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BARCELONA — Around one in seven people across the globe still live without electricity, despite some progress in expanding access, and nearly three billion cook using polluting fuels, the World Bank said on Monday.

The global electrification rate rose to 85 per cent in 2012 from 83 per cent in 2010, pushing the number of people without access to electric power down to 1.1 billion from 1.2 billion.

India made significant advances, but progress in sub-Saharan Africa was far too slow, indicated a report tracking the Sustainable Energy for All (SE4ALL) initiative, launched by the UN Secretary-General in 2011.

Almost no headway was made in switching people from biomass cooking fuels such as kerosene, wood and dung, the report showed.

"We are heading in the right direction to end energy poverty, but we are still far from the finish line," said Anita Marangoly George, a senior director for energy with the World Bank.

The report warned that traditional indicators can overestimate energy access because power supplies are limited or unreliable for many communities.

For example, new evidence showed that in the Democratic Republic of Congo's capital Kinshasa, 90 per cent of people are judged to have access to electricity because of widespread grid connections, but the streets are dark most nights and few households can use their electrical appliances.

According to Ben Garside, a senior researcher with the London-based International Institute for Environment and Development (IIED), too much emphasis was placed on investing in large-scale energy projects that feed into national grids.

"The aim is to generate the maximum amount of megawatts, but that won't address the access issue, which is in rural areas," he said.

Investment
to meet goals

The SE4ALL initiative has three goals, to be met by 2030: Providing universal access to modern energy services, doubling the rate of improvement in energy efficiency and doubling the share of renewables in the global energy mix.

The report pointed out that the share of renewable energy, including hydro, solar and wind, grew fast at 4 per cent per year from 2010 to 2012. But the annual growth rate should speed up to around 7.5 per cent to achieve the 2030 goal, it said.

Energy efficiency also improved, with energy intensity, global economic output divided by total energy consumption, dropping more than 1.7 per cent a year, but that rate must also accelerate, the report added.

"We will need to work a lot harder especially to mobilise much larger investments in renewable energy and energy efficiency," the World Bank's Marangoly George stressed.

According to the World Bank and the International Energy Agency, which co-produced the report, annual global investments in energy would have to triple from around $400 billion now to as much as $1.2 trillion to meet the SE4ALL targets.

Of this, between $40 billion and $100 billion is needed each year to provide everyone with access to electricity. Only $4.3 billion is required for all to use modern cooking fuels. 

One barrier to eliminating dirty fuels is that they are often subsidised or free, unlike cleaner options, said IIED's Garside.

Developing countries require more technology relevant to sustainable energy, the report said, adding that import taxes and other non-tariff barriers often constrain their markets for clean technologies.

Gains could also be made by better understanding of the overlaps with other areas of development. For instance, more efficient water use reduces demand and in turn the need to pump and treat water, cutting electricity consumption.

AMMAN — Arab Bank announced in a press statement on Sunday the end of its e-commerce promotional campaign, in collaboration with Visa, for Visa credit card and Visa internet-shopping cardholders.

“The campaign ran during the month of April 2015 in Jordan, Palestine, Egypt, Lebanon, the UAE, Qatar and Bahrain. Campaign offered the winners cash-back rewards and bonuses when using their Visa credit and internet-shopping cards to shop online,” the press release said.

Naim Al Hussaini, executive vice president and head of consumer banking at Arab Bank, said in statement: “This  campaign falls within Arab Bank’s strategy to promote internet shopping and reward customers who use their Visa credit and internet-shopping cards with exclusive offers.”

Karim Beg, Visa head of marketing for Middle East North Africa (MENA), said: “E-commerce growth in the MENA region has been strong in recent years, with consumer interest driving a greater influx of new merchants in the online market.” 

PARIS — While borrowers rejoice at the ultra low and even negative interest rates in Europe, savers fret and life insurance companies and pension funds face what is virtually a mission impossible.

Despite a spike in sovereign bond yields in the past couple of weeks, levels still remain ultra-low. The rate of return to investors on benchmark 10-year German and French bonds has stayed below one per cent in recent months and the yields on long-term Swiss debt even went negative.

Sovereign bonds are very important for long-term investors as they are a safe investment that allows them to lock into guaranteed returns.

For life insurance companies and pension funds which are investing the savings of others, the safety of sovereign bonds has led regulators to require them to place certain percentages of their investments in bonds.

But the unprecedented rock bottom interest rates are posing a problem as many life insurance polices offer guaranteed interest higher than current bond yields.

