IP Valuation norms key to financing growth
24th November, 2011
Malaysia is seriously considering introduction of a framework for IP valuation so that they can be offered as collaterals. Recent valuations like Nortel or Kodak or building up a patent treasure chest as it has come to be called have put the spotlight on IP valuation.
The Multimedia Development Corporation (MDeC) and Intellectual Property Corporation of Malaysia (MyIPO) are working to prepare a framework which would cover different types of intellectual property rights. The idea is to arrive at a consensus on methodology of valuation which would be acceptable to financial institutions.
MDeC opined that if such valuation could help small and medium enterprises which have significant IP portfolio to get financial assistance, it would assist them in commercialisation. The MyIPO is also looking into changes that may be required in IP laws if the valuation framework were to be given effect to.
Thailand already has such a framework in place. However given the difficulties in arriving at the true value, IP collaterisation is not favoured by financial institutions. But, several Thai banks such as the Thai SME bank are now considering IP as collateral, as per an OECD Paper by Roya Ghafele of WIPO. The Paper says that this will significantly decrease the cost of capital for entrepreneurs. Firms and research centers will be able to take loans on the basis of their IP instead of resorting to expensive finance.