Currently just listings site, needs transactions, activities
Part of plan to develop IP as established asset class
IN its efforts to make intellectual property an acceptable asset class and thus a new source of funding for the market, the Malaysian government has been devoting considerable resources to building up national capacity and capabilities in this domain.
In 2013, at a time it was reducing its funding for its various agencies, it nonetheless reaffirmed its determination to develop IP into an asset class by allocating US$57.5 million (RM200 million) into an Intellectual Property Financing Fund offered through Malaysian Debt Ventures Bhd (MDV). The Government provides a 2% interest rate subsidy and a guarantee of 50% of the IP value through the Credit Guarantee Corporation Malaysia Bhd.
It was not a standalone funding incentive though. Anticipating the strong demand this will create for highly skilled intellectual property evaluators, US$5.5 million (RM19 million) was set aside for training programs conducted by the Intellectual Property Corporation of Malaysia (MyIPO). There was also the intention to create an IP market platform.
Last week, at its monthly IP Teh Tarik session, part of its market education and outreach initiative, MyIPO’s consultant for IP markets and valuation, Samirah Muzaffar invited the private sector and all interested stakeholders to work with MyIPO to help build the type of IP market place best suited for Malaysia.
Part of the goal is to enhance the marketplace portal, which was launched in June 2014, so that it can help catalyse the entire ecosystem. The government believes that by engaging with private sector and interested stakeholders to work with MyIPO, it is able to shape the portal into one that best fits Malaysia.
Samirah recalls that, it is the same approach MyIPO has taken with the launch of the IP Valuation Model earlier this year. The model was jointly developed by four banks and four venture capital firms, or the "eight champions" as Samirah describes.
"This is just a start," she says.
Although the IP Valuation Model was designed specifically for financing purposes, Samirah admits that there is no one right model or a one-size-fits-all model.
“But banks are comfortable with this and you can always adapt it as you go along,” she adds.
The salient features for this valuation model are that it is sufficiently accurate for collateral purposes, is easily implementable by lenders, is cost efficient and uses the income approach. The success of the model seems encouraging so far, as 20 valuations has been done using the model.
Marketplace to be more vibrant
For now, the IP marketplace is mainly a listing site. But, Samirah (pic) says that works being done to make it a "more virbant platform". She also stresses that the platform is not solely owned by MyIPO.
“It is a platform that is shared by all stakeholders, whether SMEs, inventors, practitioners such as IP lawyers etc,” she says declaring her hope that the portal eventually grows to become an end-to-end service portal.
“We definitely do not want it to be just a listings site,” says Samirah, who is also welcoming IP brokers to the site.
“Any service that adds the disposal, commercialization and monetization of any IP, be it paintings, books, ICT etc, please talk to us and we will like to collaborate with you,” she stresses.
On what she felt could be a likely IP marketplace model that can work for Malaysia, Samirah shares that South Korea launched an IP marketplace around 10 years ago by focusing on listings but the model did not work. Today it has successfully evolved to become an IP brokerage but one that is very much domestically focused.
She does not believe that this model will work for Malaysia, pointing out that Korea produces a lot more IP than Malaysia and there is a large enough domestic market for the Korean marketplace model to be domestic focused.
A decision on which model to adopt for the Malaysian marketplace can only be made after the current platform sees more transactions and players on it. “Right now it is just a pilot because as the regulator, it is easier for us to talk to other IP players and governments to create linkages. But because most of the buying and selling of IP will happen between the private sector, the type of model we ultimately settle on should be decided mainly by them. We [MyIPO] just put in the framework,” she says.
The importance of having such a IP valuation model and marketplace in the ecosystem can be illustrated by the fact that Chinese businesses raised US$4 billion in IP-based funding last year. Indeed with the increasing importance it is giving to IP, it won’t be long before China dispels the perception that it gives short shrift to IP.
As a nation that has long recognized the strategic and pervading importance of ICT to its long term economic progress, the government sees IP as one of the key soft factors that must be in place but it needs the private sector to step up to help create a strong IP ecosystem where IP becomes an established asset class.
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