Last year in France, life insurance contracts paid on average 2.5 per cent.

Life insurance companies can temporarily dig into investment funds to continue to pay high rates and attract investors, but this is a strategy experts said cannot continue if rates remain low.

"This drop in rates and the uncertainty that has accompanied it is affecting life insurance returns," said Claude Chassain, an actuarial expert at Deloitte.

The level of interest rates has been worrying the industry for months, and analysts and ratings agencies are concerned about the industry.

"Low interest rates in the euro area pose substantial challenges to the life insurance industry," said International Monetary Fund (IMF) staff in a blog post earlier this month.

"Mid-sized insurers with guaranteed returns and long-dated liabilities that are not matched by similarly long-dated assets face a particularly high and rising risk of failure," they added. 

Collateral damage  

German insurers, which offer much higher guaranteed returns than their French counterparts, have been particularly critical of the European Central Bank's (ECB) ultra-low interest rate policy, and its 1.1-trillion-euro ($1.2-trillion) bond buying stimulus programme that has driven down bond yields.

"The problem with German insurers is that not long ago they guaranteed returns on [products] like long-term euro contracts. These yields must be respected every year, even as rates fall," explains Chassain.

According to Karsten Eichmann, president of German insurer Gothaer, that situation has left companies like his caught in an agonising pinch.

"The insurance sector in Germany is currently facing a considerable degree of damage, in the order of several billion, provoked by the ECB's policy of very low rates," Eichmann wrote in the Sueddeutsche Zeitung in early May.

The result, he noted, is "it is clear that in an environment of rates close to zero, life insurance becomes a money-losing activity in all its forms".

Pension funds are also sounding the alarm.

PensionsEurope, the trade organisation for European pension institutions, warned regulators in a report in late April that "pension funds can not be considered collateral damage of the ECB's [quantitative easing policy] when the problem involves retirement savings of millions of Europeans".

Chassain says low interest rates like those currently in place are destined to make life difficult for any insurer with long-term guarantees on return.

"In the United Kingdom, pension funds abandoned fixed-yield agreements quite a while ago in favour of fixed-contribution schemes that allow them to take economic conditions into account at the time [the client] retires," Chassain says.

For insurance companies, the strategy is to invest in high-risk assets like corporate bonds, stocks and infrastructure projects. Meanwhile, most also encourage clients towards options that do not guarantee savings invested, such as unit-linked plans.

That same trend has already taken hold in Japan, where interest rates have remained low for quite some time. 

Insurers have restructured their portfolios to reduce investments with fixed rates of return and replaced those with plans tied to demographic risk, such as term life insurance or provident funds, Chassain says.

In France, payments into unit-linked plans increased 38 per cent in the first quarter of 2015 compared to the same three-month period the previous year.

Historically low interest rates in the euro area are also  becoming an increasing headache for companies forced to set aside billions in extra cash to meet their pension obligations to employees.

The ECB's ultra-easy monetary policy, with record low interest rates and unprecedented bond purchase programmes, has contributed greatly to the decline in yields on bond markets.

That is not good news for the in-house schemes that many companies offer employees to help top up their state pensions.

Like banks and insurers all across the eurozone, these corporate pension funds usually rely on adequate yields or interest rates to help increase and maximise their clients' investments.

But with interest rates in the euro area around the lowest they have ever been, pension funds are finding it difficult to meet those demands.

The corporate pension scheme is particularly well-established and popular in Germany. Around 17.8 million Germans had signed up to a corporate scheme at the end of 2013, or 60 per cent of people in jobs required to pay social insurance contributions, according to data compiled by the Federal Labour Ministry.

Given the low yields, companies are having to dig deeper into their own financial reserves to fulfil their pension obligations.

German flag carrier Lufthansa, for example, set aside an additional 2.5 billion euros ($2.8 billion) in pension provisions for 2014 in order to meet the returns of 6 to 7 per cent it had guaranteed its employees. That burden was one of the factors that drove profits down to just 55 million euros last year.

Power giant E ON set aside an additional 2.2 billion euros in pension provisions last year and carmaker Daimler an extra 2.9 billion euros.

According to a study by consultants Towers Watson, the companies that make up the blue-chip DAX 30 stock index saw their pension obligations jump by 25 per cent to 372 billion euros last year.

"The ECB's policy of low interest rates is having a strong effect on the financing situation for corporate pension schemes in German companies," Towers Watson said.

