KUALA LUMPUR, June 22 — Malaysia named its new central bank governor today, choosing a woman who had been a former deputy governor assisting investigations into the 1MDB scandal, and who has most recently held a senior role at the International Monetary Fund.
Datuk Nor Shamsiah Mohd Yunus will become the second woman to hold the position in the Muslim-majority country when she takes up her post at Bank Negara Malaysia on July 1.
Her predecessor Tan Sri Muhammad Ibrahim resigned on June 6, less than halfway through his five-year term, quitting just weeks after Datuk Seri Najib Razak, the prime minister who appointed him, lost an election.
Muhammad was seen as a casualty of a fallout from the scandal at 1Malaysia Development Bhd (1MDB), the state fund whose multi-billion dollar losses are being investigated by the new government led by 92-year-old Tun Dr Mahathir Mohamad.
The new government has replaced several other senior officials seen as close to Najib’s administration.
Nor Shamsiah, who served as assistant director of the IMF’s monetary and capital markets division, told a news conference she would keep Bank Negara’s focus on “maintaining monetary and financial stability.”
She had left the bank shortly after Muhammad’s appointment in 2016, having served with him as one of the deputy governors under Tan Sri Zeti Akhtar Aziz, who became one of the best known female central bankers during her 16-year stint.
Zeti, who is a member of a Council of Eminent Persons appointed by Dr Mahathir to advise the new government, gave Nor Shamsiah a ringing endorsement.
“She is experienced and she will hit the ground running,” Zeti told journalists, Malay Mail reported.
“By appointing her, the government has demonstrated its respect for the institution and I think this is what the market wants to see, an institution that remains independent in performing its function,” Zeti was quoted as saying.
The new governor takes over at a time when there are uncertainties over the economic policies of Dr Mahathir’s administration, which effectively scrapped a consumption tax and introduced fuel subsidies within a month of assuming power.
Foreign investors have pulled out of Malaysian equities and ratings agencies have expressed concerns over the country’s fiscal strength.
“Nor Shamsiah’s appointment implies continuity in the direction and conduct of monetary policy,” analysts at Nomura said.
The appointment, and comments on the ringgit by Dr Mahathir earlier today, resulted in the ringgit strengthening 0.32 per cent marking it the largest intraday rise since March 28.
Continuity
Nor Shamsiah joined Bank Negara Malaysia (BNM) in 1987 after getting an accounting degree from the University of South Australia, and was a deputy to Zeti from 2010 to 2016.
She left the central bank when her second term ended in November 2016, shortly after the end of Zeti’s term.
Nor Shamsiah has extensive experience in the development of prudential regulation, legislation, policies and guidelines for the financial sector. The central bank also said she was involved in the financial sector resolution initiatives during the 1997-98 Asian financial crisis.
She assisted with the 1MDB investigation when Zeti was in charge.
Analysts linked Muhammad’s resignation to revelations last month that about US$500 million (RM2 billion) raised from a land sale by the government to the central bank was used to pay 1MDB’s liabilities last year.
In late May, the central bank defended the deal, saying it had initiated the purchase of the land and that it was conducted as an arms-length transaction and complied with all governance requirements.
In an email to staff on June 6, Muhammad said the central bank did not know the funds from the land deal would be used to settle 1MDB debt. — Reuters
