02/08/2016 World Business Report

South Korea orders Volkswagen to sling its hook as Asia's fourth

largest economy tells the German carmaker it can no longer

And throwing another kitchen sink at Japan's economic problems.

Yes, this man, Prime Minister Abe, gets set to splash the cash

trying again to kick start the world's number three economy.

Coming up - the Japanese government has unveiled another stimulus

package - but are investors underwhelmed?

South Korea - has suspended the sales of 80 VW models,

this is across the VW group and includes Audi's and Bentleys

and fined the German car maker some $16 million.

The South Korean govt is accusing VW of forging documents on emissions

The move by Asia's fourth biggest economy builds pressure

on Volkswagen as it struggles to repair its reputation after it

admitted in September to using illegal software to hide

toxic emissions on about 11 mln vehicles worldwide.

Our correspondent Stephen Evans is in Seoul.

Why now? Why now? That is the way the law moves. It moves at this

pace. The authorities in South Korea are determined to be tough on this.

You have a ban on sales of new models, 32 new models altogether.

Models of new cars, rather. Audi, VW and Bentley, the brands in this

economy. You also have, and it is rare across the world, they are

going after executives. The forgery allegation is basically the

allegation that to get the licence to sell in this country, documents

had to be forged and executives, they are implying all prosecutors

are implying, they knew about these tests when they sought the import

licences. There is a fine, there is a ban on sales, plus some pretty

robust language from the prosecutors who say executives in this country

must have known. Now, if you look at the VW's figures recently, the first

six months of the year, it remains the world 's biggest carmaker. Still

beating Toyota. Stay at -- sales down 7% in the US, up 7% in China.

It has set aside a bunch of money to sort this legal thing out. But, all

the signs are that the upward growth of the VW economy has not hit any

kind of permanent bump. Very briefly, I'm curious, the suspension

of sales, how permanent is it? Temporary. We don't know. It is

suspended until the authorities of the environmental Ministry here is

satisfied that the paperwork it gets reflects the reality. It doesn't

effect, for example, the sale of cars, the second-hand sale of cars.

It is the environment Ministry saying we are very very angry. We

feel we have been deceived and until you can insure us that that's not

the way you run your company, then that ban remains. Thank you for

that. We appreciate it, as always. Stephen Evans joining us from Seoul.

Japan's Prime Minister Shinzo Abe is - yet again -

throwing the kitchen sink at the country's economic problems...

Yes, he is set to splash the cash to the tune of some $270bn -

trying once more to kick start the world's number three economy.

This will rank as the largest spending package since the global

But will it be enough to jump start the Japanese economy and get it

Mark Oswald, foreign exchange strategist. Always good to have you

in the studio. Thank you for coming in at this horrible owl. Talk about

horrible, is this another horrible plan by the Japanese government? --

horrible hour. In GDP terms, the Japanese economy, in terms of

government debt. Japan has plenty of it. People are always worried about

Japan borrowing a lot because it already has debt. The bank of Japan

has run out of road so that they are trying to find something to give the

economy a bit of a kickstart. But we have been here before, plenty of

times over the past 25 years. What we really need in Japan, obviously,

is a question of when are they going to reform their economy? It clear. I

always joke. -- exactly. You can't always throw good money after bad.

Why are they so reluctant, 25 years, why are they so reluctant to

implement some economic reforms? Some of them are sociocultural

problems. Above all, changing the amount of immigration in Japan.

Foreign workers only constitute about a small percentage of the

workforce. They are against it. It doesn't work politically. With

Japan's demographics going sharply against them, they have an ageing

population, they have no young taxpayers, no young workers coming

through, to be able to pay for that. In the lung -- in the long run, they

need to find that. They need to earn money from abroad because the

domestic profile is so weak. They need to fundamentally change that.

Another issue problem for Japan and, perhaps out of its control, if

currency. Investors around the world, when we have Hick ups,

investors panic and take their money out of the stock markets and they

put it in Japan. The more they get the yen, the yen goes up and that is

not good for the Japanese companies and they sell their stuff abroad. Is

not good for Japan trying to fight this deflation. On the other hand,

not surprising, giving thereafter refuse safe havens in the world in

the dollar is obviously very much subject to when the Feds are going

to move on interest rates. That's for another interview! We appreciate

it. Short and sweet but enqueue. -- but thank you. Further south,

towards my home country. Well, it is my home country.

The central bank of Australia has just announced its interest rate

Hello, mate! Was this expected. I think it was. I was reading in the

first part of this year, we had better growth than many were

expecting but things like housebuilding and exports were doing

OK at the beginning of the year but have they called a little bit? The

big reason for this, I think, is inflation. Inflation in Australia is

quite a bit below what the reserve bank wants. The reserve wants

between two and 3%. That is one reason the reserve bank is taking

interest rates into new territory. A few moments ago the rate was lowered

to a historic low of 1.5%. If you have a mortgage, it's pretty good

news. If you are a saver, not so good. It is likely to have an impact

on quite a high Australian dollar which the Reserve Bank has also had

its eye on in recent months. Don't tell me about the dollar. And become

I come home, it kills me. In all seriousness, since China has come

off the boil, meaning the Australians were digging up less and

selling yesterday Chinese, but that has really is hit the Australian

economy, many said Australia had all its eggs in one basket and needed to

diversify the economy. Has it been doing that? Has it been on the right

path of diversifying the Australian economy? It hath too. The long

mining boom that lasted for the best part of a decade is failing.

Australia is not the powerhouse it once was in terms of exporting,

mostly iron or, to places like China and also coal. The Prime Minister

Malcolm Turnbull wants Australia to become an innovation nation. Also

boosting manufacturing, agriculture, housebuilding and tourism. All

sectors will be important in Australia's near future. Plotting a

path to Verity at the end of a very long and prosperous mining boom. --

path to prosperity. Did you see that backdrop? Not bad. Can we look at

the markets? You can see the Nikkei. Holding their breath waiting to see

what the Japanese Promina start reveals in this new wave of economic

stimulus. -- Japanese Prime Minister. There seems to be a bit of

a central banks seem. We have seen what the bank of Japan did on

Friday, that disappointed the markets, it didn't do enough in

terms of its programme. Enough in certainly in terms of investors and

the markets are round the world were hoping for. All eyes are now on the

Japanese Prime Minister. The United States reserve, of course, will

they? Won't they? People are now saying that they won't raise the

interest rates this year given, of course, the disappointing economic

numbers that we saw on Friday. Really shocked the markets and the

world's largest economy slowed down. There you go. Follow me on Twitter.

You can get me at BBC Arryn. -- Aaron. I will be back to look at the

newspapers. The High Court will decide whether

England has the power to get a