The controversy surrounding the FashionValet investment by Khazanah Nasional Bhd has erupted into a heated debate among Malaysian MPs and politicians, who continue to press for transparency and accountability over the use of public funds.
Despite former Damansara MP Tony Pua’s stance that such financial losses are expected within the high-stakes world of venture capital, several lawmakers are unconvinced and argue that the national investment arm should have exercised more oversight.
Petaling Jaya MP Lee Chean Chung has called for Khazanah to justify its decision to invest in FashionValet, questioning why the investment continued despite clear signs of financial struggles. Lee argued that if Khazanah’s approach to investing in tech startups involves risk, it should at least be clear about the overall strategy and highlight which investments have succeeded in order to balance out the losses. “If investing in a mix of high-risk tech companies inevitably leads to some losses, then show us which ones have succeeded,” Lee posted on X (formerly Twitter).
Echoing Lee’s concerns, Bandar Kuching MP Kelvin Yii emphasized that Khazanah and Permodalan Nasional Bhd (PNB) deal had displayed red flags from the start and neglected crucial oversight measures during the FashionValet investment period, despite the company reportedly facing consistent financial challenges. Yii criticized the absence of Khazanah or PNB representatives on FashionValet's board, which he believes could have mitigated losses. He questioned the wisdom of allowing vast amounts of public funds to be managed without any accountability under the label of “high-risk venture capital investment.”
Pua, however, defended Khazanah’s investment approach. He argued that venture capital by nature involves high risks and significant potential for failure, pointing out that only a fraction of investments yield substantial returns. “The nature of venture capital is such that, out of 10 investments, three or four are likely to fail, another three or four will break even, and the remaining two or three might yield exceptional returns,” Pua explained in a Facebook post. He argued that Khazanah must be prepared to absorb some “disasters” if it aims to foster regional or global tech unicorns.
Nonetheless, critics like Umno Youth chief Datuk Dr Muhamad Akmal Saleh remain steadfast in their opposition, expressing outrage over public funds supporting a company with consecutive losses. Dr Akmal pointedly criticized the notion of defending such losses, while ordinary Malaysians struggle to secure small loans to start their own businesses. “It is okay, stupidity is free and continue that stupidity,” Dr Akmal remarked, underscoring a sense of inequity in the handling of public funds.
Further fueling the debate, PKR leader Najwan Halimi questioned Akmal's criticism of Pua, noting that Akmal overlooked the fact that Khazanah was chaired by a different leader when the investment decision was made. Najwan’s reminder hints at a broader political angle, raising questions about who should ultimately be accountable for the decision.
The Finance Ministry recently disclosed in a parliamentary reply that Khazanah and PNB sold their shares in FashionValet for RM3.1 million to NXBT Partners in 2023, far below the RM47 million initially invested in 2018. This substantial loss has drawn more scrutiny to Khazanah’s investment decisions, especially as FashionValet founders Datin Vivy Yusof and Datuk Fadzaruddin Shah Anuar publicly apologized for the losses and announced their resignation from leadership roles. The founders are also being questioned by the Malaysian Anti-Corruption Commission (MACC) regarding the financial management of FashionValet, adding a legal dimension to the issue.
As the FashionValet saga unfolds, calls for more stringent governance over public investments in private ventures are growing. The case raises vital questions about how public funds should be managed within the venture capital space, balancing the ambition for innovation with responsible stewardship.
For now, MPs continue to demand transparency, hoping to prevent similar controversies from reoccurring in the future.
By: Kpost
Information Source: TheStar , Malaysiakini
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