonesians getting wealthier after years of strong economic growth and an increasing trend towards piety across broad sections of society.

Many of those without bank accounts, estimated at about 40 per cent of the population, are soon expected to open one.

"The situation is an opportunity for the Islamic banking business to get bigger," said Nasirwan Ilyas, a senior official from the Islamic banking division of the Financial Services Authority (OJK). 

The OJK is spearheading the drive, and unveiled a five-year roadmap earlier this year that included plans to educate the public about Sharia lenders and the establishment of an Islamic finance committee to better manage the sector.

'Interest is haram' 

Key features of Sharia banking include the prohibition of interest on loans or customer deposits, and a ban on investing in "non-Islamic" businesses, such as those involving pork or alcohol.

For teacher Ramadhaniah, who has an account with Indonesia's biggest Islamic lender, Bank Syariah Mandiri, the ban on interest is a key attraction. 

"Charging interest is haram [against Islam], ill-gotten gains that will not bring me any blessings from Allah," the 44-year-old told AFP. "I don't want to live in sin."

Sharia accounts often work on a "profit-and-loss sharing" model, meaning customers get a windfall when the bank does well but can lose out when it does badly.

There are obvious disadvantages. Sharia lenders generally offer lower returns on investments and their modest size often means they provide fewer services than larger, conventional peers — many shops are not equipped to accept their debit cards.

Nevertheless, Islamic banks have proven popular in recent years, with the sector expanding on average more than 40 per cent a year between 2008 and 2012, according to the OJK.

The growth came after laws were changed to make it easier to establish an Islamic bank, and there are now a plethora of standalone Sharia lenders, Islamic banking units attached to conventional banks, and smaller Islamic financial institutions in the countryside.

Growth in the sector has lost steam due to a broader slowdown in the economy, which is expanding at six-year lows — giving authorities another reason to launch their drive.

Islamic mega-bank 

Central to the overhaul is a plan to set up a National Islamic Finance Committee this year, to oversee the sector by bringing together representatives from different government agencies and act as a contact point for potential foreign investors.

Currently responsibility for the sector is spread around different bodies, such as the OJK, the central bank and the finance ministry, according to the OJK's Ilyas.

It is modelled after similar bodies in other countries, such as the International Islamic Financial Centre in Malaysia, where the sector is already far more developed as the government started supporting it some years ago. 

In addition to the OJK roadmap, the government has announced plans to merge the Islamic banking subsidiaries of four state-owned banks to create an Islamic mega-bank, which should be able to provide better services than the current Islamic lenders.

While observers have broadly welcomed the plans, they concede that many difficulties remain.

Khalid Howladar, Moody's global head of Islamic finance, said it would be "quite a challenge" to grow the sector to a substantial level.

"The market is growing faster than conventional but from a very low base," he said, adding Islamic banks in Indonesia did not offer "substantive competition" to their non-Sharia peers.

But for Ramadhaniah and a growing army of devout Indonesians with new-found spending power, Islamic banks remain the only choice.

"I really don't care that I'm not earning anything or getting lower returns on my investments," she said. "I can live in peace."

BEIJING – The outlook for the global economy became bleaker on Wednesday as signs of a deeper downturn in China emerged, despite massive policy stimulus, coupled with weak growth at best in Europe.

China's vast factory sector shrank at its fastest rate in 6-1/2 years in September, a private survey showed, sending investors worried about sagging global growth scurrying out of risky assets.

Reacting to the data, Asian stocks posted their biggest single-day fall in a month on Wednesday.

Similar surveys are likely to show the US economy lost some steam in September even with the Federal Reserve holding fire on interest rates.

"There is substantial concern at present that global demand weakness is dampening the economy in the industrial countries," said Jorg Kramer, chief economist at Commerzbank.

The preliminary Caixin/Markit China Manufacturing Purchasing Managers Index fell to 47 in September, the worst since March 2009, missing expectations for 47.5 and slipping from August's 47.3. Levels below 50 signify a contraction.

