Banks trained to valuate intellectual property: Kong
KUALA LUMPUR (Oct 2, 2012): Banks are currently being trained to provide valuations of intellectual property (IP) rights as collateral for companies seeking loans, MCA secretary general Datuk Seri Kong Cho Ha said today.
“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 said at a press conference after opening an MCA Information Resource Centre (MIRC) funding forum today.
IP can consist of anything from source codes to a platform for a first person shooting game, and banks will be accepting IP as collateral starting January next year.
On Friday, Prime Minister Datuk Seri Najib Abdul Razak had announced an allocation of RM200 million for an IP Finance Scheme fund in Budget 2013 to help small and medium enterprises in their efforts to obtain financing.
Najib had said a valuation model would be created to allow IP to be valued and used commercially in the market as well as for collateral for companies seeking funds from financial institutions.
Kong, who is also Transport Minister and MCA science and technology bureau chairman, said the announcement bodes well for small and medium enterprises (SMEs) and technology-based companies as they face funding difficulties often and such an option will provide a better chance of getting their loans approved.
“Intellectual property 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.
Malaysia Debt Ventures Berhad (MDV) business division senior vice president Nizam Mohamed Nadzri said the infrastructure for the use of IP was already in place, and that a proper valuation requires a range of methodologies and values before reaching a figure.
“MDV currently 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.
Meanwhile, the one-day forum aimed to create awareness on the myriad of funding options available to them as well as be a one-stop option for young companies and entrepreneurs to build their businesses.
MIRC president Andrew Wong said there are 160 funding options for SMEs and entrepreneurs today, and the forum addressed all four areas in the life cycle of a company.
“The forum addresses pre-business, accelerator, growth and expansion stages as well as provides support and information for companies who wish to develop their business or apply for funds.
“To date, MIRC has helped more than 4,000 SMEs and entrepreneurs, especially technopreneurs, over the past seven years,” he said.