KUALA LUMPUR • Malaysia has named Datuk Nor Shamsiah Mohd Yunus, a former central bank official who investigated the scandal-plagued state fund 1Malaysia Development Berhad (1MDB), as governor of the regulator.
Ms Nor Shamsiah, who was deputy governor of Bank Negara Malaysia for six years until she left in November 2016, will replace Tan Sri Muhammad Ibrahim, who resigned from the top job earlier this month after questions were raised about the central bank's role in a deal linked to 1MDB. Mr Muhammad was less than halfway through his five-year term.
Finance Minister Lim Guan Eng said Malaysia's King consented to the appointment, upon the recommendation of Prime Minister Mahathir Mohamad.
"She is a very capable woman and is well-respected internationally," Mr Lim said at a news conference to announce Ms Nor Shamsiah's appointment.
Ms Nor Shamsiah said she accepted the appointment with an "utmost sense of honour and responsibility". "I will endeavour to carry out the duties of the governor of Bank Negara Malaysia to the best of my ability together with the present team.
"Bank Negara Malaysia will continue to focus on delivering its mandate of maintaining monetary and financial stability in the best interests of the nation," she said at the news conference.
The new governor is taking over at a time of Malaysia's biggest political upheaval in decades following last month's unexpected election win for Tun Dr Mahathir.
She is a very capable woman and is well-respected internationally.
FINANCE MINISTER LIM GUAN ENG, when announcing the appointment of Ms Nor Shamsiah Mohd Yunus as the new governor of Bank Negara Malaysia.
One of Dr Mahathir's first steps was to reopen an investigation into 1MDB, the state-owned investment fund mired in multibillion-dollar corruption probes around the world.
The former governor said he resigned to protect the central bank's image and reputation after questions were raised about the purchase of land from the administration of Datuk Seri Najib Razak. The proceeds were subsequently used to repay 1MDB debt.
Ms Shamsiah was involved in the investigation of 1MDB at Bank Negara, which began when Mr Muhammad's predecessor Zeti Akhtar Aziz was governor. The fund took shape in 2009 under Mr Najib, who went on to lead its advisory board.
The new governor will need to bring stability and confidence to an economy facing heightened volatility amid a rout in emerging markets. Dr Mahathir's move to scrap a 6 per cent goods and services tax has put pressure on fiscal revenues and triggered concern about a credit-rating downgrade. He has also pledged to review large-scale investment projects, which may curb growth.
Bank Negara raised its benchmark interest rate in January, and left it unchanged twice since then.
"Given the fact that both the trajectory on inflation and growth are still within the central bank's expectations, this makes for a stable monetary policy," said Mr Irvin Seah, an economist at DBS Group Holdings in Singapore. "Shamsiah's not new to the industry so in terms of monetary policy, we are in good hands."
Her main challenges will be dealing with the stronger dollar, rising US interest rates and Malaysia's external debt, he said.
Ms Shamsiah left the central bank without fanfare when her term ended in late 2016 after a three-decade career with the authority. Bank Negara did not announce her departure as it typically would for others in similar positions, prompting speculation she ran afoul of Mr Najib's administration in her investigations of 1MDB.
Deputy governors at the central bank are appointed by the finance minister, a role also held by Mr Najib when he was in power.
BLOOMBERG, THE STAR/ASIA NEWS NETWORK