It was the seventh straight month of contraction for the manufacturing sector and the survey showed business conditions deteriorating almost across the board, as firms slashed output, prices and jobs at a faster pace as orders fell.

The data underline the malaise in the world's second largest economy and just how difficult it will be for policy makers to steer the economy out of the biggest downturn in decades.

Last month, Beijing devalued the currency to support exports and boost growth, currently at 7 per cent.

But that move was seen by investors as official endorsement of a slowing economy. A global financial market rout, notably in Chinese stocks, followed and forced the central bank to cut interest rates again, the fifth time since November.

China is a major importer of raw materials, especially from Australia, South Africa and Canada, and exporter of finished goods.

A slowdown there will ring out across the world, denting demand and souring business sentiment. Last week, it figured high on a list of reasons the Fed had for not raising interest rates in the United States for the first time in almost a decade.

Sentiment at Asia's biggest companies tumbled at a record pace in the third quarter on worries about China and the risks it poses to global growth, a Thomson Reuters/INSEAD survey showed.

There are signs dwindling demand from Asia, led by China, is starting to hurt businesses in the eurozone, according to PMI survey compilers Markit.

Private business growth in the currency bloc slowed this month as Asian demand weakened, leading to fewer new jobs and forcing factories to reduce output.

The Composite Flash PMI for the bloc came in at 53.9 in September against predictions of a dip to 54.1, down from 54.3 last month. Markit said the PMIs point to third quarter growth of 0.4 per cent.

"It is hard to see euro zone growth really kicking on," said Howard Archer at IHS Global Insight.

"There is the very real risk that slowing growth in emerging markets like China not only hits eurozone exports but also has a negative impact on business sentiment and leads to a scaling back of investment and employment plans."

The big upside from the data, however, was that the dominant service industry was able to charge higher prices for the first time in four years.

That will be welcome news for the European Central Bank that is struggling to get inflation close to its target of just below 2 per cent even after six months of stimulus. Inflation was a meagre 0.1 per cent in August.

Speculation the ECB will expand its 60 billion euros a month quantitative easing programme has mounted recently and several policy makers have indicated the central bank stood ready to act if inflation dipped or failed to rise as swiftly as expected.

"Growth is too slow to generate inflation and given the likelihood of a slowdown to come, the ECB should still up the pace of its quantitative easing programme," said Jennifer McKeown at Capital Economics.

Testimony on Wednesday afternoon from ECB President Mario Draghi could give an indication of how close the bank is to acting.

Business activity in Germany, the eurozone's number one economy slowed slightly in September while activity rebounded in France as manufacturing output swung back to growth after two consecutive months of decline.

WOLFSBURG – Volkswagen Chief Executive Officer Martin Winterkorn resigned Wednesday over a pollution cheating scandal that has sparked a US criminal investigation and worldwide legal action with unfathomable financial consequences for the auto giant.

"I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group," Winterkorn said in a statement issued by the carmaker.

"Volkswagen needs a fresh start — also in terms of personnel. I am clearing the way for this fresh start with my resignation."

The stock market barely flinched at the news.

Following a two-day free fall that had axed 35 per cent — or 25 billion euros ($28 billion) — off the company's market value on Monday and Tuesday, the shares had bounced back on Wednesday and were showing a gain of 5.94 per cent at 112.30 euros after Winterkorn's announcement. 

Even if the haemorrhage on the markets may have abated, Volkswagen, the world's largest auto manufacturer by sales in the first half of this year, still faces a growing tangle of legal threats after it admitted that as many as 11 million of its diesel cars worldwide are equipped with software capable of fooling official pollution tests.

In addition to investigations from France to South Korea, public prosecutors in Germany also said they were examining information and evaluating legal suits already filed against the company by a number of private individuals to decide whether to launch a full criminal inquiry against those responsible at VW.

