Malaysia names central bank boss

Outgoing governor Dr Zeti Akhtar Aziz. Source: YouTube

Malaysia has appointed Muhammad Ibrahim as central bank governor, after months of market speculation ahead of veteran chief Dr Zeti Akhtar Aziz’s retirement.

The deputy governor Muhammad will take over on May 1 for a five-year term.

His term at the Bank Negara Malaysia starts as investors look for signs of stability in a nation rocked by political turmoil and alleged financial irregularities at 1MDB, Malaysia’s state investment fund.

A statement from Prime Minister Najib Razak’s office said: “I am confident that under Muhammad’s leadership, Bank Negara Malaysia can continue its service in helping the government, providing advice and views for catalyzing the country’s economic growth, as well as administer monetary policy and overseeing the country’s financial industry, including continuing Bank Negara Malaysia’s efforts to grow the financial industry.”

Zeti, who is stepping down after 16 years, is widely respected and credited with stabilising monetary policymaking and reforming the banking sector, while establishing the central bank’s independence. Strong domestic demand enabled Najib to count on consumers to support growth amid constraints in boosting government spending.

Zeti was named as one of the world’s best central bank chiefs by Global Finance magazine in 2009.

She has been outspoken about alleged irregularities at 1MDB, and in late last month, the bank announced it was pursuing an enforcement action against the embattled fund for breaches under the Exchange Control Act that decides the movement of cash offshore for investment.

“Given that it’s an internal appointment, we should expect a continuation of policy that’s been set by Zeti,” said Sim Moh Siong, a Bank of Singapore strategist. “Overall this is a market-friendly appointment.”

The ringgit reversed a drop after the appointment, gaining 0.3 per cent against the dollar. The FTSE Bursa Malaysia KLCI Index fell 0.2 per cent, paring losses of as much as 0.6 per cent.

Muhammad is a member of the central bank’s monetary policy committee and is an independent director on the board of the state-run oil giant Petronas.

He was appointed deputy governor in 2010 and has worked for the central bank since 1984.

A chartered accountant and University of Malaya graduate, he has a Harvard master’s degree and a postgraduate diploma in Islamic banking and finance from the International Islamic University Malaysia.

Asean’s third-largest economy grew 5 per cent last year, falling from 6 per cent in 2014. In January, Najib revised this year’s budget to reflect falling oil prices and sliced this year’s GDP forecast to 4-4.5 per cent from 4-5 per cent.