ASEAN KEY DESTINATIONS
S$100m IP Financing Scheme launched
SINGAPORE: Local innovative companies are set to get more financing support to grow and expand their business.
The Intellectual Property Office of Singapore launched a S$100 million financing scheme on Tuesday, enabling firms to use granted patents as collateral for bank loans.
The latest initiative comes on the back of a new campaign to enhance the IP framework in Singapore to help businesses expand locally and abroad.
Singapore businesses have reported growth in the value of their intangible assets, such as rights, relationships and intellectual property.
According to a study by asset valuation consultancy Brand Finance, intangible assets accounted for 42 percent of enterprise value in Singapore in 2012, up from 35 percent the year before.
The new financing scheme allows businesses to monetise their intangible IP assets, with the government stepping in to share the risk.
Launching the Intellectual Property (IP) Financing Scheme, Senior Minister of State for Law and Education Indranee Rajah said: "Last year, the government announced that we were looking at IP valuation and the use of IP as collateral in a loan transaction.
"Under the IP Financing Scheme, S$100 million of funds will be made available for debt financing in the next few years, with patents used as collateral. The risk will be shared between the participating financial institutions and the government."
So far, the three local banks -- DBS, OCBC and UOB -- have agreed to accept IP as collateral for loans, and authorities are working on bringing more banks on board.
While the concept is relatively new in Singapore, industry participants have expressed optimism about the potential benefits.
OCBC Bank's head for global commercial banking, Linus Goh, said: "In a way, identifying a specific IP may be perceived as challenging or new, but in reality there are established practices from the rest of the world, where people are able to assess the value of IP.
"So I think that's the learning process, the journey that we need to take. As we become more comfortable, I think it becomes a reasonable basis on which to finance.
"Today, we support many small businesses. We finance them on an unsecured basis at the start of their businesses.
"Many of these businesses may have IPs within their business strategies. If we're able to isolate that, it becomes another positive consideration for us to look at mitigating risk."
Firms would have to obtain a valuation from an IP valuer. Those currently approved include American Appraisal, Consor Intellectual Asset Management, and Deloitte.
With more access to funding and support from the Intellectual Property service centre -- which was also launched on Tuesday -- authorities hope more local firms will be able to expand abroad.
The new IP service centre - IP 101 - will provide firms with traditional IP filing and registration services. Companies can also visit IP 101 to seek assistance from consultants and lawyers in managing their IP portfolios.
The new financing scheme will start accepting applications from late second quarter of this year.
It is available until April 2016 when there will be a review on the potential extension of the scheme.
However, banks are free to continue taking IPs as collaterals thereafter.
Helping local businesses aside, changes will be made to existing IP laws to benefit the visually impaired.
The existing Copyright Act only allows institutions assisting persons with reading disabilities to make copies of copyrighted works in traditional formats, such as Braille.
With the adoption of the Merrakesh Treaty, copies of works can be made in all types of formats, such as electronic books.
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