Malaysia must combat corruption and pursue more market-oriented reforms if its economy is to make the leap to higher-income status, Nazir Razak, head of one of country’s biggest banks and youngest brother of its prime minister, has told the Financial Times.
The chief executive of CIMB Group also said that following this year’s deals for parts of RBS’s investment bank in Asia and a commercial bank in the Philippines, he has finished the acquisition spree that increased staff 40 times and grew the bank’s balance sheet from $4bn to almost $95bn in just 8 years.
Razak has been pursuing his ambition of creating a universal bank with a presence in south-east Asian markets since he took over at the top of the group in 2006. The 46-year-old joined the investment bank at CIMB’s heart straight after finishing his studies in 1989.
CIMB is now in nine out of 10 south-east Asian countries, excluding only Laos, after takeovers and deals for controlling stakes. These include GK Goh, a Singapore broker, and commercial banks in Thailand, Indonesia and the Philippines.
“I don’t anticipate doing any further acquisitions for the foreseeable future,” he told the FT at the group’s headquarters in a suburb of Kuala Lumpur. “I think we’re done but I never say never because sometimes things just fall into your lap.”
The bank’s leading private shareholder told the FT that Razak had professionalised CIMB, making it competitive outside its home country in a way that is not true of the vast majority of Malaysian companies.
Government involvement, political considerations and corruption have hampered corporate development in Malaysia but it still has one of the most established economies in the region.
Economists at Credit Suisse in an influential report recently named the country as one of only two in Asia likely to break out of the middle-income trap, along with China.
But it is heading towards elections with the ruling coalition – led by Najib Razak, Nazir Razak’s eldest brother – looking more under threat of losing power than at almost any time since Malaysia gained independence from Britain in 1957. Their father, Tun Abdul Razak, was Malaysia’s second prime minister.
The government of Najib Razak has launched a market-oriented reform programme under the guidance of Idris Jala, a former Shell executive appointed as minister of development by the government.
Nazir Razak told the FT that his eldest brother had “a hell of a task” because “worldwide, no one has really been able to reform from incumbency”.
“[Corruption] remains a problem and it is something that needs to be combated,” he said. But alongside corruption there was “still a need to strengthen market forces in general and that is about rolling back government in business, both in terms of bureaucracies but also in terms of its direct involvement”, he said.
Nazir Razak has said in the past that Malaysia could look to Hong Kong and other countries where an amnesty has helped to stamp out the issues.
“You could argue that when you do that, you will get a lot less resistance from the vested interests, which is always the problem; then say, the past is the past and we all start from scratch. I still believe that’s what is needed.”