KUALA LUMPUR (Oct 3, 2012): Local banks are being trained to comprehend, analyse and evaluate intellectual property (IP) rights in a move to allow companies access to IP-backed lending, MCA secretary-general Datuk Seri Kong Cho Ha (pic) said.
“Banks must learn how to evaluate IP and do proper valuations as one kind of IP can be valued differently from another. We are working with funding agencies and commercial banks on this matter,” he told a press conference after opening an MCA Information Resource Centre (MIRC) funding forum yesterday.
IP refers to creations of the mind and can be divided into two categories: Industrial property such as inventions (patents, trademarks and industrial design) and copyright, which includes artistic and literary work.
Banks will start accepting IP assets as collateral from January next year.
On Friday, Prime Minister Datuk Seri Najib Abdul Razak had announced an allocation of RM200 million for an Intellectual Property Financing Fund scheme in Budget 2013 to help SMEs obtain financing.
Najib had said a valuation model would be created to allow IP to be valued and used commercially or as collateral for companies seeking funding from financial institutions.
Kong, who is Transport Minister and MCA science and technology bureau chairman, said the announcement bodes well for SMEs and technology-based companies as they often face funding difficulties.
Malaysia Debt Ventures Bhd (MDV) business division senior vice-president Nizam Mohamed Nadzri said the infrastructure for the use of IP as collateral is already in place, and that a proper valuation requires a range of methodologies and values before reaching a figure.
“MDV evaluates five areas of a company when processing loan applications, namely the management, technical, financial, legal and collateral areas.
“However, the principal exit of repayment will always be the project or specific profits from the project; collateral is only used when all other avenues and options have been exhausted,” he said.
The one-day forum by MIRC is aimed at creating awareness on various funding options available, besides being a one-stop option for young companies and entrepreneurs to build their businesses.
“MIRC has helped more than 4,000 SMEs and entrepreneurs, especially technopreneurs, over the past seven years,” its president, Andrew Wong, said.
“IP is worth a lot these days. Banks overseas accept IP as the ‘knowledge’ of the company and will finance the company based on IP as collateral,” he said.