CIMB bank chairperson Nazir Razak has admitted that he never ceases to worry about the ominous links between Malaysian politics and the state of the country’s economy.
In an interview with Euromoney magazine, Nazir was asked for comment on one of his many cryptic Instagram postings - alluding to his fears for Malaysia’s future.
"Yes, I’m worried," he is quoted in the interview titled "CIMB's Nazir battling Malaysia's demons" published in the September issue of Euromoney.
"Malaysian politics has a much bigger connection to the economy and to business than in many other countries.
“In Thailand, you can have soldiers shooting in one street and business being conducted on another. Whereas Malaysia…,” he trailed off, punctuated by what the writer described as a vast thunderclap.
The problem, Nazir explained, stemmed from the way the country’s economy has been constructed post-1970, with heavy emphasis on the government’s involvement in the system.
"Economic decisions are often driven by the political environment as well, so with the uncertainties in the political arena, it is of course a concern,” he said, adding that the system comprises not only local banks like CIMB, but also other global financial institutions.
"Banking has changed quite dramatically. We worry about slower growth, we worry about disintermediation and fintechs, we worry about re-regulation, we worry about global reform.
"We obviously diagnosed the financial crisis wrongly," he is quoted as saying.
"We said the problem was the banks. Actually, it was a bit more than the banks.
“It was the system as a whole, and in particular excess debt in the global financial system,” Nazir said of the happenings that triggered CIMB’s recalibration programme last year to revamp its operations.
Cost-cutting efforts implemented by CIMB
In particular, Nazir cited cost-cutting efforts implemented by CIMB to meet its future anticipated operational challenges.
“We must reduce our portfolio, and our dependence on two areas that CIMB has been very strong in.
”These two components of our business need to be dialled down…,” Nazir said in reference to CIMB’s investment and corporate banking portfolios in Indonesia.
The move to downsize its overall operations was in contrast to CIMB’s accelerated growth period since 2006, Nazir said.
Asked about the political changes needed to boost the economy, Nazir said: "Well, what are the key drivers of economic growth? We dial back from there."
Top of the list include Malaysia’s need to retain its best talents while at the same time attracting more foreign talents, a move Nazir said would be linked closely to the country’s sociopolitical environment.
'A worrying system'
He cited a survey that showed 73 percent of non-Malays polled felt that the current system is unfair, and that 60 percent would migrate if they could afford it.
The article’s writer attributed the findings partly to affirmative action policies that date from the days of Nazir’s father, Abdul Razak Hussein, as second prime minister.
"That [survey] worries me. One of the great advantages of this country is the ability for our companies to thrive on diversity.
“We will lose that if we don’t keep those talents,” said Nazir, who has openly called for reforms to affirmative action policies.
And in order to change the system, Nazir said: “One must deal with the political inhibitors. And when I look at the political inhibitors they are very, very difficult.”
In calling for reforms, Nazir had previously raised serious concerns over financial scandals surrounding state investment fund 1MDB.
The troubled state fund is the brainchild of Nazir’s older brother, Prime Minister Najib Abdul Razak.
