NOV 13 - For 10 years, Bank Negara governor Tan Sri Zeti Akhtar Aziz bristled over the fact that when reporters, economists and pundits praised Malaysia’s brave experiment with currency controls after the Asian financial crisis, her name hardly merited a mention.
Lavish praise seemed to be the reserve of Tun Dr Mahathir Mohamad, the former prime minister who went against convention and pushed through the controls, and Tan Sri Nor Mohamed Yakcop, the man who flew to Argentina in the early days of the crisis to brief Dr Mahathir on the intricacies of the financial world and who went on to become a trusted adviser.
Privately, Zeti told friends and government officials that she too played a role in crafting some of the policies that prevented a complete meltdown in Malaysia, and wondered why she never earned the column inches that others did. Today, she can lay that complaint to rest.
Finally, she is getting the credit she craves and deserves. Politicians, corporate figures, bankers and journalists roundly claim that her tough stewardship of the central bank and monetary policies is the reason why Malaysia’s banks and financial system are in a better position to withstand the shock of the global economic turmoil.
The non-performing loans ratio is low at 2.5 per cent; foreign reserves are high at US$100.2 billion, sufficient to finance more than eight months of retained imports and 4.2 times short-term external debt. The capital account is healthy; there is sufficient liquidity in the system, and loan growth is at 9.5 per cent. Going forward, inflation is expected to moderate at between 3 and 4 per cent next year.
With such statistics to back her, the Wharton alumni has been more than ready to speak to the press and press her case before different audiences that the fundamentals of the Malaysian economy are sound. When confronted with scepticism like she was at a dialogue yesterday with fund managers and the business community, she sticks to the message.
One of the participants wondered if the Malaysian government was painting too rosy a macro picture while underestimating the impact of the global economic slowdown on the average Malaysian. Zeti pointed out that no one could accuse the central bank of being in denial or having its head buried in the sand.
The reason: as early as July this year, Bank Negara cautioned that an economic slowdown was imminent and Malaysians would have to ready themselves for more challenging times. Having sketched that scenario and taken into consideration the strong banking sector, the low external debt and strong savings base here, there was every reason for her and others to have confidence in the system, she explained.
Still, even the optimistic Zeti has to accept that the global economic downturn is more challenging for Malaysia than the economic crisis it faced in 1998, with the risk of slow growth in a high-cost environment.
Datuk Azman Yahya, a member of the Economic Council, was quoted in the New Straits Times as saying that: "From an economist's standpoint this is probably one of the worst positions to be in. More worrying is that this is today a global phenomenon. From a policy response this is tricky - too much stimulus either fiscal or monetary may lead to inflationary pressures, too little may lead to a recession."
But he and others in the business community are convinced that Malaysia would be staring at a much more gloomy picture had it not been for the role of Bank Negara and Zeti, in particular.
"The tsunami did not avoid our shores by design," said banker Datuk Nazir Razak recently, giving praise to Zeti’s strict stewardship of the financial system.
An investment banker told The Malaysian Insider: "Bank Negara under Zeti has been quite conservative. It was very suspicious of allowing banks to get involved in certain high-risk instruments. That is why the US sub-prime crisis did not impact our banks in a big way.''
It may be 10 years late, but Zeti is finally snaring the headlines and column inches she deserves.