British companies are facing similar problems, including several on London's FTSE 100 index of blue-chip stocks.

According to JLT, a pension and benefits consultancy, "a number of FTSE 100 companies will be forced to increase their cash contributions to their defined benefits pensions schemes in 2015".

JLT calculated that the total deficit in FTSE 100 pension schemes at the end of last year amounted to £80 billion (110 billion euros, $125 billion) wider than a year earlier.

Dilemma  

This places companies in a dilemma between safeguarding their own financial reserves while still offering attractive pension packages to their workforce as demand for top-up schemes increases in the face of dwindling state pensions.

"Employees' expectations with regard to corporate pension schemes will continue to rise. Adequate pension provisions will play a key role for companies looking to hire and keep hold of skilled employees," said Thomas Jasper at Towers Watson.

"In order to remain attractive as an employer, companies need to offer attractive pension schemes while at the same time managing costs and risks," he added.

German airline Lufthansa, for one, is currently looking to re-think its retirement system for employees.

"The risks and costs of the existing pension system are jeopardising the airline's future sustainability," argued Lufthansa's personnel chief Bettina Volkens, insisting that pension provisions for all groups of employees needed to be reorganised.

But talks on the issue with unions are deadlocked.

Lufthansa's pilots, for example, have staged a series of walkouts over the past year in protest over management plans to scrap an arrangement under which pilots can retire at 55 and receive up to 60 per cent of their pay until they reach the statutory retirement age of 65.

Nevertheless, despite the challenges many companies are facing with their corporate pension schemes, the government is looking at how such programmes can be extended even further to small-and mid-sized companies.

With state pensions now averaging less than 800 euros per month, private sector employees are being encouraged to take every action to buy additional pension coverage.

AQABA – The Aqaba Special Economic Zone Authority has announced that the Kingdom will receive the first shipment of the liquefied natural gas (LNG) via a new specialised terminal, which its investment arm, Aqaba Development Corporation (ADC), has completed.

According to the corporation’s Chief Executive Officer Ghassan Ghanem, the development of the facility is part of a JD1 billion- port development master plan for the years 2005-2030, which is now at its “peak period”. 

ADC’s top executive said the LNG terminal, created to import liquefied gas as one alternative to the costly heavy oil used to generate electricity, is one of four energy ports, including the oil terminal, which is in the “hot operation status”.

The third is the liquefied propane gas terminal, dedicated to receive shipments of gas used in cylinder for cooking and heating purposes. The facility is also fully operational now, after upgrades that reduced unloading time by 50 per cent. 

Ghanem told The Jordan Times in a recent interview at his office in Aqaba that the highest international technical and safety standards are applied in the operation of the terminal, where environment considerations have been taken into account.

A state-of-the-art miscellaneous liquids terminal project is in the pipeline, with tender documents expected to be ready in two months, according to the official, who said that the port will include 30 lines to carry the liquids to “tanks farms” for storage. 

The industrial ports of Aqaba are cited as an exemplary partnership between the public and the private sector. 

The Jordan Industrial Ports Company PSC (JIPC) has emerged as a joint venture between Arab Potash Company (APC) and Jordan Phosphate Mines Company (JPMC). 

JIPC has embarked on a multi-million-dinar project to refurbish an existing industrial jetty, which is operational now, in conjunction with building a new industrial jetty. ADC chief noted that the cost of the new terminal is JD170 million, adding that the progress was at 50 per cent.

A major component in the ports package, the container terminal has also received a facelift. The facility has seen expansion and upgrading, with four berths fully operational, equipment upgraded and storage areas increased, at a total cost of JD300 million. 

Ghanem added that the staff members, mostly Jordanians, operating the terminal have been targeted with rehabilitation and skill-upgrading plans. 

New berths have been added to the passenger terminal, the CEO added, with 100 per cent progress reported in this aspect of the development, while 25 per cent of plans concerning other facilities has been completed. 

The New Port is the highlight of ADC’s master plan for ports. The plan entails the relocation of port from the urban area to the southern tip of the region. 

The original land was sold to the UAE-based Al Maabar property developer, which is building the $10-billion Mrasa Zayed, a multi-use waterfront project, the largest in the history of Jordan.

Ghanem said that the land value was only one reason for the relocation. Another was the need for separating the land use function, avoiding mixed use, in line with the vision for Aqaba. 

