DR ZETI NAMED MOST PROACTIVE CENTRAL BANKER ANYWHERE

By Mohd Iswandi Kasan Anuar

KUALA LUMPUR, Oct 11 (Bernama) -- Bank Negara Governor Dr Zeti Akhtar
Aziz has been named Central Bank Governor of the Year 2010 for Asia for
being, among many attributes, the most proactive central banker anywhere,
according to the Emerging Markets Newspaper.

For instance, Bank Negara, Malaysian central bank, raised its base policy
rate three times this year, marking Dr Zeti out as the only central banker to
have acted pre-emptively and decisively against inflation, said The Emerging
Markets Newspaper, a publication dedicated to the International Monetary Fund
(IMF)-World Bank Annual Meetings, said in a statement Monday.

Her proactive stance was evident in the wake of the global crisis, Malaysia
has had to grapple with a new reality for emerging economies -- a sharp rebound
in growth and unprecedented capital flows to the region and with them, renewed
fears of inflation and asset bubbles in Asia, it said.

"Malaysia wisely moved to withdraw the accommodative stance as economic
rebound gathered pace," says Rahul Bajoria, an economist at Barclays Capital,
who predicts the economy will grow by 7.5 per cent this year.

A study by Citigroup concludes that the central bank’s 25 basis points
policy
hike in March, May and July soundly anticipated inflationary pressures
and was based on the right estimate of the country's output gap.

Indeed, analysts surveyed by Emerging Markets agreed that Dr Zeti's
proactive monetary loosening at the onset of the global crisis and sure-footed
ahead-of-the-curve tightening highlights both the sophistication and confidence
of the central bank and should help to anchor medium-term inflation
expectations.

This stand was in contrast to much of the rest of Asia where despite red-hot
regional growth, policy rates have yet to normalise post-crisis, it said.

"It's easy to be wise after the event, but we have tried very hard to be
wise before and during the event,” Dr Zeti was quoted as saying in the
statement.

Dr Zeti came to office in 2000 as the storms of Asia's financial crisis
still hung heavy and when mainstream economists were much divided about the
prudence of Malaysia's tactics, then seen as the handiwork of the country's
feisty long-term leader Dr Mahathir Mohamad.

The argument has swung to Kuala Lumpur's side, with Malaysia's prolonged
growth and Dr Mahathir's smooth retirement in 2003 after 22 years.

Dr Zeti said Malaysia's economy had continued to expand with vigour, absent
bank failures and major interruption in investment was "very pleasing".

Despite Malaysia being one of Asia's more globalised economies, as a
contract manufacturer in areas such as technology, she says Malaysia was spared
stinging damage from the 2008 crisis due to well-timed macro-prudential
measures beyond the traditional central bank levers such as interest rates.

She cites portfolio restrictions and a capital gains tax revision to dampen
speculation and a "general flexibility in policy" as keys to limit deeper
impact.

"What paid off for us (from the experience of 1998) was early intervention,
anticipating that the worst is yet to come, and taking action to address that."

"By way of example, Dr Zeti points out the central bank had re-activated a
dormant corporate debt restructuring committee to monitor corporates and
stem crippling defaults.

"To support growth and access to the market of viable companies, we also
activated a credit enhancement entity to help raise funds in the bond market,
supported by a guarantee," she added.

-- BERNAMA