August 25, 2015
The Intellectual Property Office of the Philippines (IPOPHIL) took the initial step towards promoting the monetization of intellectual property assets in the Philippines. The IPOPHIL, in collaboration with KPMG, held a High-Level Forum on IP Financing last May 15, 2015. The forum was attended by representatives from various government agencies and research institutes, such as Bangko Sentral ng Pilipinas (BSP), Bureau of Internal Revenue (BIR), Department of Finance (DoF), Securities and Exchange Commission (SEC), Department of Science and Technology (DoST), National Economic and Development Authority (NEDA), University of the Philippines – Los Banos, Filipinas Copyright Licensing Society (FILCOLS), and the Philippine Institute of Certified Public Accountants (PICPA). The main purpose of the forum was to formally discuss the possibility of creating a framework for IP financing and IP valuation in the Philippines. This initiative of the IPOPHIL, as the government agency in-charge of advancing intellectual property rights, is a recognition of the growing trend of IP financing as an alternative source of credit, as well as the value of a good IP financing framework to the country’s economy.
At the forum, Mr. Jamesy Laya of KPMG Corporate Finance Pte. Ltd., acted as the resource speaker, who shared his knowledge and experience with the IP financing program of Singapore. In 2014, the Intellectual Property Office of Singapore launched the Intellectual Property Financing Scheme to support and encourage Singaporean businesses to use their granted patents as collateral for bank loans. Targeted at IP-rich and asset-light companies burgeoning in the technology sector, the scheme was intended to open a new avenue for innovative companies to access capital, as well as to grow and expand their business.
IP financing is a recent and recognizably growing trend around the world. The objective of IP financing is for companies with low tangible assets to tap into their IP assets in order to access loan facilities, or for banks to be able to use granted patents, or a brand or copyright, as collateral for business loans. Companies, such as start-ups or small and medium-sized enterprises, cannot afford to ignore this trend and miss out on the opportunity of utilizing its IP assets as valuable sources of financing. The additional funding can spur more innovation, improve the company’s research and development, and impact the overall economic growth for the country.
Also discussed at the forum are valuation of IP assets. Being an intangible asset, proper valuation of IP will be challenging. Concerns were expressed on whether a sound valuation can actually be achieved. Issues of the disclosures by companies of its IP assets for tax purposes, as well as the reporting with the SEC in its financial statements, were also discussed during the forum. In addition, not all IP owners are aware or have knowledge of IP financing, as well as the necessary understanding of the value of IP assets.
The Philippines has not yet developed its IP financing framework or policy. This forum marks the initial step taken by the IPOPHIL towards developing a legal framework and a national policy on IP financing. To help the IPOPHIL further this initiative, recommendations on a sequel forum to further discuss the issues on IP financing with private sectors, such as banking institutions and investors were made. Moreover, the creation of the Technical Working Groups, composed of different government agencies, as well as continuing dialogues with concerned agencies will also help further identify issues, which should be addressed by the framework to be crafted. The forum and these future directives of the IPOPHIL are geared towards helping local IP stakeholders to attract foreign investors into the country.