The city’s urban part (50 per cent) is planned to be exclusively dedicated to tourism and real estate, while industrial (20 per cent) and the ports (30 per cent) components are located outside the city.

The official explained that such a plan would protect the environment of Aqaba. The relocation of the port is environmentally vital because it is used for grain, which attracts birds, a major complaint by residents in the town, apart from the dust caused by unloading the commodity.

In addition to these factors and the fact that the virtual life of the old facility is expired, he said, the regional developments have made it imperative to upgrade and expand the terminal. 

In fact, the planned capacity of 100,000 tonnes of silo storage has been doubled, a goal that was originally set to be achieved in 2025, Ghanem said, adding that 80 per cent of the project, which The Jordan Times toured, has been achieved. 

The Middle Port is also subject to a JD110 million makeover and ADC is currently tendering consultancy services from specialised international firms to add new berths, taking advantage of the naturally deep waters.

AMMAN — Several banks are extending a lifeline to the Middle East Specialised Cables Company/MESC-Jordan with a multimillion dinar syndicated loan.

The company, 49 per cent owned by Saudi Arabia's Middle East Specialised Cables Company, has all the product range of low, medium and high voltage power cables at plants in Mafraq, 60 kilometres north of Amman.

As a public shareholding company listed on the Amman Stock Exchange, MESC-Jordan also manufactures aluminum conductors as well as electrical and building wires.    

Under the debt restructuring deal with the Housing Bank, Capital Bank of Jordan, Jordan Commercial Bank, and Jordan Kuwait Bank, MESC-Jordan will also be given a working capital short-term credit besides the long-term financing.    

According to the auditor, EY/Jordan, all the assets of MESC-Jordan and its affiliate, MESC for Medium and High Voltage Cables Company,   were hypothecated as security for the lending in addition to the affiliated company's guarantee and the endorsement of insurance policies on the company's assets to the agent bank, namely Housing Bank.  

At the end of March 31,2015, the company's debts to the banks totalled JD46.2 million and the cost of financing during the first quarter of 2015 stood at JD0.4 million, compared to JD0.6 million in the first quarter of 2014.

The auditor's report showed JD51.7 million in accumulated losses at the end of the first quarter of this year. 

"The amount represents 133 per cent of MESC-Jordan's JD38.9 million paid-up capital and, consequently, depicts a JD9.3 million deficit in the shareholders equity," EY/Jordan wrote.

The annual report disclosed the losses from 2010 until 2014 to be JD11.5 million, JD12.1 million, JD6.4 million, JD3.2 million and JD4.6 million respectively.  

The auditor indicated in the quarterly report that the general assembly of shareholders decided in an extraordinary meeting in 2011 to increase the company's capital by JD20 million through a convoluted process.

MESC-Jordan obtained the approval of the Ministry of Industry, Trade and Supply for raising the capital within a three-year grace period from December 5, 2013 to rectify the situation and avoid liquidation.

"But with the interim financial statements under preparation, the company has not yet received the approval of the Jordan Securities Commission," the auditor said.

EY/Jordan added that the quarterly results were prepared on the basis of an ongoing concern company although the financial statements show a deficit in net shareholders equity and operational losses that affect MESC-Jordan's capability to continue. 

"The company's potential to continue as an ongoing concern depends on  making the most of its assets, meeting its obligations, and completing the procedures for a syndicated loan to restructure the indebtedness," the auditor concluded.

"Signing the syndicated loan agreement, with the aim of restructuring the long-term diminishing loans that are outstanding and extended by the participating banks, was a highly important accomplishment achieved by the company during 2014," MESC-Jordan Chairman Abdul Raouf Al Bitar wrote in the 22nd annual report.

He said in the foreword that the $56.96 million aggregate loan amount, to be repaid over eight years, would greatly support the company's financial position and maintain the liquidity necessary to back up the operational expenditure as well as raise the efficiency of the cash flow in order to fulfill obligations.

"Moreover, the interest rate specified in the syndicated loan agreement is less than the charge in most of the other previous agreements and, subsequently, brings down the financing costs by 11 per cent from those in the past year," Al Bitar indicated.

According to the profit and loss statement at the end of March 2015, MESC-Jordan generated a JD0.6 million gross profit, compared to JD0.5 million at the end of March 2014, as sales were higher at JD6.5 million from JD5.8 million during the first quarter of last year.

But the end result was a JD1.2 million loss in both periods when various administrative, selling and distribution expenses are taken into consideration in addition to financing costs and the cost of unutilised production capacity.

