Spokesperson Julie King told the media that Exxon is exploring potential opportunities for its Malaysian oil and gas assets sale, in addition to other properties globally. According to the reports, Exxon plans to sell $15 billion worth of assets by 2021. 

Currently, Exxon has no sale opportunities in the pipeline—and will continue to operate the fields till a deal takes place. 

The company operates 35 oil and gas platforms in 12 offshore fields in Malaysia. In addition, it has working interests in 10 platforms in five fields in the South China Sea. 

Exxon’s operations produce 15 percent of Malaysia’s 600,000 barrels per day oil output and half of its natural gas output of more than 2 billion cubic feet per day. 

WoodMackenzie said in a note that, “The Malaysian assets are both operated and generally highly mature, with a significant amount of ageing infrastructure. A buyer will need to have strong operating credentials, and be recognised by (Malaysian national oil company) Petronas to be a suitably qualified and reputable operator.” 

In recent months, Exxon has increased efforts in assets sales worldwide. Exxon assets have been offered or sold to oil  producing companies in Norway, Australia, Nigeria, Azerbaijan and Britain.

Exxon has operated in Malaysia for more than 125 years. Media reports said that the company will continue to operate other businesses in Malaysia after a sale takes place. It operates two support centres in Kuala Lumpur for upstream, fuels, lubricants and chemicals manufacturing. 

The post Exxon appoints Bank of America to execute Malaysian assets sale appeared first on International Finance.

30th September 2013

Fidelity Investments, the top retirement plan providers in the U.S. has been sued by its own employees over the 401 (k) plan it offers to its own workers. Employees claim that the plan is dominated by expensive Fidelity mutual funds when lower-fee options are available within Fidelity’s own offerings and from other providers. Fidelity is the 401 (k) provider for 12 million workers across thousands of companies, the employees who have filed the suit claim that the investment options available in the Fidelity plan were offered by Fidelity or a company subsidiary. By the end of 2010, nearly 85 percent of the plan’s assets were held in actively managed Fidelity mutual funds, which tend to have higher fees than passively managed index funds. The complaint comes in the wake of a series of 401 (k) related law suits against financial firms and other companies that allege mismanagement of funds and high fees. The Federal Employee Retirement Income Security Act clearly says that companies with 401 (k) retirement plans have a “fiduciary responsibility” to act in the best interest of their employees. A spokesman from the company sought the dismissal of the lawsuit as it was without merit and baseless allegation from a group of employees from the company; he said that the company provides its employees a wide variety of investments to choose from, including low cost index funds.

In this article let us understand the meaning of a 401 (k) plan, eligibility criteria, how the plan works, caveats to the rule, difference between a 401 (k) 403 (b) plans and the law suit filed against Fidelity Investments for its alleged role in the misuse of 401 (k) plans of its own employees.

What is a 401 (k)?

A 401 (k) is a retirement plan sponsored by an employer; the workers can save a portion of their salary before deduction of taxes. It is the most common kind of defined contribution retirement plan, it is named for the section of the tax code that governs them, 401 (k)’s became popular in the 1980’s as a supplement to pensions. Most employers used to offer pension funds, these Pension funds were managed by the employer and they paid a steady income during the time of retirement, but as the cost of pensions escalated, employers decided to replace them with 401 (k)’s. The term 401 (k) is a reference to a specific provision in the U.S. Internal Revenue Code, however, its popularity has made other nations use it as a generic term to describe the analogous legislation.

For example: In 2001, Japan adopted the version by using 401 (k) accounts even though no provision of the Japanese code is called 401 (k). The term is not used in U.K. where analogous pension arrangements are known as personal pension schemes.

How does it work?

The employee can decide the extent of contribution made to the plan, since the plans offer valuable tax breaks, employee can make the maximum contribution to the fund. As on 2013, the maximum limits to the fund was $ 17,500 if he was under the age of 50. If the employee is more than 50, he can make an additional catch-up contribution of $5,500, for a total of up to $ 23,000. The investment happens through payroll deduction and the employee can decide what percentage of salary he can contribute, the amount shall be deducted and deposited into the fund. The company where the employee is working shall serve as the “plan sponsor”, the company does not invest the money, instead, it hires another company to administer the plan and its investments. The plan administrator may be a mutual fund company such as Fidelity, Vanguard or a brokerage firm such as Schwab or Merrill Lynch or even an insurance company such as Prudential or MetLife. The employer sends the payroll deductions directly to the company managing your plan, but the employee should decide the course of investment among the various options.

Caveats to the rule

The 401 (k) plan has lots of caveats and restrictions, the employer contribution cannot be withdrawn until a specific time limit, employers generally use this plan to control attrition rates and prevent early leaving by employees thereby strengthening their human resources. There are complex rules on the withdrawal limits and the company can impose heavy penalties for withdrawals before superannuation.

What if the company goes bankrupt?

If the company ceases to function, the plan would be terminated. If that happens, employees can roll the money into a traditional IRA to avoid paying the 10 percent withdrawal penalty and income taxes.

Difference between 401 (k) and 403 (b) Plan

Both 401 (K) and 403 (b) plans are employer sponsored retirement benefit plans that offer tax savings. Structurally both the plans are similar, the main difference lie in the eligibility of participants and the reporting requirements for employers.

The post 401 (k) Plan for Savings and Retirement appeared first on International Finance.

Singapore, July 18, 2014: Singapore’s growth shrunk in the second quarter after notching an ascent in the first, primarily because of a decline in the manufacturing sector, prompting financial institutions to downgrade their GDP foresight for 2014 citing the island nation’s “weak” factory segment.

“The Singapore economy grew by 2.1 percent on a year-on-year basis in the second quarter of 2014, slower than the 4.7 percent growth in the previous quarter,” said the government data agency Statistics Singapore.

