Malaysia’s MESTECC Minister does the right thing
Coming up to almost two years since a May 2018 historic election victory in Malaysia, the new ruling government in Malaysia, Pakatan Harapan (Coalition of Hope) which came in with the intention of managing the country in a more transparent and collaborative manner is finding it tough and slow going to introduce its promise of Malaysia Baru.
Undoing bad habits, process abuses that became accepted over time as how things were done, is proving tougher than expected to change and for any changes made, tougher for some parties to accept.
Take for instance the current, and I may add, long overdue, search for a new Malaysia Venture Capital Management Bhd (Mavcap) CEO, a post that has been vacant since Sept 2018 when Jamaludin Bujang left. The position has been helmed by Mavcap COO Sharil Anas, as acting CEO in the interim.
What’s interesting about this search is the hands-off role being played by Yeo Bee Yin, Minister of Energy, Science, Technology, Environment and Climate Change (MESTECC), under whose ministry, Mavcap sits.
This apparently worries some who wish for the minister to play a more active role in the final selection process to ensure the best candidate wins the job, especially when some board members are holdovers from the previous board. The concern here apparently being that the old board members may not want a CEO who is too aggressive and questions past board actions.
However others, feel this is a stretch, as there is no evidence of wrongdoing at Mavcap, aside from it owing the government money that it borrowed to then make its venture capital investments. These debts have already been made public.
When I asked Minister Yeo, about the likely strong role existing board members could take to influence the choice of CEO, she said: “Of the selection panel for Mavcap CEO, only the chairman and one board member were members of the previous board, two board members are new appointees, and another three members [of the selection panel] are Ministry representatives from MoF (Ministry of Finance) and Mestecc.”
Sources close to the matter explained to me that the minister’s authority only involves the appointment of board members. She does not get involved in picking the CEO.
Now to me, this sounds like the Minister is doing the right thing to work within the ambit of her powers and not to abuse her authority.Yet, some are not comfortable with this, perhaps used to the old ways.
A member of the selection panel also tells me that everything is being done, “with the proper due process. All nine final candidates were interviewed by us and ranked according to the criteria we were given.”
I should add that the two new Mavcap board members are, Wong Siew Hai and Kong Sooi Lin. Both come with rich industry experience as leaders in their respective fields of technology, in the case of Wong, and finance and banking in the case of Kong. They join existing board members, Noharuddin Nordin, the chairman, Darawati Hussain and fifth board member Mohd Hisyamuddin Awang, an MoF representative. The board is short of a direct MESTECC representative but I am told that person will be appointed soon.
All five board members, plus one senior executive from Mestecc, are also on the selection panel to choose a new CEO. Nine candidates have been interviewed and I am told, four are left with two more to be dropped before the final two names will be submitted to the MoF and to Minister Yeo.
And once both parties acknowledge the final candidates, the selection panel/Mavcap board will make the final decision. However, here, the process is not clear cut as I have been told by a party involved in the process that the final decision will be made by Noharuddin, Mavcap chairman. Another party however says the entire selection panel will make the decision jointly.
So, I say, let the final four candidates all be interviewed by the full selection panel before the CEO is chosen from among them. May the best person win!
Explaining long period before Mavcap CEO search
That long period, from when Jamaludin left in Sept 2018, to the search for his replacement being done now, can be partly explained by a new government coming in promising to eliminate replication among government agencies and moving around of some agencies with the aim of finding a better fit under the right ministry.
This was how, in Nov 2018, that Mavcap, which since its formation in 2001 has been under the Ministry of Finance, suddenly found itself a new home parked under Mesteec, adding to the burgeoning slew of agencies under its rookie minister, Yeo Bee Yin. And yes, almost every new Minister and Deputy Minister in the new government of May 2018 was a rookie.
Further contributing to the delay in appointing a new CEO was Minister Yeo’s desire to have better clarity of how she could maximize the effectiveness of the agencies, specifically those to do with funding and entrepreneurs. So the Minister, in January 2019, assembled a task force of seasoned industry players on Technopreneur Funding to come up with recommendations for her on how she could act to further strengthen the Malaysian funding and entrepreneur ecosystem.
Working pro bono (I hope they got a nice dinner treat from the Minister) and putting in long hours with various industry engagements, one of which I attended as well, they delivered a set of recommendations to the minister that were apparently accepted by her in full.
For Mavcap, the objective was clear, it would not make any more direct investments at all and only focus on being a Fund of Funds. Now this was something Mavcap had already embarked on during Jamaludin’s time, resulting in much better success than when Mavcap was making direct investments in its first 10 years. However it was still making some direct investments and those will stop now.
“This strategy was producing much better results than making direct investments,” says a member of the Technopreneur Funding task force which looked at the performance of Mavcap when it was making direct investments against when it adopted the Fund of Funds strategy.
Among the earliest funds Mavcap invested in were with the Southeast Asian (SEA) fund of Silicon Valley based venture capitalists, 500Startups. The SEA fund was called 500 Durians I, established in 2014, and 500 Durians II in 2017. Mavcap was a key investor in both funds.
A former Mavcap executive tells me both funds were still doing well as of 2018, meaning the value of the fund is higher than the cost of investment made into those companies combined.
Another executive familiar with both the 500 Durian funds points out that the two funds have invested in three unicorns – the Singapore/Malaysia Grab, Indonesia’s Bukalapak and Revolution Precrafted from the Philippines, as well as owning stakes in startups valued in the hundreds of millions in US$ with companies like Carsome , Finaccel and Carousell.
Depending on when the two funds mature, Mavcap could be looking at decent returns. Besides 500 Startups, Mavcap has also invested into two other Silicon Valley VC firms, Elixir Capital and Gobi Ventures. On the home front, it invested into a Axiata Digital Innovation Fund (ADIF).
I do hope that when the new CEO is appointed, he will give us an update of how all Mavcap’s existing investments are doing. After all, that is the transparency promised by the government.