Malaysia’s image needs restoring, says Nazir Razak

(Reuters) – Datuk Seri Nazir Razak, the chairman of Malaysian bank CIMB said political uncertainty facing the government led by his elder brother is the biggest concern for foreign investors looking at the once-stable Southeast Asian country.

Speaking to Reuters on Saturday at a country club on the outskirts of Kuala Lumpur, where his bank was hosting a golf tournament, 48-year-old Nazir said the “central issue for Malaysia” was restoring its reputation for political stability.

Prime Minister Datuk Seri Najib Razak, 62, is embroiled in a scandal surrounding 1Malaysia Development Berhad (1MDB), the state fund that has racked up debts of US$11 billion (RM46.8 billion) since he established it soon after taking power in 2009.

Najib’s denial of any wrongdoing has failed to dispel suspicions of mismanagement and corruption, which led to a mass protest in Kuala Lumpur in August and more recently moves to bring a confidence vote in parliament.

Nazir did not discuss his brother’s political problems, but said investigations into 1MDB should be concluded quickly, and the findings made public if the government is going to restore confidence in the way Malaysia is being run.

“The sooner we deal with the 1MDB overhang, the better,” said Nazir, the chairman of Southeast Asia’s fifth-largest bank, and Malaysia’s second-largest by assets.

The scandal has taken its toll on the energy-exporting country, already hit by a slump in global oil prices.

The ringgit currency has fallen 18.5 per cent this year against the dollar, plumbing levels unseen since the depths of the Asian financial crisis in the late 1990s.

Political stability has been a selling point for Malaysia in a region whose young democracies have gone through troubled times, but the 1MDB scandal has damaged that reputation.

“Traditionally, Malaysia has had this posture in terms of political stability, self-sufficient economy, well-managed banking systems and robust institutions,” said Nazir.

“That image is affected by some of the recent events. That is the central issue for Malaysia.”

The brothers’ father, Tun Abdul Razak Hussein, was Malaysia’s second prime minister, earning a reputation for frugality and integrity as he led the new country in the austere post-colonial years.

With 1MDB’s transactions under investigation in Switzerland and also, according to media reports, in the United States, Najib has tightened his grip on the ruling United Malays National Organisation.

But there are uncertainties over what might happen if he finally became regarded as unelectable in a party that has led every multi-ethnic coalition since Malaysia emerged from British colonial rule in 1958.

Nazir’s disquiet over the fallout from 1MDB, whose advisory board is chaired by Najib, is no secret, as he has used social media to flag his worries for months.

In early September, Nazir used his Instagram account to raise concerns over the resignation of a 1MDB advisory board member who had quit after complaining that he had been denied scrutiny of the fund’s financial affairs.

Helping change Malaysia

Beyond what went wrong at 1MDB, people also want to know how the mess will be cleared up, Nazir said.

“Investors are concerned as to whether anyone else will have to take the burden, and whether there will be a negative impact on anyone else, including the government balance sheet,” he said.

Doubts over 1MDB had brewed for years, but a storm broke in July after the Wall Street Journal, in an article on 1MDB, reported that investigators had traced deposits totalling around US$700 million into accounts held in Najib’s name.

Najib has denied taking any money for personal gain, and the state’s anti-corruption agency says those funds came from an unnamed Middle East benefactor.

Local news networks and social media, sensing some split between the brothers, have been abuzz with reports that Nazir will enter politics, even launch his own political party. But he has no such plans.

Indeed, Najib turned to Nazir after the ringgit’s fall became alarming, recruiting him for a new special economic committee to help steer Malaysia away from economic danger.

“I don’t aspire to be a politician,” he said. “All I am hoping to do is to be helpful. When you feel strongly that your country needs positive changes then one ought to be open to be helpful in that process.”