IP-Based Financing

MyIPO, MDeC To Boost IP-Based Financing
05-01-2012 | By Samantha Tan Chiew Ting

KUALA LUMPUR, Dec 17 (Bernama) — Intellectual Property Corp of Malaysia (MyIPO) and Multimedia Development Corp (MDeC) are taking firmer steps to promote intellectual property (IP)-based financing in Malaysia.

A tea talk, ‘IP System and Valuation’, was jointly organised by MyIPO, MDeC and the Association of Islamic Banking Institutions Malaysia (AIBIM), gathering bankers to share and exchange ideas in promoting IP-based financing.

The talk focuses on financial institutions in a bid to enhance IP knowledge among the bankers and expose them to the long-term benefits of IP-based financing. It attracted AmIslamic Bank, Alkhair International Islamic Bank, Bank Islam, Bank Muamalat, Bank Kerjasama Rakyat, Bank Simpanan Nasional, CIMB Islamic Bank, HSBC Amanah, Hong Leong Islamic Bank, Maybank Islamic, OCBC Al-Amin, Public Islamic, RHB Islamic, as well as other key government agencies.

MyIPO’s director-general, Datuk Azizan Mohamad Sidin, said it was crucial for the financial industry to gain exposure in IP as it was considered an important intangible asset in any organisations.

“Banks focus on significant tangible assets. However, over the past decade, trade mark, patent and copyright have become more important as key assets,” he said.

Azizan said banks should recognise IP as tangible assets to enable businesses, especially the small and medium enterprises, to raise funds and expand operations.

“It is timely for Malaysia (to promote IP-based financing) as the country strives to become a developed and knowledge-based economy by 2020,”
he said.

AIBIM’s executive director, Mohamed Rithuan Datuk Mohamed Shamsudin, said the Economic Transformation Programme defined opportunities for IP in at least seven sectors of the 12 National Key Economic Areas, including agriculture and business services. He said the syariah-compliant Commercialisation Innovation Fund (CIF) by the Malaysian Islamic banks with the government subsidising two per cent of the financing rate, highlights the commercialisation of IP as a criteria to be eligible for financing. MyIPO and AIBIM are confident the CIF would be the benchmark for Islamic financial institutions to start IP-based financing and make IP as one of the criteria in order to obtain financing rather than focusing on cash flows.

Meanwhile, Wong Jin Nee, a partner in Messrs Wong Jin Nee and Teo specialising in IP and technology, said IP-based financing was rare but not new as it was introduced as early as 1884 in Western countries. She said Lewis Waterman got a US$5,000 loan in 1884 to start pen manufacturing business secured by Waterman patent and Calvin Klein raised US$58 million in 1993 with royalties on use of CK brands on existing and future products. Other success stories are Michael Jackson, who borrowed US$200 million from Sony with Beatles’ catalogues and Disney raised US$725 million against future earnings of Tokyo Disneyland based on the use of its brand.

Wong said most bankers see IP-based financing as more risky and worried about the non-performing loans as well as difficulty in liquidating in event of default.

“Lack of IP asset recognition on balance sheets and no established standardised valuation methodology are also among the blocking factors to this untapped gold mine industry,” she said.

However, she said, IP-based financing was indirectly happening as some banks gave loans to franchise businesses, adding, as a franchise was valueless if the IP was taken out from the operations.

Both MyIPO and MDeC hope banks could start accepting IP as collateral together with other tangible assets, adding, putting a ratio between intangible including IP and tangible assets in approving loans should be the starting point for the banks.

- BERNAMA

We are MSC-Status!

Giggle Garage Sdn Bhd is now an MSC-Status company!

The recognition of being an MSC Status company from the Government of Malaysia under Creative Multimedia Clusters, cements our passion and commitment in the production of Malaysian’s animation content for the world. Very proud of this!

IP Valuation Model

CYBERJAYA, Nov 18 (Bernama) – The Multimedia Development Corporation (MDeC) is striving for Intellectual Property (IP) rights to be accepted as assets or collateral through the IP valuation model which is set to be introduced in the first quarter of next year.

MDeC chief operating officer Ng Wan Peng said currently there is no collectively acceptable IP valuation framework which financial institutions can adhere to when processing applications for financial assistance.

She said financial institutions are reluctant to accept IP as assets or collateral because of the difficulty in determining the value of Intellectual Property.

Ng said the introduction of the IP valuation model is the first step taken in assisting financial institutions to refer to a specific methodology in valuing IP rights.

