“Fashion Valet’s collapse, government agency oversight”

Focus Malaysia:

“Fashion Valet’s collapse, government agency oversight”

By Prof Ramasamy Palanisamy

THE recent losses sustained by Khazanah Nasional (KN) and Permodalan Nasional Bhd (PNB) in their investments in the e-Commerce platform Fashion Valet founded by Vivy Yusof and Fadzaruddin Shah Anuar have sparked serious questions about oversight and accountability.

With the founders expressing regret over their rapid expansion without sufficient market insight, there’s a broader issue of due diligence – or lack thereof – by the government agencies investing public funds.

Given the RM44mil in losses, why did KN and PNB proceed without proper market analysis? Was the Bumiputera status of Fashion Valet a significant factor in their decision to invest, perhaps even outweighing business fundamentals?

While government policies often support Bumiputera businesses, investing in a startup without thorough evaluation could indicate blind favouritism rather than a strategic investment in economic growth.

This case raises additional concerns: how do KN and PNB plan to account for this loss, funded by taxpayers? Are there contingency plans in place, or will this financial setback simply be written off? The impact of COVID-19 on businesses was undeniable, but the economy has shown signs of recovery. Should Fashion Valet not have been able to stabilise or even rebound by now?

One has to question why this loss has only recently come to light. Effective management and oversight would involve continuous performance tracking and early intervention if the company was struggling.

Was there no system to flag financial downturns earlier, or did those in charge choose to overlook issues until the situation became irreparable?

Accountability for this loss lies not just with the founders but with those in charge of public investments.

The Malaysian Anti-Corruption Commission (MACC) should initiate an investigation to determine if there was any negligence or malpractice involved, regardless of political considerations.

Public trust in these agencies is vital, especially when taxpayer funds are at risk. It is also a reminder that while government support for Bumiputera businesses can be beneficial, it must be paired with responsible, accountable practices.

In this instance, RM44mil could have been directed toward more deserving ventures including small Bumiputera enterprises, which would benefit from support more significantly.

In light of Malaysia’s foreign debt, currently around RM1.5tril, indiscriminate support for well-connected businesses highlights a troubling trend.

Prime Minister Datuk Seri Anwar Ibrahim’s call for accountability among the super-rich and government-linked corporations becomes all the more pressing here.

For those of us who pay taxes, accountability is essential. Both KN and PNB must demonstrate how they intend to prevent similar losses in the future. The MACC’s focus should be on all financial improprieties, regardless of political affiliations.

In the end, apologies alone from Fashion Valet’s founders and the agencies involved are insufficient. True responsibility would mean financial accountability, transparency, and safeguards to prevent a repeat of this costly mistake. – Nov 2, 2024



Former DAP stalwart and Penang chief minister II Prof Ramasamy Palanisamy is chairman of the United Rights of Malaysian Party (Urimai) interim council.