Muham­mad gives im­por­tance to trans­parency, ac­count­abil­ity and fair play

New Straits Times - - Business -


LABUAN ru­pa­banerji@me­di­aprima.com.my

TRANS­PARENCY in fi­nan­cial sta­bil­ity poli­cies is the way to go for Bank Ne­gara Malaysia gov­er­nor Datuk Muham­mad Ibrahim and he ea­gerly looks for­ward to feed­back from the pub­lic.

“When there’s a ma­jor pol­icy, the pub­lic is in­vited to give com­ments, crit­i­cism and ideas. This is the way to go and we will con­tinue with this prac­tice,” said Muham­mad at a me­dia brief­ing re­cently.

To­day is the first an­niver­sary of Muham­mad’s ap­point­ment as the gov­er­nor of Bank Ne­gara. He took over from Tan Sri Dr Zeti Akhtar Aziz, who held the po­si­tion for 16 years.

Muham­mad, 57, who has a Mas­ter’s de­gree from Har­vard Univer­sity, joined the bank in 1984.

Prior to his ap­point­ment as the gov­er­nor, he had served in var­i­ous de­part­ments rang­ing from in­ter­na­tional re­serve man­age­ment to money mar­ket, for­eign ex­change op­er­a­tions, bank­ing su­per­vi­sion, in­surance and off­shore bank­ing.

“Many things have hap­pened in the past one year,” he said.

Bring­ing on­board his own brand as a cen­tral banker, Muham­mad has since been in­sti­tut­ing changes in a grad­ual man­ner.

For in­stance, he prefers to hold the Labuan Fi­nan­cial Ser­vices Au­thor­ity an­nual re­port press brief­ing and board meet­ings here.

Me­dia con­fer­ences at the bank are ad­mit­tedly longer now as he pa­tiently ad­dresses ev­ery ques­tion.

Muham­mad also prefers to get his se­nior man­age­ment team to chair meet­ings on new mea­sures and poli­cies as he wants the pub­lic to get to know them.

“The job of a cen­tral banker is never end­ing”, said Muham­mad. “There are al­ways new ac­tion plans to han­dle, and there’s a con­stant need to en­sure trans­parency in the work.”

Over the last three months, the cor­po­rate gov­er­nance code was high­lighted to em­pha­sise trans­parency, ac­count­abil­ity and fair play by banks and their board mem­bers.

It is due to this sense of in­de­pen­dence that many re­search houses have high re­gard for the cen­tral bank.

There were two im­por­tant things to be mind­ful of in or­der for the econ­omy to move for­ward, he said.

“At any point of time, fi­nan­cial and mon­e­tary sta­bil­ity must be main­tained. This is cru­cial for the de­vel­op­ment of the econ­omy.”

The cen­tral bank is do­ing sev­eral things in great de­tail in terms of pay­ment sys­tem, in­surance and also Is­lamic fi­nance.

With the in­put from the Fi­nan­cial Mar­ket Com­mit­tee (FMC), Bank Ne­gara has an­nounced two mea­sures to deepen the domestic bond mar­ket liquidity as well as broaden and deepen the on­shore fi­nan­cial mar­kets. This is to al­low in­vestors to bet­ter man­age rates and for­eign ex­change ex­po­sures.

The ini­tia­tive will take ef­fect to­day.

The en­hance­ment to fi­nan­cial mar­ket in­fra­struc­ture, mean­while, will be im­ple­mented on a grad­ual ba­sis and is ex­pected to be com­pleted over 12 to 18 months.

On­shore for­eign ex­change mar­ket ac­tiv­i­ties have in­creased since last De­cem­ber and there are im­prove­ments in the ring­git ver­sus the US dol­lar lev­els.

“We ex­pect the de­mand and sup­ply of the ring­git to be more bal­anced than be­fore. It will re­flect the strong fun­da­men­tals that we have now,” said Muham­mad.

The FMC, which was set up last year, com­prises par­tic­i­pants and rep­re­sen­ta­tives from the cen­tral bank, fi­nan­cial in­sti­tu­tions cor­po­ra­tions, fi­nan­cial ser­vices providers and other stake­hold­ers.

On the in­ter­na­tional front, there have been sev­eral agree­ments inked with coun­ter­parts from In­done­sia and the Philip­pines — as part of the Asean In­te­gra­tion Bank­ing Frame­work.

“Trade and fi­nan­cial link­ages would fol­low suit,” he ex­plained.

“If we set­tle trade in the domestic cur­rency, it will cre­ate more sta­bil­ity and busi­nesses will have more op­tions to choose the cur­rency type and re­duce the cost of do­ing busi­ness.”

Another area the cen­tral bank is fo­cus­ing on now is the de-tar­iff­ing of in­surance pre­mi­ums to en­sure those with good risk pay lower pre­mi­ums while those with high risk pay more.

“It’s a ma­jor re­form that af­fects our daily lives, but news­pa­pers have not picked it up.”

He as­sured that the tran­si­tion to­wards de-tar­iff­ing would be done in a grad­ual man­ner to avert any dras­tic change in pre­mium ad­just­ment.

From July 1, in­sur­ers can take into ac­count the ve­hi­cle’s safety and se­cu­rity fea­tures, du­ra­tion on the road, geo­graph­i­cal lo­ca­tion and traf­fic of­fences record to de­ter­mine pre­mi­ums.

When there’s a ma­jor pol­icy, the pub­lic is in­vited to give com­ments, crit­i­cism and ideas. This is the way to go and we will con­tinue with the prac­tice.


Bank Ne­gara Malaysia gov­er­nor Datuk Muham­mad Ibrahim has a mas­ter’s de­gree from Har­vard Univer­sity.


Re­search houses have high re­gard for Bank Ne­gara Malaysia.

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