MDeC, the driver of MSC Malaysia’s National ICT Initiative, is working very closely with Intellectual Property Corporation of Malaysia (MyIPO) in getting the necessary approvals for the IP valuation model.

At the 22nd MSC Malaysia Implementation Council Meeting (ICM), organised by MDeC last year and chaired by the Prime Minister, it was decided that MyIPO should formulate an IP valuation model in accordance with the National IP Policy, she said.

Since then MDeC and MyIPO, together with other stakeholders, have been collaborating in preparing an introductory IP valuation framework that looks into the different types of IP rights. MDeC and MyIPO are confident that the framework would be ready and be tested with a few IP owners soon.

“More needs to be done as it is a new area and not many have experience in this. We must start getting the financial institutions to value IP rights as something of high value. Educating and increasing the level of awareness is necessary in order to ensure more people understand and appreciate IP,” Ng told Bernama in an interview.

Ng revealed that hundreds of MSC Malaysia-status small-and-medium enterprises (SMEs) that possess IP rights such as patents, copyrights and trademarks are facing difficulties in getting financial assistance to commercialise their products.

“More than 1,000 SMEs with MSC Malaysia status have IP rights which range from patents to trademarks, copyrights and industrial designs. Not all need financial assistance to commercialise their products but most of them will be happy to have some kind of recognition that the IP created by them actually has value,” she said.

According to Ng, the IP valuation model could serve as a guide for the financial institutions as well as stakeholders in conducting valuation or use it as a basis to get third party valuators to undertake the valuation process.

Ng said IP owners, financial institutions and Bank Negara have provided input for the valuation initiative for the IP. MyIPO together with MDeC had conducted feedback sessions with some financial institutions, industry players as well as IP owners to make them understand this area better as well as share their concerns in the valuation of IP rights.

“We are happy with the cooperation provided by the parties involved in this IP valuation initiative. MyIPO has been working hard in driving this initiative including looking at the amendments of the IP laws to allow the adoption of IP rights as security,” she said.

Although the government has been promoting an innovation and knowledge-based economy, support from financial institutions is not forthcoming as they find it very difficult to accept IP rights as a collateralisable asset.

“I think they are more comfortable in giving out the loan based on business plans on tangible assets or proven business rather than looking at IP as collateral. It’s not that they don’t want to value the IP, the problem is that they don’t know how to value IP rights,” she said.

“We do not see financial institutions keen in readily accepting IP as collateral at this moment. We were told by some companies, most of them SMEs, that they have difficulties in getting banks to recognise their IP rights,” she added.

Ng said the ultimate goal of the IP valuation initiative is for IP rights to be recognised by financial institutions as an asset that can be put up as collateral.

“These are also opportunities for the banks. Financial institutions have to start developing capability in these areas as more and more companies will have less and less tangible assets. In becoming more competitive, financial institutions would need to know how to value intangible assets and put a defensible value that can mitigate the perceived risk attached to assets such as IP.

“Eventually, we hope that local companies will continue to create IP which will be accepted as an asset that can be transacted and thus help increase our competitiveness as a nation,” she said.

(Source: Bernama)

Saladin up for Emmy

Oct 6 2011 – PETALING JAYA: Animated action-adventure Saladin has put Malaysia on the world map with its nomination for an award at the 39th International Emmy Awards.

Saladin is co-produced by the Multimedia Development Corporation (MDeC), caretaker of the country’s MSC Malaysia initiative, and Qatar’s Al-Jazeera Children’s Channel (JCC).

The nominations were announced on Monday at the MIPCOM content event in Cannes.

Meet us @MIPCOM 2011

Join the Fold,  Join the Fun!
Giggle Garage will be at MIPCOM 2011, Palais des Festivals, Cannes on the 3rd to 6th October 2011.
Meet us at Stand 03.20, 05.19

MAC3 needs to expand

KUALA LUMPUR: The Multimedia Development Corp (MDeC) hopes to further improve the infrastructure at the Malaysia Animation and Creative Content Centre (MAC3) to meet growing demand. The custodian of the MSC Malaysia initiative said there are 50 registered users from the content development industry, as well as animation students, using the facility regularly for rendering tasks.
Also, MDeC said, the MAC3 supports an average of three rendering projects running simultaneously at any given time, but this number fluctuates according to seasons and phases. About three new users sign-up monthly.

Based on the current demand for the facility, MDeC expects that it will need to increase the number of servers there to 300 by the second quarter of 2013 to keep up.

