Malaysia’s first female central bank governor Zeti Aktar Aziz will step down on Saturday but as the 1MDB saga rolls on, her legacy is a mixed one, according to observers.
KUALA LUMPUR: Malaysia’s first woman central bank governor Zeti Aktar Aziz officially steps down on Saturday (Apr 30) after having helmed Bank Negara for 16 years.
While she is hailed as one of the most influential central bank governors in the region, the verdict is still out whether she has done enough to rein in the debt ridden state investment fund 1Malaysia Development Berhad (1MDB). Her departure will come at a sensitive time with the recent defaults by 1MDB weighing on the currency and stock markets.
Dr Zeti, who holds a PhD in monetary and international economics from the University of Pennsylvania, carved her place in history when she she became the first woman to head Malaysia’s central bank in 2000.
Under her watch, economists say the country’s monetary policy was kept remarkably stable despite Malaysia’s exit from a fixed exchange rate and capital controls in 2003.
She was credited with strengthening the independence and credibility of the central bank. In 2009, Global Finance magazine named her as one of the world’s best central bank chiefs.
In 2012, Dr Zeti was picked by Bloomberg as among the top four nominees to head the International Monetary Fund. In 2013, she was accorded “Grade A” among heads of central banks for the tenth time by the Global Finance magazine.
“Dr Zeti is probably the most influential central banker we’ve had for a long time; she’s left a mark, she’s set certain standards which her successor will need to emulate,” said economist K S Jomo. “But beyond that, it is important for a central bank to look at fiduciary duties and other responsibilities expected of a central bank.”
But for some – Dr Zeti’s legacy will be judged by the 1MDB saga. She recommended criminal action against the fund and ordered the repatriation of US$1.8 billion, but then the attorney general cleared 1MDB of any wrongdoing and ordered the case closed. Dr Zeti said she has since invoked administrative punitive action against 1MDB, which may see it heavily fined.
But critics say it is too little, too late. “You think by making some statements here and there, or by pointing to some references to your good work in the past, people will forget what you’ve done?” said former Law Minister Zaid Ibrahim. “We need not have waited for the Wall Street Journal to expose 1MDB; why do we need foreigners to expose these things? What happened to our institutions?”
But, others disagree. “We are not in position to judge how much central bank knew, how much was actually uncovered, and what exactly should have been done,” said Prof Jomo. “It would be premature to make unfair criticism.”
So now attention shifts to her successor. While, the guessing game continues on who will take the mantle. With the 1MDB scandal still dominating headlines across the world, it is unlikely to be an easy handover.