Finance Ministry Outlines 3 Reasons Why FashionValet Failed

The story of the fall of FashionValet is still the talk of town.

Other than questioning Khazanah Nasional Bhd (Khazanah) and Permodalan Nasional Bhd (PNB)’s reasoning to invest millions in FashionValet (FV), many have wondered what led to the e-commerce website’s fall.

Since the investment used public funds, many wanted to know why FashionValet which started out promising failed at the end of the day.

Finance Minister II Datuk Seri Amir Hamzah Azizan pointed out three probable factors that led to FashionValet’s downfall while answering Bukit Bendera MP Syarleen Abdul Rashid’s question at the Dewan Rakyat yesterday (114 November).

The three points are:

1. The Covid-19 pandemic changed things

The Covid-19 pandemic changed the way we did things. Businesses with physical stores had to pivot to an online business model, especially during the Movement Control Order (MCO) periods.

This also meant fewer people were buying premium products, such as the luxury headscarves sold by FashionValet’s dUCk brand.

FashionValet’s aspiration to become a multi-channel shopping platform featuring local brands led them to rapidly build more physical stores.

However, the pandemic threw a wrench in the plans and the market for premium clothing fell significantly.

2. Changes in e-commerce platforms trends

FashionValet experienced strong competition from other social media sites with a marketplace such as Facebook.

This forced FashionValet to focus only on its own home brands such as dUCk and LILIT. As such, FashionValet’s site was shut down.

Although Khazanah and PNB provided strategic and financial advice, the competition with the other platforms were too strong.

3. Lack of funding

Due to the business setbacks, it discouraged investors from investing in FashionValet and this affected the company’s finances.

In short, FashionValet had a hard time convincing other investors to pump in more money.

Investors like Khazanah and PNB didn’t agree to take larger risks by investing more in FashionValet. As we all know, Khazanah and PNB later sold their minor stakes, citing it was a “responsible exit.”

MACC detected suspicious transactions since 2018

After Khazanah and PNB sold their minor share, the Malaysian Anti-Corruption Commission (MACC) had raided the offices of FashionValet, the Finance Ministry, Khazanah, and PNB on 4 November.

FashionValet founders, Datin Vivy Yusof, and her husband Datuk Fadzaruddin Shah Anuar, were also called up to give their statements at MACC on 5 November.

MACC’s latest update on their investigation into FashionValet uncovered several suspicious transactions involving investment losses totalling RM43.9 million.

MACC chief commissioner Tan Sri Azam Baki said the suspicious transactions started in 2018 until last year from a company and other parties. He claimed that part of the investment was misused.

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