The 2014 annual report listed several misfortunes that impaired MESC-Jordan's operations, foremost of which the regional instability.

"Exports to Iraq last year fell by 59 per cent," Bitar pointed out, noting that the neighbouring country accounted for more than a quarter of the sales volume in the previous year.

He said that the drop in the price of copper also led to a wait-and-see attitude among many international contractors who delayed purchasing orders and, consequently, caused a big drop in MESC-Jordan's sales volume.

Sales as per  the profit and loss statement at the end of last year totalled JD29.6 million (JD39.3 million in 2013).

External sales accounted for JD24.7 million (JD30.6 million) of the total and local sales amounted to JD4.9 million (JD8.6 million).

Another important drawback mentioned in the report was the extremely severe competition, as a big increase in the number of local or foreign producers led to a reduction in the company's market share and lower selling prices and profitability.

Despite the acute competition from newly established firms with similar line of activity, MESC-Jordan estimated its share of the overall market, inside and outside the Kingdom, at 30 per cent.

"Manufacturers of cables and electric wires are operating in a market  marked by a cut throat competition due to oversupply from various sources, especially from abroad," the report stated, noting that MESC-Jordan was still able to enter several markets, such as Iraq, Saudi Arabia, United Arab Emirates, Syria, Libya and Sudan, in addition to its share of the local market.

"Because the prices of raw materials for this industry is almost equal, the competition remains confined to the capabilities of each entity in terms of lowering production costs and securing financing at lowest costs," the report indicated.

Within this context, the company intends to raise the profit margin related to the cost of production inputs.

To address all these hurdles, the company's plans include restructuring the sales and widening the base of clients abroad, focusing in particular on international contractors where the profit margin is better than electricity companies or traders.

MESC-Jordan, whose workforce comprises 326 employees, is also planning to develop new products that would enable it to penetrate new non-traditional markets and sectors on the regional level, including all types of renewable energy.  

While aiming to expand the share in the local market, the report  mentioned that payment terms will be modified, shortening to tenor that  customers enjoy to settle their dues to the company.

Financially, the gross profit as of December 31, 2014 amounted to JD2.6 million (JD3.5 million) but the net result was a JD4.6 million loss (JD2.3 million loss) after deducting the cost of unutilised production capacity, financing costs, administrative and selling expenses, and the company's share of the loss at an affiliated firm.

According to the balance sheet at the end of the last year, total assets dropped to JD42.3 million (JD50.8 million), of which JD23.3 million (JD25.6 million) were fixed assets. 

Current assets, totalling JD19 million (JD25,3 million), include JD3.3 million (JD6.2 million) net receivables, after deducting JD4 million in doubtful assets in both years.

TOKYO — Japanese electronics giant Sharp on Thursday said it was cutting thousands of jobs in a fresh turnaround plan to keep it afloat as the struggling firm posted a bigger-than-expected $1.86 billion annual loss.

The 222 billion yen net loss, much bigger than an earlier 30 billion yen forecast, came as Sharp said it would cut about 10 per cent of its 49,000-strong global workforce, including 3,500 jobs in Japan.

The firm said it hoped to swing to an 80 billion yen operating profit in the current fiscal year, but it did not give a net profit forecast.

The embattled Aquos-brand maker said it would sell the building that houses its Osaka headquarters to raise cash, roll out unspecified pay cuts, and launch a drastic capital reduction plan to wipe away huge losses.

Sharp, a major Apple supplier and leader in screens for smartphones and tablets, also said it would issue 200 billion yen worth of new shares with no voting rights to Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ as part of its bid to repair a badly damaged balance sheet.

"Our company is facing an extremely difficult situation," President Kozo Takahashi told reporters. "By implementing these structural reforms, we believe we can see a concrete path toward recovery."

Sales in the last fiscal year fell 4.8 per cent 2.78 trillion yen, Sharp, indicated.

On Monday, the company lost more than a quarter of its market value following reports that it was planning a drastic capital reduction and the sale of preferred shares, spooking investors who worried about their holdings being diluted.

The stock lost 0.99 per cent to close at 200 yen on Thursday in Tokyo, before its results were released.

Sharp, like rivals Sony and Panasonic, has been working to move past years of gaping deficits, partly caused by steep losses in its television unit, which has been hammered by competition from lower-cost rivals particularly in South Korea and Taiwan.

The trio have launched huge restructuring plans with Panasonic emerging as the leader as it focuses less on consumer products and more on goods sold to other businesses.