“On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 0.8 percent, a reversal from the 1.6 percent growth in the preceding quarter,” it said in a July 14 statement.

In contrast to the drop for the first time in seven quarters, the median forecast of 17 economists polled in a Bloomberg News survey projected a gain of 2.4 percent.

The manufacturing sector was dragged down by dipping performance of electronics, one of its mainstays – the other being pharmaceuticals; electronics accounts for a third of Singapore’s revenues from manufacturing.

However, the sector has lagged behind in the rest of the region in recent years as the economy has become increasingly reliant on trade, financial services, tourism, and property development.

“The manufacturing sector, the key driver of growth in the previous quarter, now became the weakest link,” said DBS Bank, Singapore’s largest bank by assets, in a note.

Economists also attributed the decline to Singapore’s efforts to reshape its economy. Apart from the slide in manufacturing, it has tightened its labour laws to check the influx of less costly foreign workers, forcing a leading semi-conductor manufacturer, Western Digital Corp, to shift production base overseas and disturb the island nation’s manufacturing numbers.

In a June 13 statement on Singapore’s labour market in the first quarter, the Ministry of Manpower said more residents, “especially the less educated”, were encouraged to enter the labour force, given that there were more job openings, increased wages, and tightened foreign manpower controls.

In addition to foreign labour controls, the Singaporean authorities are also taking steps to attract newer industries such as those engaged in research and development. Going by the latest data, the move has apparently backfired, say economists.

“Restructuring appears to be failing. Growth is being impeded by tight labour constraints even as global demand recovers,” wrote Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch, in a note after the GDP report. “Economic activity is losing steam despite a healthier global backdrop.”

Incidentally, the last time that Singapore’s GDP shrank – in the seasonally adjusted annualised quarter-on-quarter advance estimates – was in the July-September quarter of 2012, when it contracted by 3.6 percent.

“Structural changes in Singapore’s economy will act as a constraint on medium-term growth, even as cyclical conditions improve,” said research house Capital Economics in a note.

Capital also downgraded its growth forecast for the current year from 4 percent to 3.5 percent, saying: “The days of trail-blazing industrialisation are long over.”

Similarly, United Overseas Bank (UOB) also whittled down its growth forecast, paring it to 3.5 percent from 4.2 percent projected earlier.

“Not only may we see slower external demand,” UOB said in a note, “Singapore’s domestic sectors will also continue to face challenges from the ongoing economic restructuring amid tight labour market conditions.”

ELECTRONICS HIT

Statistics Singapore noted that the economy’s 0.8 percent contraction on a quarter-on-quarter seasonally-adjusted annualised basis was a reversal from the 1.6 percent growth registered in the January-March quarter.

The data office also identified a decline in electronics as one of the main reasons for the sluggish second quarter growth, with the manufacturing sector taking a hit primarily due to a sharp fall in the production of semiconductors, a low value-added industry that the island nation is so dependent on.

On a year-on-year basis, the manufacturing sector grew by 0.2 percent in the second quarter, moderating from the 9.9 percent expansion in the previous quarter, the agency said.

“The deceleration in growth was largely due to a contraction in electronics output and slower growth in transport engineering output,” it added.

On a quarter-on-quarter basis, the manufacturing sector contracted at an annualised rate of 19.4 percent, in contrast to the 12.2 percent expansion in the preceding quarter.

The decline was led by the falling output of the electronics cluster, which fell 7.5 percent year-on-year in the month under review.

Infocom and consumer electronics as well as other electronics modules and components segments grew 9.1 percent and 2 percent, respectively, the data office said, but the gains were negated by the semiconductor segment, output of which decreased 6.4 percent.

On the brighter side, Statistics Singapore said, the cumulative output of the electronics cluster expanded 2.7 percent from January to May this year, compared to the same period last year.

Another sector driving an economy but undergoing a slowdown in Singapore in the second quarter was construction, which registered a 5 percent year-on-year growth, lower than 6.4 percent notched in the preceding quarter.

The data office attributed the lower rate of growth to a slowdown in private sector construction activities.

On a quarter-on-quarter basis, the sector expanded at an annualised rate of 2.6 percent – a rare improvement from the 0.5 percent contraction recorded in the previous quarter.

Also slowing down growth in the quarter under review was services producing industries, which grew by 2.8 percent on a year-on-year basis, following the 3.9 percent growth in the previous quarter.

The moderation in growth was largely due to slower expansion in the wholesale and retail trade and transportation and storage sectors.

On a quarter-on-quarter basis, the services producing industries grew at an annualised rate of 5.2 percent, a reversal from the 1.4 percent contraction in the preceding quarter.

The Ministry of Trade and Industry will release the preliminary GDP estimates for the second quarter in August 2014 in its “Economic Survey of Singapore” report, which will include performance by sectors, sources of growth, inflation, employment and productivity.

PHARMA BLUES

The Statistics Singapore statement did not dwell on the pharmaceutical sector, but official data for the manufacturing sector’s performance in May saw it declining 11.6 percent – primarily on account of a lower production of active pharmaceutical ingredients.

As a direct fallout of this, the biomedical manufacturing cluster’s output contracted 9.2 percent, compared to the same month a year ago.

On a year-to-date basis, output of the biomedical manufacturing cluster increased 11.2 percent, compared to the same period a year ago.

On a year-on-year basis, Singapore’s manufacturing output declined 2.5 percent in May; excluding the biomedical segment, the fall was only 0.5 percent.

On a seasonally adjusted month-on-month basis, output contracted 5.7 percent but increased 0.4 percent after excluding biomedical production.

The post Singapore’s factory output dips, drags down Q2 growth appeared first on International Finance.