Malaysia's Sovereign Fund Faces Backlash Over $10.1 Million Loss in Fashion E-Commerce Investment

*KUALA LUMPUR:* Two Malaysian government-linked companies, including the nation's sovereign wealth fund, are under scrutiny for incurring a significant loss from their investment in FashionValet, Malaysia's pioneering fashion e-commerce platform.

Khazanah Nasional and Permodalan Nasional Berhad (PNB) have been compelled to respond to rising public concerns after the Malaysian finance ministry revealed in a recent parliamentary update that the firms collectively lost RM43.9 million (approximately US$10.1 million) following the sale of their minority stakes in FashionValet.

The companies sold their stakes at the end of 2023 for just RM3.1 million, representing a staggering 93.4% loss from the combined initial investment of RM47 million made back in 2018. This staggering reduction has led to calls for accountability, as it represents the mishandling of public funds.

On October 31, Fahmi Fadzil, Malaysia’s Communications Minister, urged Khazanah and PNB to clarify their losses, drawing attention to the significant public interest in the matter. 'Since public funds are at stake, it’s only natural for people to ask questions. We expect a statement to enlighten us,' remarked Fadzil, who also speaks for the Unity Government.

A formal response from the two firms is expected, although Fadzil indicated they should be given some time to prepare their statements.

FashionValet, founded by the well-known entrepreneur Vivy Yusof and her husband Fadzarudin Shah Anuar, initially attracted substantial investments—RM27 million from Khazanah and RM20 million from PNB. However, the finance ministry, while acknowledging the losses, noted that they remain 'negligible' in light of the total income for both firms for that year.

The recent sale was referred to as a 'fire sale' to local investment firm NXBT Partners, drawing further controversy. The finance ministry defended Khazanah's original investment, asserting it aligned with the fund's goal of bolstering local tech entrepreneurs and stimulating growth in the e-commerce sector.

The situation worsened for FashionValet amid challenges stemming from the COVID-19 pandemic, which severely impacted its business operations. By 2022, mounting competition and ongoing struggles led Ms. Vivy and Mr. Fadza to abandon the e-commerce platform, refocusing their efforts on their branded modest wear lines, Duck and Lilit.

Adding fuel to the fire, reports indicate that FashionValet has faced losses for three consecutive years, with the firm recording a loss-after-tax of RM34.51 million in the fiscal year ending December 31, 2022, a figure significantly larger than the RM9.63 million loss just a year earlier.

As the controversy unfolded, Vivy took to social media expressing her desire to address the public and hinted at an upcoming statement regarding the outcry and questions surrounding the financial management of her multi-million-dollar enterprise.

Netizens have voiced frustration and skepticism about the fiscal decisions made by both PNB and Khazanah, with one user questioning, 'How could such substantial funds be managed poorly, and who approved these deals?'

With her popularity as an influencer and fashion figure—amassing over 1.8 million followers—Vivy Yusof's luxurious lifestyle is now under scrutiny as the public grapples with the fallout from this high-profile investment debacle.

As the situation develops, many are left asking: **Will the truth come to light, and how will this impact Malaysia's venture into the e-commerce arena?** Stay tuned as more details unfold!