Last month, Panasonic said that its annual profit soared 49 per cent, crediting its lesser-known auto parts unit and lower costs.

Sony, by contrast, booked a $1.1 billion annual loss, but said it expects to swing back to profitability in the current fiscal year as it emerges from a painful corporate makeover.

Separately, Hitachi said Thursday that its annual profit fell, owing to a one-off surge a year earlier, but it forecast a rebound this year.

The Japanese conglomerate, which sells everything from lifts to nuclear plants, said its net profit was down 8.9 per cent at 241.3 billion yen ($2 billion) in the 12 months to March, largely due to year-earlier gains it booked from a reorganisation of its thermal power generation unit.

Operating profit in the just-ended year rose nearly 12 per cent to 600.48 billion yen on sales of 9.76 trillion yen, up 2.1 per cent, Hitachi indicated, crediting strong demand for its lifts in China and strong sales of auto parts and electronics products.

For the year to March next year, Hitachi estimates it will post a 310 billion yen net profit on sales of 9.95 trillion yen, under newly adopted accounting rules.

In February, Hitachi said it would buy the rail and traffic signal businesses of Italy's Finmeccanica, in a deal that could reach more than $2 billion as it looks to take on global rail giants.

The acquisition was expected to push up Hitachi's annual rail-related sales to more than 400 billion yen, about half that of Canada's Bombardier, Siemens of Germany or France's Alstom.

LONDON — Iran may be about to restore banking links with the rest of the world after years of separation, but the process won't be easy as its Islamic financial system has evolved in ways that will complicate ties with foreign banks.

Smothered in bad debt and shut out of the global system by sanctions, Iranian banks badly need to resume business with foreign lenders, for whom this would be a huge opportunity.

Iran's Islamic banking assets totalled 17,344 trillion riyals as of March 2014, or $523 billion at the free market exchange rate, according to the latest central bank data, over a third of the estimated total of Islamic banking assets globally.

But the Iranian banks' shaky finances and close ties with their government will increase the risks of dealing with them. And during their years of isolation, they have developed a version of Islamic finance that is in some ways markedly different from that practised in other Muslim-majority states.

The differences may make it hard for foreign banks, even ones from other big Islamic banking markets in the Gulf and southeast Asia, to do business in Iran.

"Given the prevailing socio-political situation, the market in Iran has evolved to be a highly domestic, stand-alone and managed banking industry," indicated Ashar Nazim, partner at consultancy EY's Islamic banking centre.

Bad debt

The sanctions may start to be lifted in coming months if Tehran and world powers reach a deal to curb its nuclear programme by a June 30 deadline. The deal would trigger a surge of trade and investment into Iran.

"There is huge upside for Iranian banks — their topline revenue has always been trade finance and letters of credit," indicated Ramin Rabii, managing director of Tehran-based investment firm Turquoise Partners.

In the Gulf and Europe, Iranian banks have substantial operations that have largely been mothballed in the past several years, such as Bank Melli's sprawling branch in downtown Dubai. These could spring to life if sanctions were removed.

But Iranian banks are not in good shape to exploit another boom. As the government battled the sanctions in recent years, it fixed banks' lending rates below inflation, which surpassed 40 per cent in 2013. 

Non-performing loans peaked at 17 per cent of total loans in 2013, representing almost 10 per cent of non-oil gross domestic product, according to the International Monetary Fund.

The administration of President Hassan Rouhani, who took power in late 2013, has brought inflation down sharply and helped banks to begin repairing their balance sheets. Bad or doubtful loans were 13.2 per cent of total loans in March 2014, central bank data shows.

But a full recovery is expected to take years. Banks may need to raise billions of dollars of fresh capital through sukuk or equity sales to take on substantial new business.

Another source of risk is the banking system's ties to the government. There are three state-owned commercial banks and five specialised government banks; although Rouhani has declared he wants the private sector to play a bigger role in the economy, many of the 19 banks classified as private have close ties to state institutions and operate under their influence.

Islamic finance 

In 1983, Iran passed legislation converting its entire banking system into an Islamic one. But it is a unique form of Sharia-compliant banking.

Although Islamic finance is interpreted by scholars around the world to ban the payment of interest, Iranian banks can still effectively use interest-based transactions and retain the accounting standards of conventional banking, according to a study by Pakistan's central bank.

"All these features indicate Islamic banking in Iran (is) significantly different from the basic features of Islamic banking in other regions of the world," the study found.

