Intellectual property as collateral for companies

New $100m scheme involves Govt co-sharing risk of default with banks

By Mok Fei Fei, The Straits Times, 9 Apr 2014

DETAILS of a new $100 million scheme aimed at helping firms secure loans by using intellectual property (IP) as collateral have been unveiled.

The Government first announced in April last year that it planned to launch a scheme under which local companies would be able to use their intellectual property (IP) as collateral when applying for bank loans.

It was also revealed then that the Government would partially underwrite the value of patents so banks will not be made to bear all the risks if firms cannot repay the loan.

The size of the programme and a slew of other details were unveiled yesterday.

The two-year scheme provides a kind of loan that is not available in Singapore so it is hoped that the scheme, which is being implemented by the IP Office of Singapore (IPOS), will spark interest.

Firms keen to tap on the scheme must be local enterprises incorporated here and use a granted patent as collateral.

They will also have to get their patent valued by a member of the IPOS-appointed panel as part of the loan application submission.

Valuation companies American Appraisal Singapore, Consor Intellectual Asset Management and Deloitte & Touche Financial Advisory Services are on the panel.

They will determine the worth of the IP, which will help banks decide on how much to lend.

The Government will co-share the default risk with the banks, though the breakdown is not cast in stone as the partners will look at each deal on a case-by-case basis.

Local banks DBS, OCBC and UOB are participating in the scheme and signed a partnership agreement with IPOS yesterday.

IPOS chief executive Tan Yih San told a briefing yesterday that more lenders could come on board: "What we are seeing is just the first tranche; we have received quite a few more queries."

Banks typically recognise physical assets, such as a company's factory or machinery, as collateral before issuing loans.

Accepting IP as collateral will help businesses monetise such intangible assets, said Senior Minister of State for Law Indranee Rajah, who was speaking at an IPOS event where the value of the scheme was announced.

"Singapore businesses can grow through exploiting new ideas. There is a growing trend of businesses being valued based on intangible assets," she added.

A report by the consultancy Brand Finance found that 42 per cent of the US$464 billion (S$585 billion) total enterprise value in Singapore was in intangible assets in 2012, up from 35 per cent the previous year.

Industry players pointed out that small and medium-sized enterprises (SMEs) and start-ups will stand to gain.

Mr Lim Chu Chong, head of SME banking at DBS, said the bank will charge interest in the range of 3.5 per cent to 7.5 per cent for loans of between one and six years.

The rate is lower than the 8 per cent to 10 per cent interest charged to smaller firms seeking unsecured loans.

OCBC's head of global commercial banking Linus Goh expects the scheme to benefit firms in various sectors, including those in services and manufacturing as a number of them would hold patents.

Mr Eric Tham, UOB's head of group commercial banking, said the scheme is timely as Singapore is increasingly becoming a technology-driven, knowledge-based economy.

Mr Andy Chaw, chief executive of Star360 Group, which owns several patents related to footwear technology, is keen on the scheme. "We look forward to working with DBS to unlock the value of our Masai Barefoot Technology patents," he said.

But Mr Essay Toh, co-founder of E-Tag RFID, a designer and manufacturer of radio frequency identification tags, is more hesitant. "It's a feasible scheme but it really depends on the valuation of the IP," he said.

Copyright changes to help the blind
By Mok Fei Fei, The Straits Times, 9 Apr 2014

THE Copyright Act will be amended to make it easier for the visually impaired to access more forms of published works beyond those in Braille.

Yesterday's announcement of the changes comes a day after news that the Act could be strengthened to block piracy websites.

The latest move will involve amending the law to facilitate access to copyrighted works in all types of formats, including electronic books, for the visually handicapped.

The current copyright regime only allows institutions assisting the blind to reproduce protected works in traditional formats such as Braille.

Singapore's move follows its adoption of the Marrakesh Treaty, which was concluded in June last year.

The pact aims to improve access to copyrighted works for some 340 million people in the world who are blind.

The Straits Times understands that the changes to the Act could be made in the second half of this year.

Senior Minister of State for Law Indranee Rajah announced the move yesterday at the official opening of IP 101, a one-stop intellectual property (IP) service centre.

The centre on the ground floor of Manulife Centre in Bras Basah Road aims to raise public awareness of IP.