Winterkorn 'takes responsiblity' 

A day after Winterkorn had offered his "deepest apologies", the 68-year-old said he accepted his "responsibility for the irregularities that have been found in diesel engines".

But he also insisted: "I am not aware of any wrongdoing on my part."

His widely predicted departure came after a meeting of the supervisory board's six-member steering committee in Wolfsburg. 

A new chief executive is to be named Friday, and other personnel changes were expected, the board said.

According to the US authorities, VW has admitted that it equipped about 482,000 cars in the United States with sophisticated software that covertly turns off pollution controls when the car is being driven.

It turns them on only when it detects that the vehicle is undergoing an emissions test.

With the so-called "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 times higher than emissions standards, said the US Environmental Protection Agency (EPA).

The EPA, which announced the allegations Friday along with California state authorities, is conducting an investigation that could lead to fines amounting to a maximum of more than $18 billion.

The US Department of Justice has also launched a criminal inquiry led by its environment and natural resources division, a source told AFP, speaking on condition of anonymity.

The California Air Resources Board, too, is investigating Volkswagen's pollution violations.

New York Attorney General Eric Schneiderman said he had launched his own probe of Volkswagen and would work on it with prosecutors from other states across the United States.

Billions in provisions 

Private law firms are lining up to take on the German company, with a class action suit already being filed by a Seattle law firm.

VW has halted all diesel vehicles sales in the United States during the investigations.

The scale of the exposed deception expanded dramatically Tuesday when Volkswagen said that as many as 11 million diesel vehicles worldwide may have the same "anomalies".

The full impact on the reputation of Volkswagen, whose parent company also owns brands including Audi, Skoda and Lamborghini, is hard to measure. 

The scandal has already hit the share price of other carmakers, buffeting international stock markets.

Volkswagen has set aside 6.5 billion euros in provisions for the third quarter to cover the potential costs of the revelations. 

While the scandal has been restricted to Volkswagen so far, environmental protection groups, particularly in Germany, suspect other carmakers may be using similar technology. 

The European carmakers' association ACEA said that while it recognised the gravity of the affair, "there is no evidence to suggest that it's a problem across the whole industry." 

And the German carmakers' federation VDA insisted that diesel engine technology itself was not in question. 

'Screwed up' 

But the EPA has said it will screen for defeat devices in other manufacturers' diesel vehicles now on the road, although it declined to identify which brands would be tested.

German Transport Minister Alexander Dobrindt said a special commission of inquiry had travelled to VW's headquarters on Wednesday. 

France, Britain and other nations have called for a Europe-wide investigation. 

South Korean officials summoned VW representatives for explanations on Tuesday, saying tests would be started by "no later than next month".

The United Nations has described the revelations as "extremely troubling”.

The German company is likely to face tough questioning in the US House of Representatives' energy and commerce committee, which announced plans for a hearing in the coming weeks.

HONG KONG — Weaker growth in China this year is expected to cause a slowdown in the rest of Asia, the Asian Development Bank (ADB) said Tuesday, as it became the latest major body to revise down its forecasts for the world's number two economy.

It also warned central banks to prepare for an expected Federal Reserve interest rate rise, with many nations already seeing huge capital outflows as dealers look for better, safer US investments.

The report comes as markets are swiped by extreme volatility driven by fears over the Chinese economy, and its leaders' management of it, after last month's surprise devaluation of its yuan currency.

"The combination of a moderating prospect in China and India, together with delayed recovery of advanced countries, weighed on our forecast for the region as a whole," said ADB Chief Economist Shang-Jin Wei, who presented the report at the Foreign Correspondents' Club in Hong Kong.

In an update to its flagship Asian Development Outlook released in March, the bank said growth in the region would hit 5.8 per cent this year and 6 per cent in 2016. March's forecast was for 6.3 per cent for both years.

Inflation in the developing Asia region was forecast to ease further, partly due to lower global commodity prices.

Wei said the overall outlook for the region was "still positive" but had been impacted by capital flow reversals and weakened commodity prices for exporters, partly related to the China slowdown.

