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Government Invests US$65 million to Help SMEs Use Patents

Issued: July 01 2013

During the IP Valuation Roundtable with Financiers in Kuala Lumpur, Malaysia’s government announced that it would launch a RM200 million (US$65 million) IP financing scheme through Malaysian Debt Ventures.


This is an additional boost to the IP financing scheme, in particular for the small and medium enterprises, P Kandiah, founder of KASS International, tells Asia IP. “It is an initial grant to incentivize SMEs to use IPs in business expansion. Many SMEs have taken the offer to facilitate the registration of their patents, industrial designs and trademarks both domestically and internationally. The amount is sufficient for a start, but has to be continued once the initial sum has been utilized.”


The Intellectual Property Corporation of Malaysia (MyIPO) is developing a national valuation model suitable for local industries and the model would help support the acceptance of IPs as collateral by lenders.


The idea of using IPs as collateral for business loans is new to Malaysians, Kandiah says. “Many SMEs use IPs to forge their business forward, so it will take time for them to digest. But a start has to be made and SMEs would eventually follow,” he says.


Through another agency, Credit Guarantee Corp Malaysia, the government provides a 2% interest rate subsidy and a 50% guarantee.


MyIPO is running the IP valuation initiatives that concentrate on four achievements: training of local IP valuers, the valuation of IPs for suitable local SMEs, formulating a national IP valuation model and developing a market for IP deals.


But with current resources and framework, developing a market for IP deals is the most challenging, Kandiah says. “Although granted patents are available from universities and research institutions, there is no strong conduit for industries to acquire and commercialize the technologies and there is not much publicity on the technologies available for assignment or licensing. More importantly, there is some mismatch between what the industries want and what the universities offer.”


More significant changes in the IP laws are coming soon, Kandiah says. “The Trademarks Act will allow the registration of non-conventional trademarks such as shapes and sound. The Industrial Designs Act will make absolute novelty a registrability requirement instead of local novelty. The Patents Act will introduce observation by third parties on patentability and will provide for patent monetization and securitization.”


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