While the standards of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) are widely followed around the world, they are not enforced in Iran.

Trading of Islamic bonds using the salam format, a deferred sale contract, was disallowed by AAOIFI in 2007, for example. But in Iran's debt market, salam is a common form of sukuk.

Such differences may make it hard for Islamic as well as conventional banks to establish ties with Iran's banks and do business there, at least initially. The Sharia boards of Gulf banks would balk at deals with Iranian institutions that were seen to be un-Islamic.

"Major issues are the trading of debt and use of derivatives;  these are two very complicated issues in any Islamic financial system, and in Iran we have very different approaches," said one Iranian banker.

There are signs that Iran is starting to develop new channels that would ease contacts with foreign banks, however. An official of the capital market regulator, the Securities and Exchange Organisation (SEO), said last month that it was seeking to develop alternative sukuk products.

"The Sharia committee in SEO is working hard to adjust these contracts as well as developing new Sharia-compliant contracts," Majid Zamani, chief executive of Tehran-based Kardan Investment Bank, told Reuters.

AMMAN — Construction licences issued during the first quarter of 2015 reached 7,931 licences, 27 per cent less than the 10,857 licences issued in the same period of 2014, the Department of Statistics (DoS) announced Wednesday.

The total area of licensed buildings in the first three months of this year stood at 2.9 million square metres, compared with 3.98 million square metres in the same period of 2014.

Buildings for housing purposes accounted for  2.53 million square metres of the total licensed buildings in the January-March period of 2015, compared to 3.34 million square metres in the same period of 2014, marking a 24.3 per cent decline.

Non-housing licensed buildings dropped to 380,000 square metres in the first quarter of 2015, while it stood at 635,000 square metres in the same period of 2014, according to DoS figures. On governorate basis, Amman topped the list of licensed buildings with 50.7 per cent, followed by Irbid with 20.6 per cent, Zarqa 9.3 per cent and Balqaa 5.4 per cent, the DoS revealed. 

NEW DELHI — Lawmakers on Wednesday approved a crucial bill that aims to unearth billions of unaccounted dollars believed to be illegally stashed in foreign banks by Indians to avoid paying tax.

The upper house of parliament passed the bill that calls for fines as high as 10 million rupees (about $156,500) and prison terms up to 10 years for offenders.

The passage of the legislation underscores Prime Minister Narendra Modi's resolve to trace hidden and undeclared cash outside the country, known as "black money".

Modi's Bharatiya Janata Party (BJP) won the biggest mandate in 30 years last May on pledges to revive the economy and end corruption. 

Modi pledged during his high-octane election campaign to "bring back black money within 100 days" of being elected, after accusing the previous Congress Party-led government of failing to crack down on the issue.

He set up a team of regulators and ex-judges to identify illicit fund-holders and repatriate money as soon as he took office.

Illegal deposits abroad cost India billions of dollars in lost revenue. According to the Washington-based think-tank Global Financial Integrity, India suffered $344 billion in illicit outflows between 2002 and 2011.

The government has already submitted a list of people with illegal foreign bank accounts to India's top court, which is monitoring the case.

But the latest bill's passage is a rare victory for Modi in the upper house, where his coalition lacks a majority and regularly faces opposition protests.

Modi's struggle in the house has stymied his economic agenda, especially after furor over a controversial land-buying law and a further delay in the long-awaited goods and services tax (GST) bill which was sent for scrutiny to a committee earlier this week.

The GST bill aims to end India's patchwork of taxes under which each state can tax different commodities at different rates. The move would stop rival states competing for business through taxes.

It will now be introduced in the next parliamentary session in July.

Separately, India's government moved Wednesday to toughen child labour laws in a country where millions of youngsters work long hours, often in poor conditions, but activists slammed the steps as inadequate.

Modi's Cabinet approved a ban on all children under the age of 14 from working, except if employed in family businesses or in the sports and entertainment industry.

The current law prohibits children under 14 from working only in hazardous jobs, although even this is not properly implemented, according to activists.

The government defended the decision to allow some forms of labour after school hours or during vacations saying some children needed to learn traditional skills. 

"In a large number of families, children help their parents in their occupations... and while helping parents, children also learn the basics," the government indicated in a statement.

The Cabinet also needed to "keep in mind the country's social fabric and socio-economic conditions".

Some argue that outlawing child labour altogether is impractical in India where almost a quarter of the 1.2 billion population lives on less than $1.25 a day, according to the World Bank.

