By Irene Tham, The Straits Times, 2 Apr 2013
A NEW financing scheme is being introduced to pave the way for local companies to use their intellectual property (IP) as collateral when applying for bank loans.
With a kitty of "tens of millions" of dollars, the Government will partially underwrite the value of patents so banks will not be made to bear all the risks if firms cannot repay the loan.
The sharing of risks is aimed at encouraging banks to recognise IP as an asset, just like a factory or office building. Banks currently do not accept IP as collateral.
The scheme, details of which are yet to be worked out, will also provide firms with other ways to raise capital if selling equity to angel investors is not an option. It was among a slew of measures announced yesterday as part of the Government's 10-year masterplan to develop Singapore as a global IP hub.
"IP was identified as a new promising area for economic growth," said Senior Minister of State for Law and Education Indranee Rajah.
"The trend is IP is increasingly becoming an important asset class. People are beginning to treat it the way that they would other real assets."
Over the past decade, patent and trademark filings rose by 40 per cent, with global royalty and licensing revenue doubling to over US$200 billion (S$248 billion).
The steering committee, chaired by former Economic Development Board chairman Teo Ming Kian, was created last May to look into how Singapore could capitalise on such trends.
The recommendations announced yesterday were accepted by the Government after it consulted more than 200 IP professionals from over 100 local and foreign companies.
Also announced yesterday was a $50 million investment by the Intellectual Property Office of Singapore (IPOS) to build patent search and examination capabilities, especially in biomedical sciences, electronics and information technology. These are needed to decide if a patent can be granted.
A joint programme between the Economic Development Board and the Ministry of Law will also be set up to develop the IP and legal sectors.
The Government hopes to double the current number of 1,200 IP professionals - including trademark and patent valuation analysts, patent agents and IP lawyers - in eight to 10 years.
To this end, Ipos will invest $15 million in its executive training centre IP Academy. But the "spillover effect" - such as the creation of new jobs - cannot be underestimated, said Mr Teo, also the chairman of national broadcaster MediaCorp.
Mr Philip Wong, managing director of local clean-energy firm Real Time Engineering, said banks here would not finance him. Real Time - which converts sawdust, fruit peel and plant waste into electricity - has no factory or building that can be used as collateral.
"I will definitely apply for IP financing to raise working capital for projects," he said.
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