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Muhyiddin picks CIMB CEO as finance minister in new Cabinet line-up

Appointment of private sector banker who is non-political is seen as PM's attempt at fiscal credibility

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Mr Zafrul will be tasked with implementing a RM20b stimulus package to counter economic damage from the coronavirus outbreak.

Kuala Lumpur

MALAYSIAN Prime Minister Muhyiddin Yassin on Monday picked the head of one the country's main banks as his new finance minister amid heightened global risks and domestic policy uncertainty.

Zafrul Aziz, the chief executive officer of CIMB Group Holdings, will head the finance ministry under Mr Muhyiddin, who replaced 94-year-old Mahathir Mohamad last week after a power struggle.

Mr Zafrul will be tasked with implementing a RM20 billion (S$6.6 billion) stimulus package to counter economic damage from the coronavirus outbreak. Growth in Malaysia's economy was slowing even before the contagion, weakening to a decade low last year.

"The appointment of Zafrul Aziz, with his deep banking sector expertise - and not a political appointee - will be seen as Muhyiddin's attempt to ensure fiscal credibility," said Wellian Wiranto, an economist at OCBC Bank in Singapore.

"(It is) a positive move, although it remains to be seen how he can quickly win market confidence at a time when fiscal stability may be threatened by the deep plunge in the oil price."

Mr Zafrul, 46, spent much of his career climbing the ranks at CIMB before becoming the group's CEO in 2015. A senior investment banker, he previously worked at Citigroup Malaysia, Credit Agricole Group and local broker Kenanga Holdings.

He holds a Master's degree in economics and accounting from the University of Bristol and a bachelor's degree in finance from the University of Exeter.

The ringgit fell one per cent to 4.2165 per US dollar, tracking losses in regional currencies after crude prices slumped.

The appointment comes a week after Malaysia's central bank lowered the benchmark interest rate by 25 basis points to counter risks to the economy from the coronavirus outbreak.

The government recently revised down its economic growth forecast for this year to between 3.2 per cent and 4.2 per cent, from 4.8 per cent previously, after last year's expansion was the weakest in a decade.

It also has widened the fiscal deficit target to 3.4 per cent of gross domestic product, from 3.2 per cent earlier, to accommodate the stimulus package.

Mr Muhyiddin must balance the interests of lawmakers cobbled together from opposing factions. He is backed by a Malay-majority party, a group of lawmakers from the former multiracial government, as well as a party advocating more autonomy for the eastern state of Sarawak.

His new government is set to face a no-confidence vote from Dr Mahathir when Parliament convenes on May 18.

The new Cabinet line-up includes:

  • Azmin Ali, a former economy minister, as senior minister for international trade and industry;
  • Ismail Sabri Yaakob as senior defence minister;
  • Fadillah Yusof, senior minister for works;
  • Radzi Jidin, senior minister for education;
  • Wee Ka Siong as transport minister;
  • Shamsul Anuar Nasarah as energy and natural resources minister;
  • Hishammuddin Hussein as foreign minister;
  • Adham Baba as health minister;
  • Saifuddin Abdullah, a former foreign minister, as communications and multimedia minister;
  • Mohd Khairuddin as commodities and plantations minister.

The line-up shows the compromise Mr Muhyiddin has had to strike between appointing technocrats like Mr Zafrul and returning many ministers from United Malays National Organisation's (Umno) previous stint in power, said James Chin, director of the Asia Institute at the University of Tasmania.

Umno ruled Malaysia for six decades until it was ousted from power at the last general election in 2018.

"This Cabinet will please the Malay ground," Mr Chin said, referring to the country's ethnic majority.

Mr Muhyiddin also created a new post for special minister of Sabah and Sarawak, which is likely to appease the Sarawak State Parties Coalition that agreed to back him at the last minute, Mr Chin added.

Mr Muhyiddin has pledged to continue some of his predecessor Dr Mahathir's policies. In addition to the stimulus package, that includes the Shared Prosperity framework meant to reduce wealth inequalities and boost purchasing power till 2030. BLOOMBERG