KL central bank deputy chief promoted as new governor

On the central bank's role under his charge, Mr Muhammad Ibrahim said it is important for the bank "to maintain monetary and financial stability, remain focused on its strategic agenda and work towards contributing to a better future for all Malaysia
On the central bank's role under his charge, Mr Muhammad Ibrahim said it is important for the bank "to maintain monetary and financial stability, remain focused on its strategic agenda and work towards contributing to a better future for all Malaysians".PHOTO: THE STAR/ASIA NEWS NETWORK

The Malaysian government has promoted central bank deputy governor Muhammad Ibrahim to the top job, ending months of speculation over who will succeed current governor Zeti Akhtar Aziz.

Datuk Muhammad, 56, a Harvard graduate, has been with Bank Negara Malaysia (BNM) for 32 years and been its deputy governor since 2010. His five-year term starts on May 1.

"I'm confident that under his leadership, Bank Negara Malaysia will continue assisting the government with advice to further strengthen Malaysia's economy, as well as managing monetary policy, and regulating and developing the financial services industry," Prime Minister Najib Razak said in a statement yesterday.

Tan Sri Zeti, who will step down on Saturday after 16 years at the helm, lauded the "positive" move.

"Being part of our policy team at the bank will provide continuity and the much needed certainty in this prevailing period of great uncertainty," said the widely respected 68-year-old central banker.

Yesterday's announcement boosted the ringgit, which endured a four-day losing streak leading up to state investor 1Malaysia Development Berhad's (1MDB) bond default due to non-payment of interest, which then triggered cross-defaults on two Islamic bonds.

"The appointment is positive for the market and the central bank," said Mr Alan Tan, an economist at Affin Hwang Investment Bank.

Aside from Mr Muhammad, whom the banking sector favours, other names that had been touted for the top post included Finance Ministry secretary-general Irwan Siregar, Minister in the Prime Minister's Department Wahid Omar, and Malaysia's Ambassador to the United States Awang Adek.

There was concern in the financial community that politics might trump other considerations in the choice of Dr Zeti's successor.

But Mr Ibrahim Suffian, a political analyst and director of independent pollster Merdeka Centre, said: "The government is acutely aware of what the market wants and does not want to create more problems for itself."

Mr Muhammad made clear in a statement what BNM's role would be under his charge.

"It is important for the central bank to maintain monetary and financial stability, remain focused on its strategic agenda and work towards contributing to a better future for all Malaysians," he said.

BNM is one of the investigating authorities looking into allegations of financial mismanagement at the troubled 1MDB. Dr Zeti has been leading the BNM's probe into the state investor's transactions, which amounted to billions of ringgit.

Last month, she said the central bank was pursuing "appropriate administrative enforcement action" and was awaiting the Attorney- General's decision.

The 1MDB financial scandal was one of the stress factors last year for the Malaysian economy, already hit by low commodity prices and China's slowing growth.

"1MDB is a source of embarrassment but the bigger concern (for the government) is fixing the economy... It's more important to get a competent governor instead of someone who can stave off the 1MDB issue," said Mr Ibrahim.

A version of this article appeared in the print edition of The Straits Times on April 28, 2016, with the headline 'KL central bank deputy chief promoted as new governor'. Print Edition | Subscribe