Zeti Akhtar Aziz: Clarity of purpose

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By:
Chris Wright
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As part of Euromoney's 50th anniversary coverage, we profile some of the biggest names that we interviewed for our May Asia focus.

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Ask anyone who has worked with Zeti Akhtar Aziz about her and they will refer to her stability and calmness in the most difficult of circumstances. The secret, she says, is: “Having great clarity of the central purpose of what is to be achieved.” 

She has had this sense of clarity tested more than most in a long career book-ended by crises. 

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The record books show that she was governor of Bank Negara Malaysia from 2000 to 2016, but she actually made her name when she was made acting governor on 24 hours’ notice in the absolute heart of the Asian financial crisis in August 1998, after both the governor and deputy governor resigned over capital controls planned by the government. 

Zeti was chief economist at the time. 

“I got the call from Anwar [Ibrahim, then minister of finance] saying the leadership decided I would take over,” she recalls. She said she wanted to speak to Mahathir Mohamad, prime minister then (and now), before the letter was sent for royal assent. “I went to see him and told him: ‘I don’t have expertise on controls.’ 

“Mahathir said: ‘This country doesn’t have any [such] expertise. We are all in this together.’” 

Displaying a conciliatory approach that would become her hallmark, Zeti took emotion out of the situation and resolved to work with the leadership’s economic council on the capital controls it wanted to implement. 

“Truly, it would have been quite a disaster if the whole range of measures that were being proposed [were implemented],” she says. “But I’m a lateral thinker. So instead of confronting, I looked at what was the outcome we wanted to achieve.”

The answer was restored stability in the foreign exchange market in the light of speculative attacks – and she knew this better than anyone, having been in charge of overseeing the money markets as part of her previous role. 

“I knew, because I sat in the dealing room for more than a year watching it before my eyes.”

Capital controls

The jury will forever be out on whether or not capital controls were the correct way to deal with the crisis, but certainly Zeti’s involvement moderated them and, as she says, after an economic contraction of 7% in 1998, Malaysia grew 6% the next year.

She learned a lot from that, and to this day is an authority on how to avoid crisis: building resilience, addressing vulnerabilities, enhancing surveillance and looking at the worst that can happen. 

“Most people, when they see the light at the end of the tunnel, think things are going to get better,” she says. “Actually, it can be an oncoming train.” 

She also learned something else. “You must never show your emotion on your sleeve.” 

Overseeing the ministry’s dealing room during speculative attacks, she says, “there was panic in their eyes because we knew the market had far more resources and ammunition than we had. So if they saw any flicker in my eye, it would create a very disorderly environment.”

1MDB

The global financial crisis didn’t appear to vex Zeti – she refuses to call it global, thinking of it as an American, European and British crisis that just had an impact on Asia – but a greater challenge was to come with 1MDB towards the end of her tenure. Former prime minister Najib Razak, now on trial, has consistently tried to drag the central bank into the mix.

Given Najib’s trial, there is only so much Zeti can say about 1MDB, but she points out that she first raised concerns about a systemic threat from it back in 2013 to the finance minister – who, unfortunately, was also Najib. She followed it up with two detailed letters and, when nothing happened, recommended to the (new and Najib-appointed) attorney general that charges should be brought against 1MDB for irregular practices. 

The attorney general said twice that Bank Negara didn’t have a case, but finally, against much resistance, it took administrative action and fined 1MDB, eventually stopping its approvals for foreign investment. 

Asked if she would do anything differently if she had her time again, she says not: “I can’t think of anything else that we could have done.”

Her term was ending and she had long since decided to go. As far as she was concerned she had strengthened the bank as much as she could, with five levels of succession planning in place and its independence preserved. She has come out on the right side of history. 

When Najib lost the election to Mahathir, Mahathir called Zeti once again and asked her to join the so-called Eminent Council of elders guiding the country and to run Permodalan Nasional Berhad, the government-linked investment company. That’s what she is doing now.

“I’ve been right in the middle of everything quite a few times,” she says.