"Developing Asia is expected to continue to be the largest contributing region to global growth despite the moderation," he added.

However, it tipped China, the main driver of global economic growth, to expand 6.8 per cent this year, instead of the 7.2 per cent previously estimated, following a stream of weak indicators including on trade, inflation, investment and consumer spending.

US rate worries 

The ADB predicted growth rate would be the slowest since 1990, a year after the Tiananmen Square crackdown that led to global sanctions against Beijing. It is also below China's official target for the year of "about" 7 per cent.

It said Southeast Asia was bearing the brunt of China's slowdown, with growth in Southeast Asia this year put at 4.4 per cent, before bouncing back to 4.9 per cent in 2016.

Jurgen Conrad, head of the ADB's economic unit, told reporters in Beijing that the revision was "mainly due to the delayed recovery in industrial countries reducing export demand".

Last week the OECD cut its 2015 growth forecast for China by 0.1 percentage points to 6.7 per cent.

Forecasts for India were also lowered to 7.4 per cent from 7.8 per cent, weighed by the slow pace of reform by the new government and weak external demand, the report said.

The ADB urged regional central banks to move now on monetary policy to prepare for a US rate hike, which Federal Reserve (Fed) chief Janet Yellen has said will come before the end of the year.

"To counter the impacts of a US rate rise, monetary policy authorities in developing Asia will need to find a balance between stabilising the financial sector and stimulating domestic demand," the report warned.

A tightening of US monetary policy would likely flight of much-needed capital from developing nations as traders move into the United States in search of better returns.

This would in turn put pressure on central banks to lift rates themselves in a bid to protect their currencies, at a time when they are struggling to kickstart tepid growth at home.

World markets were rocked after the Fed on Thursday held off announcing a rise, with Yellen citing the threats to the US economy caused by China's economy as a key reason for the decision.

BERLIN — Until last Friday, the mighty Volkswagen (VW) brand symbolised German engineering prowess and reliability.

In just four days, that has changed radically. A scandal over cheating on US diesel emission tests has engulfed the company and many Germans worry it will have a domino effect on their businesses, eroding the cherished “Made in Germany” label.

Following a series of other blows to Germany's reputation, from repeated delays in Berlin's new airport to a string of financial misdeeds at flagship lender Deutsche Bank, Germany's business image looks tainted.

"Made in Germany is quality and trust. Now that trust is lost," said Ferdinand Dudenhoeffer of the University of Duisburg-Essen. "No one could have imagined the scale of this and the damage it will cause for German industry will go on and on. This is just the tip of the iceberg."

Top-selling Bild daily described VW as the crown jewels of German industry and said its success must not be gambled away.

The reality, however, is that VW has been caught deliberately misleading the US environmental watchdog and US consumers over emissions from its diesel engines.

Its shares have tumbled 33 per cent in the last two days. Earlier on Tuesday, the Wolfsburg-based firm said it would set aside some 6.5 billion euros in provisions this quarter to cover costs related to the scandal. Media are reporting that Chief Executive Martin Winterkorn will go.

The impact of such a scandal is especially great in Germany, Europe's biggest economy, because of its reliance on exports which make up more than 45 per cent of the gross domestic product.

"The great success of the export nation of Germany rests on the quality label 'Made in Germany'," said Marcel Fratzscher, head of the DIW economic institute in Berlin. "VW stands for this German quality — for perfection, reliability and trust."

"Even if we don't know how much the VW case will affect the German economy, the risk is high due to a reliance on exports," he added.

Germany's auto industry accounts for roughly one in five jobs. It accounted for 17.9 per cent of Germany's 1.1 trillion euros in exported goods last year, according to Deutsche Bank, and has enjoyed above-average export growth since 2009.

German Economy Minister Sigmar Gabriel has also expressed concern about the reputation of the car industry overall, although VW rivals Daimler and BMW were quick to say the accusations against VW do not apply to them.

