Malaysia Picks Bank CEO as Finance Minister in New Cabinet

Malaysia’s prime minister picked the head of one the country’s main banks as his new finance minister Monday amid heightened global risks and domestic policy uncertainty.

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

Zafrul will be tasked with implementing a 20 billion ringgit ($4.8 billion) stimulus package to counter economic damage from the coronavirus outbreak. Growth in the Southeast Asian nation was slowing even before the virus, 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 PM Muhyiddin Yassin’s attempt to ensure fiscal credibility,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore. It’s “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.”

The ringgit fell 1% to 4.2165 per dollar, tracking losses in regional currencies after crude prices slumped.

Easing Steps

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 3.2%-4.2%, from 4.8% previously, after last year’s expansion was the weakest in a decade. It also has widened the fiscal deficit target to 3.4% of gross domestic product, from 3.2% earlier, to accommodate the stimulus package.

Muhyiddin must balance the interests of lawmakers cobbled together from opposing factions. He’s 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 Mahathir when parliament convenes May 18.

The cabinet line-up includes:

Azmin Ali, a former economy minister, as senior minister for international trade and industry;Ismail Sabri Yaakob as senior defense 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; andMohd Khairuddin as commodities and plantations minister

The line-up shows the compromise Muhyiddin has had to strike between appointing technocrats like Zafrul and returning many ministers from United Malays National Organisation’s 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 in 2018.

“This cabinet will please the Malay ground,” Chin said, referring to the country’s ethnic majority.

Policy Continuity

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, Chin added.

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

Finance Minister 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 Bhd. 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 appointment of these senior ministers will allow the issues raised between the ministries in those fields that I mentioned just now to be streamlined more efficiently and effectively,” Muhyiddin said Monday in announcing his choices. “I want to form a cabinet that can truly provide the best service to the people — a cabinet that delivers.”

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