As such one could understand why the Malaysian and global Islamic finance industry in particular are rejoicing the extension last week of Zeti’s term as governor of Bank Negara Malaysia for another five years effective from May 1 by Malaysian Prime Minister Mohd Najib Abdul Razak, who is also the finance minister.
The announcement was made last week in Kuala Lumpur following royal assent from the Malaysian monarch, the Yang di-Pertuan Agong, to the reappointment of Zeti.
For a while, there were the usual unfounded rumors that Zeti may either retire or resign. Malaysian government officials technically are supposed to retire at the tender age of 55.
Bank Negara under its mandate is also responsible for “the prudent conduct of monetary policy” especially in achieving low and stable inflation and thereby preserving the purchasing power of the ringgit; maintaining financial system stability and fostering a sound and progressive financial sector; developing financial system infrastructure with major emphasis placed on building the nation’s efficient and secured payment systems; actively promoting financial inclusion, acting as a banker and adviser to the government, and of course issuing currency as well as managing the country’s international reserves.
The bank, although operating independently, ultimately reports to the minister of finance, who in Malaysia’s case is also the prime minister. However, Malaysia has an idiosyncratic structure in which there is also the minister of finance II, currently Ahmad Husni Hanadzlah, in addition to several deputy finance ministers.
In the nature of politics it is inevitable that tensions do arise occasionally over policy nuances. Politicians on the other hand are notorious in their desire to flex their muscles and to sometimes undermine the independence of the central bank.
Not that Gov. Zeti is free from oversight. Some of her appointments in the past were flawed and did raise some eyebrows.
But with respect to Zeti, it is uniquely a case of “like father and mother like daughter.” Beneath that seemingly beguiling charm, to which successive premiers have alluded to, there is a determination and sense of purpose driven primarily by a deep attachment to the concept of meritocracy.
This it seems she has inherited from both her parents. Her mother Sharifah Azah is a well-known writer and journalist and her father Royal Professor Ungku Abdul Aziz is the renowned academic, economist and effectively the founder of the iconic Lembaga Tabung Haji (the Malaysian Pilgrims Management Fund), the most successful non-banking Islamic savings institution in the world.
The US-educated Zeti has held the position of governor of the Malaysian central bank since May 2000. She oversaw the successful transformation of the Malaysian financial system into one of the most developed and resilient financial systems in an emerging economy. This also included spearheading the development of Islamic finance, domestically and globally, and enhancing the contribution of small-and-medium-enterprises (SMEs) to the Malaysian economy.
The dominant prime minister in Malaysia’s history for the last three decades, Mahathir Mohammad was both protective and perhaps paternalistic toward her. There is the anecdote that Mahathir did not want to appoint her as minister of finance, albeit she is eminently qualified, because he wanted to protect her from the morass of Malaysian and UMNO politics, which at the time was plagued by “money politics.”
The current Malaysian Premier Mohd Najb emphasized that Zeti’s reappointment as Bank Negara Malaysia governor will ensure leadership continuity at the central bank, which under her watch has emerged as a strong institution and respected by the banking community not only in Malaysia but worldwide. “Therefore, she should be given the opportunity to continue leadership at BNM when we are facing a very challenging global economic environment,” he added.
Prominent Malaysian bankers including Abdul Wahid Omar, president and CEO of Maybank, agree that Zeti almost single-handedly elevated the image of Malaysia in the global financial system — whether at the G7 meeting, the Basel Committee or the World Bank/IMF Annual Meetings. Her international reputation is further underlined by her appointment as a member of the United Nations General Assembly Commission of Experts on Reform of the International Monetary and Financial System, a high-level task force established by the UN secretary-general to examine possible reform of the global financial system.
Zeti is also a champion of regional cooperation and integration, and chaired the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP) task force on “Regional Cooperation among Central Banks in Asia.” She is also a member of the Southeast Asian Central Banks (SEACEN) board of governors and directors; a member of the Bank for International Settlements (BIS), central bank governance group since 2001; and one of the founding members of the BIS Asian Consultative Council.
In the field of Islamic finance her contribution and leadership is legendary, carrying on and adding to the work of her predecessors. Thanks to this proactive support, Malaysia today has the most developed and systemic Islamic financial architecture in the world, and the Malaysian model is now emulated in several Islamic Development Bank (IDB)-member countries in the Middle East and Asia. Under her watch, Malaysia has easily achieved the target set by the Mahathir government of the Islamic banking sector reaching 20 percent of the total banking industry market share by 2010. In fact, the market share of Islamic banking is over 22 percent.
When the G7 finance ministers wanted someone to brief them on Islamic finance a few years ago at their meeting in Washington DC, it was Zeti they turned to. She is also a prime mover behind the establishment of the Islamic Financial Services Board (IFSB), the prudential and supervisory standard-setting body for the global Islamic finance industry; the chairman of the international task force on “Islamic Finance and Global Financial Stability” and the task force on liquidity management; and currently the chairperson of the International Islamic Liquidity Management Corporation governing board and the Chairperson of the IILM’s board executive committee.
The governor has played a leading role to develop Malaysia as a center for the origination, distribution and trading of sukuk under the Malaysia International Islamic Financial Center (MIFC) initiative. In 2002, Zeti led a team that launched the Malaysian global Islamic sukuk, the world’s first Islamic sukuk to be issued by a sovereign country.
In a post global financial crisis era, Zeti’s focus has been more on financial stability and risk mitigation to ensure that the Malaysian banking system is in a position to handle future challenges and shocks. In 2009, Zeti spearheaded the formulation of a new central banking legislation which provided Bank Negara Malaysia greater clarity on its mandate and the necessary powers to enable the bank to perform its responsibilities effectively with the enactment of the Central Bank of Malaysia Act 2009.
Zeti has spearheaded a cornucopia of initiatives whether in talent and human capital development especially in Islamic finance; Shariah governance framework; Shariah research and cross-border cooperation; consumer protection and education in finance; and widening the financial inclusion net.
Not surprisingly, her accolades and recognition — local, regional and international — are numerous. She is one of the most senior central bankers in the world and was named as one of five “Central Bankers of the Year” by Global Finance magazine for 2009 and 2010. She has won similar awards from Emerging Markets magazine, The Banker and Euromoney, and several Lifetime Achievement Awards and industry organization awards.
This is not surprising given that Zeti Akhtar Aziz is not only a “Central Banker’s Central Banker” but also a “People’s Central Banker.” As a member of the Johor royal family and given her aristocratic origins, she has never leveraged her roots, instead displaying an innate ability to connect with people across the religious, class, ethnic and gender divides.