Wealthy brands

According to brand consultancy Interbrand, VW is worth 10 billion euros and is one of the most valuable German brands.

The top 50 German brands are worth more than 170 billion euros, says Interbrand, and carmakers dominate the top ranking, with Mercedes-Benz, BMW, Volkswagen and Audi taking first, second, fifth and sixth position respectively.

Highlighting the public relations battle it faces, German television has been showing a frequently aired US television commercial in which VW not only boasts that it is the top diesel car brand in America, but also asks: "Isn't it time for German engineering?"

The scandal undermines VW's whole push into clean diesel which has been the pillar of its efforts to develop environmentally friendly technology, a strategy shared by other German carmakers BMW and Daimler.

Volkswagen's US chief Michael Horn said the company had "totally screwed up" and promised to make amends.

Part-owned by the state of Lower Saxony, VW has shaken off a 2005 corruption scandal involving prostitutes and luxury trips for members of the company's works council. Earlier this year it overtook Toyota as the world's biggest carmaker by sales.

Its path, from its creation in 1937 when it was tasked with  building an affordable "people's car" in Hitler's Germany, came to epitomise the country's post-war regeneration thanks to models from the Beetle to the ubiquitous Golf and Passat.

Politicians frequently fete its expansion into the United States and China as contributing to Germany's export strength.

Some experts say VW now needs to apply a strategy like Mercedes did after the 1997 “elk test” when a Swedish motor magazine found Mercedes' new A Class tended to flip over when undergoing an evasive manoeuvre test.

Mercedes responded by recalling the cars and adding new safety features but it took time for the brand to recover.

Dirtier image

Yet, this scandal is different to the "elk test" and other car recalls as it exposes not incompetence but a deliberate attempt to mislead.

After a spate of scandals at German firms and organisations, it is starting to look as if malpractice is not limited to a handful of isolated cases, although Germany is no laggard in international rankings.

Corruption watchdog Transparency International gives VW a relatively high score of 5.5 out of 10 in its ranking of global corporate transparency, a score that put it just outside the top 10 companies.

But Germany's image is getting dirtier.

Last year, ADAC, Europe's largest car club, was found to have falsified the results of its coveted annual car award, which had gone to VW's Golf. The order of results had not been tampered with, said ADAC, only the total number of votes but it still caused an uproar in Germany and in the auto world.

Such practices are not confined to the auto industry, which has in the last few years been criticised for wielding its economic clout to exert influence in Berlin and Brussels, for example over European Union (EU) green legislation.

Engineering giant Siemens has sought to recover damages from 11 top managers and supervisory board members for failing to stop illegal practices and bribery that forced it to pay more than $1.3 billion to settle corruption probes in the United States and Germany in 2008.

The German auto giant revealed Tuesday that 11 million diesel cars worldwide are equipped with devices that can cheat pollution tests, a dramatic expansion of a scandal that immediately sent its shares plummeting by another 20 per cent.

Authorities from France to South Korea to the United States announced investigations and threatened legal action, prompting Volkswagen to announce that it was setting aside 6.5 billion euros ($7.3 billion) in provisions for the third quarter to cover the potential costs of the scandal. 

VW shares, which dived 17 per cent on Monday, plunged by another 23 per cent to a low of 101.30 euros during trade on the Frankfurt Stock Exchange as the automaker's new revelations, including a warning that it will have to lower its profit outlook, sent investors fleeing.

"Further internal investigations have shown that the software concerned is also installed in other diesel vehicles," VW indicated in a statement. "Anomalies have shown up in around 11 million cars worldwide that are equipped with a specific engine type." 

"In order to cover the necessary service and other measures to win back customer confidence, VW plans to set aside 6.5 billion euros in provisions in the third quarter. The group's earnings targets for 2015 will be adjusted accordingly," he added  

The spiralling scandal has led to France calling for a Europe-wide probe into the revelations, South Korea summoning Volkswagen officials, and the US Justice Department reportedly launching a criminal investigation.

