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Malaysia Names New Bank Governor

September 7, 1998

KUALA LUMPUR, Malaysia (AP) _ Consolidating his control over Malaysia’s embattled economy, Prime Minister Mahathir Mohamad named close aides Monday to head the central bank and Finance Ministry.

Ali Abul Hassan Sulaiman will take over from acting Bank Negara Governor Zeti Akhtar Aziz, who has filled the role since former Governor Ahmad Mohamed Don and his deputy, Fong Weng Phak, resigned two weeks ago in opposition to rigid currency controls. Zeti will stay on as deputy governor.

Last week, Mahathir announced sweeping currency curbs that effectively isolate the nation’s sinking economy from the global free-market system. The measures include a fixed exchange rate and ban on trading of Malaysian stocks overseas.

Already, benchmark interest rates have fallen to 8 percent from more than 11 percent, a trend that analysts say is likely to continue.

Ali, a close confidant of Mahathir, has been chief of the powerful Economic Planning Unit in the Prime Minister Department since the early 1990s and helped formulate Malaysia’s wide-ranging privatization program.

Mahathir also announced Monday that Mustapa Mohamed, the entrepreneur development minister, would fill the newly created post of second finance minister. It is unclear what Mustapa’s duties will be. Mahathir said he himself would retain the title of first finance minister.

The appointments come amid a reshuffling of top-level policy makers apparently designed to give Mahathir domination over the country’s economic and political leadership.

Mahathir named himself acting finance minister last week after he fired Finance Minister Anwar Ibrahim, who was also deputy prime minister. Mahathir blamed Bank Negara’s tight monetary policies, which were backed by Anwar, for pushing the country into its worst recession in 13 years.

Meanwhile, shares on the Malaysian stock market skyrocketed Monday, propelled by aggressive buying by government-linked funds.

The surge caused the benchmark Composite Index, which had lately suffered 10-year lows, to jump 23 percent to 445.06.

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