by Shamim Adam & Y-Sing Liau
Bloomberg
April 25, 2016

Malaysia’s central bank Governor Zeti Akhtar Aziz has one week to go in the job and investors still don’t know who will replace her.

Zeti is credited by investors with strengthening the credibility and independence of Bank Negara Malaysia in the 16 years she’s been at the helm and the longer Prime Minister Najib Razak drags his feet on announcing a successor, the more market analysts are worrying. It’s something the economy can ill afford with sentiment already under pressure as Najib faces his biggest political crisis since coming to power seven years ago.

“Trepidation is particularly pronounced” given the uncertainty over Zeti’s successor, said Jack Chambers, an economist at Moody’s Analytics Australia Pty Ltd. While the ringgit has gained about 10 percent this year after a 19 percent slump in 2015, a measure of its implied volatility is the highest in Asia.

Zeti ends her term with Najib facing questions about possible embezzlement at state investment company 1Malaysia Development Bhd., whose advisory board he chairs. She had become increasingly critical about the situation at 1MDB, which has consistently denied wrongdoing.

Aides to Najib said there’s no exact indication when he will announce Zeti’s replacement. Kuala Lumpur-based New Straits Times reported on Monday that Najib will make the announcement this week, without saying where the information was obtained. The central bank didn’t reply to an e-mail seeking comment.

“The person should have the best credentials for this current environment,” Zeti said in an interview on April 16, when asked if she’d prefer an internal or external candidate to replace her. “We’re all waiting with bated breath for the announcement.”
Below are potential candidates to succeed the governor, according to people familiar with the discussions since late last year and news reports.

Deputy Governor Muhammad Ibrahim

Muhammad joined the central bank in 1984 and has been deputy governor since June 2010. He oversees international reserve management, and money market and foreign exchange operations. He has served in areas from banking supervision and regulation to insurance and offshore banking.

Muhammad was previously managing director at Danamodal Nasional Bhd., a bank recapitalization agency created during the Asian financial crisis in the 1990s. He has a master’s degree from Harvard University.

“Appointing someone from within the BNM would be a positive sign that the central bank’s independence remains, even after its investigations of the 1MDB affair,” Chambers said.

Mohd Irwan Serigar Abdullah, Finance Ministry’s top bureaucrat

Irwan, secretary general of the Treasury, started his government career in the Economic Planning Unit in 1984 and in 2003 joined the Finance Ministry, where he has held various positions.

Irwan has a Ph.D. in economics from the International Islamic University Malaysia and holds a master’s degree in energy management and policy from the University of Pennsylvania. He sits on the boards of state oil company Petroliam Nasional Bhd. and one of Malaysia’s biggest pension funds. Irwan is part of the central bank’s board of directors.

Abdul Wahid Omar, government minister and former banker

The son of a factory worker who grew up in poverty, Wahid earned his British accounting degree through a government scholarship and has been a promoter of Malaysia’s affirmative-action policy aimed at helping ethnic Malays.

Wahid has held top management positions in several government-linked companies and was chief executive officer of Malayan Banking Bhd., the country’s biggest lender. Najib appointed him a minister in charge of economic planning in 2013. Two past CEOs of Maybank went on to become central bank governors.

Wahid currently heads the Economic Planning Unit, which served as a launchpad for another former Bank Negara chief.

Awang Adek Hussin, former ambassador to the U.S.

The former deputy finance minister has a Ph.D. in economics from the University of Pennsylvania’s Wharton School — Zeti’s alma mater.

He worked at the central bank for more than a decade from 1985 in departments including economics and banking regulation, and later became an assistant governor. He was appointed U.S. ambassador in 2014 and his term ended this month. He is a senior official in Najib’s ruling party and has said he wants to return to “active politics,” official news agency Bernama reported.

The government wants Awang to remain in Washington until his replacement is found, the New Straits Times said on Monday, without saying where it got the information.