The scandal went public Friday when US regulators ordered Volkswagen, the world's largest automaker by sales, to fix the defect and said they were launching a probe.

The German firm halted all diesel vehicle sales in the United States during the US investigation, which could lead to fines of more than $18 billion.

The shockwave immediately hit stock markets, with VW shedding more than a quarter of their value — or more than 20 billion euros —  since last week.

Other automobile stocks were also dragged lower with Daimler shares down 7.03 per cent and BMW shedding 7.17 per cent on Tuesday. 

'Europe-wide probe?'

French Finance Minister Michel Sapin on Tuesday requested a Europe-wide probe, telling French radio that it seemed necessary to check cars manufactured by other European carmakers in order to reassure the public.

"This is not a minor subject, it's not about speed or the quality of leather," Sapin told Europe 1 radio station. "What we are dealing with is making sure people avoid being poisoned by pollution." 

South Korean officials summoned VW representatives for explanations on Tuesday. "We will start conducting tests no later than next month," said a senior official at the environment ministry.

In addition to the environmental probe already under way, the US Department of Justice has launched a criminal investigation, US officials told the Bloomberg news agency. The Justice Department and Volkswagen declined to comment on the report.

According to the US authorities, VW has admitted that it had equipped about 482,000 cars in the United States with sophisticated software that covertly turns off pollution controls when the car is being driven and turns them on only when it detects that the vehicle is undergoing an emissions test.

With the so-called "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 times higher than emissions standards, said the US Environmental Protection Agency (EPA), which announced the allegations Friday along with California authorities.

Blow to reputation 

"Using a defeat device in cars to evade clean air standards is illegal, and a threat to public health," said Cynthia Giles, enforcement officer at the EPA.

In Germany, the government has already launched an investigation into whether Volkswagen or other carmakers are doing anything similar in Germany or Europe.

The German daily Frankfurter Allgemeine Zeitung reported that the national supervisory authorities had alerted VW to discrepancies in the emissions data in May 2014 and some cars were even recalled.

Transport Minister Alexander Dobrindt told the Bild daily that he had asked Germany's Federal Motor Transport Authority "to immediately have specific and extensive tests conducted on all Volkswagen diesel models by independent experts".

Beyond the potential fines and lawsuits, the company faces a potentially crippling blow to its reputation.

So far the scandal has been restricted to Volkswagen.

But the EPA said Monday that it will screen for defeat devices in other manufacturers' diesel vehicles now on the road, though it declined to identify the automakers whose vehicles will be tested.

Environment protection groups, particularly in Germany, suspect other carmakers may be using similar technology. 

AMMAN — The total value of the Kingdom's imports during the first seven months of this year declined by 12.5 per cent, compared to the same period of last year, statistics showed Monday.

The decrease was attributed to the drop in the value of imported oil and its derivatives as well as steel. 

The value of the Kingdom's total exports also went down by 7 per cent to JD3.2 billion. 

The Department of Statistics (DoS) indicated that national exports dropped by 7.7 per cent by the end of July 2015 to JD2.7 billion.

Data showed an increase in the value of exported clothes and raw phosphate, and a decline in the value of exported fruit and vegetables, raw potash, pharmaceuticals and fertilisers.

As a result, the commercial balance deficit went down by 15.7 per cent in the January-July period of 2015, compared to the same period of the previous year.

Separately, Zarqa Chamber of Industry President Thabit Wirr said the value of the chamber's total exports during the eight months of the year reached $576 million, 1 per cent less than the same period of the previous year.

He indicated that the chamber, covering Zarqa and Mafraq governorates, issued a total of 9,012 certificates of origin during the first eight months of 2015.

Leather and embroideries sector topped the list of the chamber's exports, with a value of $342 million, followed by supply, food, agricultural and livestock at $77 million, and the engineering, electric and IT at $48 million.

Exports to the North American markets accounted for 56.5 per cent of the chamber's total exports with a value of $32 million, Wirr added.