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Malaysia names ex-1MDB investigator as new central bank governor
[KUALA LUMPUR] Malaysia named Nor Shamsiah Mohd Yunus, a former central bank official who investigated the scandal-plagued state fund 1MDB, as governor of the regulator.
Nor Shamsiah, who was deputy governor at Bank Negara Malaysia for six years until she left in November 2016, will replace 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 when he left.
Prime Minister Mahathir Mohamad’s spokesman confirmed the appointment after the premier said in an interview with Bloomberg Television’s Haslinda Amin on Friday that it was approved by the king.
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 the 92-year-old Dr Mahathir. One of his first steps was to reopen an investigation into 1MDB, the state-owned investment fund mired in multi-billion dollar 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 previous administration of Najib Razak. The proceeds were subsequently used to repay 1MDB debt.
Nor Shamsiah was involved in the investigation of 1MDB while at Bank Negara, which began when Mr Muhammad’s predecessor Zeti Akhtar Aziz was in power. 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 percent goods-and-services tax has also put pressure on fiscal revenues and triggered concern about a credit-rating downgrade. He’s 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. Policy makers are due to meet again in July.
“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 Irvin Seah, an economist at DBS Group Holdings in Singapore. “Shamsiah’s not new to the industry so in terms of monetary policy, we’re in good hands.”
Her main challenges will be dealing with the stronger dollar, rising US interest rates and Malaysia’s external debt, he said.
The ringgit traded in line with most regional currencies on Friday, and was little changed at 4.0140 against the US dollar as of 12:10 p.m. in Kuala Lumpur. The currency is down 1.2 per cent in the past month.
Nor Shamsiah left the central bank without fanfare when her term ended in late 2016 after a three-decade career with the authority. Bank Negara didn’t 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.
Nor Shamsiah first joined the central bank in 1987. A certified practicing accountant, she was involved in policies to strengthen the banking system during the Asian financial crisis and has helped develop regulation and guidelines for the financial sector. She was also involved in formulating the Malaysian financial sector’s 10-year master plan through 2010.
She was promoted to deputy governor in 2010 to oversee areas including banking, insurance, financial intelligence and enforcement. Nor Shamsiah was among potential candidates considered to succeed Zeti when she stepped down in April 2016.