Dismay as veteran Central Bank chief nominated for second term

Many had hoped President U Win Myint would promote a reformer to the role. (AFP)

NAY PYI TAW — Parliamentarians say they hoped for change at the top of the Central Bank after President U Win Myint nominated governor U Kyaw Kyaw Maung for a second five-year term.

The veteran banker has served 15 years as Central Bank chief, including from 1997 to 2007, a period marked by a major financial crisis that critics say he did little to avert.

More recently, when President U Thein Sein called him out of retirement in 2013 to lead the newly independent institution, Kyaw Kyaw Maung was seen as a conservative who was unable — or unwilling — to modernise in line with wider economic reforms.

His term ends on July 31 and many had hoped Win Myint would take the opportunity to promote a reformer to the powerful role. Hluttaw representatives say they are disappointed by what they see as a missed chance to accelerate economic reforms.

U Aung Kyaw Kyaw Oo (Hlaing, Yangon Region) said he did not agree with the decision. “We want a new [governor] who can really make reforms and who will make the Central Bank more independent and improve banking facilities,” he said.

He said Kyaw Kyaw Maung appeared to have done little to control inflation or the exchange rate. Local businesses had also hoped a new governor might relax rules around foreign banking operations, he said, so they could access long-term loans at low interest rates.

The industry would have preferred a younger choice such as U Set Aung or U Bo Bo Nge he said, and he questioned the government’s decision to prioritise stability over reform.

Daw Khin San Hlaing (Pale, Sagaing Region) also believes it is time for change. “I want someone else,” she said. “There are many competent people … we expected a young person who could do the job effectively and energetically for the rest of our government’s term.”

She said Kyaw Kyaw Maung was trusted because of his experience, but warned that he was unlikely to implement much-needed reforms.

Hluttaw representatives were told to register by today if they wanted to discuss the nomination, with debate likely to take place this week.

The confirmation process for the Central Bank governor position is vague, with the Central Bank Law of 2013 stating only that the person should be “appointed by the president with the consent of the Pyidaungsu Hluttaw”.

This differs from appointments for most other union-level positions, such as the chair of the Union Election Commission or Constitutional Tribunal, where the constitution states that lawmakers can only object to the president’s nomination if it “can clearly be proved” that the nominee does not meet the criteria.

However, parliament observers said they thought it unlikely NLD lawmakers would object to Kyaw Kyaw Maung’s nomination given it had come from the party’s leadership.

If the nomination is upheld, major economic reforms over the next five years appear unlikely. Aung Hlaing Win (Mingalardon, Yangon Region) said he does not expect anything to change.

“With the same old [governor], no doubt, all will be the same as before,” he said. “The government deficit will be replenished by the Central Bank. Commodity prices will continue to rise and the government will let the Central Bank print new currency.”

It is not just parliamentarians who are upset by the choice. Small and medium businesses, hamstrung by strict lending rules, that have benefitted the elite and curtailed economic growth, had been hoping for reforms since the current administration took power.

The business community was “shocked” by the decision, said U Maung Maung Lay, vice chair of the Union of Myanmar Federation of Chambers of Commerce and Industry.

“All yearn for change. New ideas, new leaders, new approaches, renewed hopes,” he said. “The present government, as many have claimed, needs a sort of miracle.”

At the very least, he said, political leaders should attempt to alleviate fears of businesses and the general public over the slow pace of reform. “Otherwise they will be doomed,” he said. “No landslide in 2020.”