Millions of children work as domestic servants and in factories, mines and many other areas, aid agencies and government figures show.

Activists warned that the proposed changes could be exploited by unscrupulous employers and would be difficult to enforce in a country with a huge number of backyard industries. 

"There have been many discussions around providing vocational training to children but we think that this is regressive," Sreedhar Mether, advocacy and policy manager with Save The Children, told AFP.

"Enforcement of these points is really difficult and opens the possibility of children being exploited in bangle or garment industries where work is often outsourced to home-based units," he said.

Cabinet also approved higher fines of between 20,000 rupees ($300) and 50,000 rupees and jail terms of between six months and two years for employers hiring children under 14.

The approved amendments still need to be approved by both houses of parliament.

The changes are meant to bring India's child labour law into line with its landmark Right to Education law, which was passed in 2010 and provides free, compulsory schooling to children up to 14.

LONDON — With Middle East giants Saudi Arabia and Iran squaring up on opposing sides in the Yemen war, the dangers to vital oil tanker and goods voyages are growing daily.

Millions of barrels of oil pass through the Bab Al Mandeb and Strait of Hormuz everyday to Europe, the United States and Asia, waterways which pass along the coasts of Yemen and Iran respectively. Insurance costs for shippers are likely to jump.

Last week, Iran released Marshall-Islands container ship Maersk Tigris and its crew which were seized in the Strait of  Hormuz. This prompted the United States to send vessels to temporarily accompany US flagged ships through the strait. Iranian patrol boats had shadowed a separate container ship earlier last month.

"The whole area is a tinder box now," said John Dalby of Marine Risk Management Ltd., which provides private armed security teams for ships in the area.

"The main tension appears to be between the navies, be it Iranian patrol boats or ships or other forces in the area. That in some ways creates more uncertainty than dangers from Somali pirates as we saw previously, and, more worryingly, far more firepower capability," he added.

Iran's foreign ministry spokesman was quoted as saying on Wednesday that it would not let Saudi-led naval forces inspect an Iranian cargo ship bound for Yemen.

Saudi-led forces have imposed inspections on all ships entering Yemen in an attempt to prevent weapons being smuggled to the Iran-allied rebel Houthi group that controls much of the country.

"The question for us is: Could the Bab Al Mandeb become so perilous to navigate that guns onshore, controlled by Houthis, might shoot at ships? ... If so, fasten your seatbelts, the insurance rates are going to go up," said Michael Frodl, of US based consultancy C-Level Global Risks. 

Changing routes? 

The likelihood of a sharp rise in the premiums on voyages could be as much a deterrent to trade as the conflict itself.

"The reality is that ships heading to the Gulf, the Red Sea and the Eastern Mediterranean will be obliged to reconsider their movements not simply because of the widening scope of the attacks on, and seizures of, commercial vessels but also because of prohibitive insurance premiums," indicated Jonathan Moss of law firm DWF, who acts for insurers.

Khalid Hashim of Precious Shipping, one of Thailand's largest dry cargo owners, said: "If gets really bad, insurers may altogether stop covering calls to the badly affected areas."

According to Hashim, if the Iranian cargo ship went ahead with its intention to deliver aid to Yemen despite a call by the US to deliver it to neighbouring Djibouti, it may lead to a response by the Saudi-led coalition.

"That could possibly escalate tensions in a wide area including the Red Sea, the Gulf of Aden and through to the Straits of Hormuz. That would surely be bad for shipping, and for all the countries in the region," Hashim added.

The US Maritime Administration and the Marshall Islands flag registry have both warned of increased risks for ships operating around Hormuz.

"If a boarding by Iranian forces occurs even after declining permission, the boarding should not be forcibly resisted by persons on the US flag merchant vessel. Refraining from forcible resistance in no way indicates consent or agreement that such a boarding is lawful," one of the advisories said.

The region has already seen disruptions in recent years due to Somali piracy and attacks by militants.

A suicide bombing carried out by Al Qaeda killed 17 sailors on the US warship Cole in the southern Yemeni port of Aden in 2000. Two years later, Al Qaeda hit a French tanker in the Gulf of Aden, south of the Bab Al Mandeb, which led to a tripling of insurance premiums.

"The tensions are rising, with some concern evident as tanker owners have long memories of the tanker war from the 1980s," said Phillip Belcher of tanker association INTERTANKO, referring to vessels that were fired at during the Iran-Iraq war.