“We are preparing to present MAC3′s results to management. Hopefully with such numbers, we’ll qualify for allocations to expand the facility,” said Shazril Rahman, a senior executive at the facility.
MAC3, built in partnership with multinational technology company IBM Corp, is equipped with 128 high-performance servers coupled to IBM’s rendering software. It also has 80 terabytes of storage, and high-speed broadband connectivity. It was built so that local animation companies could have access to huge computing power without having to build their own rendering centres, which also cost a lot, or turn to overseas facilities.

MAC3 went operational in June, last year.

According to IBM, the facility is able to perform rendering jobs 8x faster than if a single workstation was used. Shazril was speaking at a media roundable on the sidelines of IBM Malaysia’s symposium on cloud computing here. He said MAC3 has helped local animation players save up to RM500,000 yearly in total in rendering costs, and has cut down rendering time from days to just hours. Abdul Jalil Rahman, an executive at the facility, said that before MAC3 was built, content developers had to look for high-speed computers in order to render their works, or use rendering facilities in other countries. This process time was consuming, costly and those facilities could not promise proper confidentiality of intellectual property to their clients.

“The onus was on the right owners to protect their works by signing NDAs (non-disclosure agreements) with the facilities to protect their works.

“But here at MAC3, our users can manage their own intellectual properties, which they can also access from any device,” Abdul Jalil added.

The MSC Malaysia initiative is aimed at leapfrogging the nation into a knowledge-based economy.

Target: Global Film Sector (Cannes 2011)

The government is launching a new initiative to bring Malaysian TV and film projects to the rest of the world.

MDeC set Standards

By: Jo Timbuong
Source: The Star
Custodian of the MSC Malaysia initiative, the Multimedia Development Corp (MDeC) will create its own standards certification to help ensure products developed by MSC Malaysia-status companies maintain a high quality. This is being done to supplement its efforts to transform Malaysia into an ICT (information and communications technology) hub. MDeC has tentatively labelled its certification standard as the MSC Solution Certified.

MDeC chief executive officer Datuk Badlisham Ghazali said MSC Malaysia-status companies have been wanting a common standard to which the quality of their products and services can adhere to and be recognised for.

“This will bring an assurance to both buyers and sellers that the commercialised product is of a high quality,” he said.

According to him, existing standards do not necessarily take into consideration some factors that may be just as important, such as the usability of a particular product.

“Usability means different things to different people. With our certification standard, we hope to make it so clear to buyers that they’ll know immediately how the product or service can be usable to them,” he said.

Badlisham said the MSC certification will also give manufacturers of IT solutions and software a huge boost when marketing their products. He said MDeC has noticed that the companies whose products bear a standards certification tend to do well in the marketplace.

MDeC is drafting its standards certification and has roped in Germany-based international certification body – TUV Rheinland – to help ensure that MSC Solution Certified includes the best practices and elements of other internationally-recognised standards, like ISO and CMMI.

“We want to make sure that what we are developing is on par with global standards,” Badlisham said.

Targets identified

This is also being done with the aim that MDeC’s standards certification will eventually be accepted internationally.

Under MSC Solution Certified, Badlisham said, products will be evaluated based on 12 major criteria, as well as more than 400 sub-criteria. The products will also be rated on an 80-20 rule, where 80% of the score is for the product and 20% is for the development process.

MDeC will apply for its standards certification to be accepted as a Malaysian standard by year end, and then it will push for global recognition. “We’ll leave it to Sirim, the Malaysian standards body, to decide on this. All the proper steps have been taken,” he said.

Badlisham was speaking at press conference to announce the MDeC’s goals as the MSC Malaysia initiative enters its third phase this year. The initiative was kicked off in 1996 to leapfrog the country into the Information Age, and to develop its knowledge economy. The third phase, which ends in 2015, will see the MSC Malaysia move to increase its contribution to the national Gross Domestic Income by 21%, which is from RM34.6bil to RM42bil. There are now 2,088 MSC Malaysia-status companies.

MDeC is also working to create 160,000 new jobs in the ICT sector; increase the export of locally developed and manufactured ICT products and services by 75%, which translates to RM58bil in sales, compared to RM33bil now.

MDeC confident

KUALA LUMPUR: Multimedia Development Corp (MDeC) expects to sees further growth in the third phase of the development of the Multimedia Super Corridor (MSC) that is set to run from this year to 2020.

Chief executive officer Datuk Badlisham Ghazali said during this critical phase, MDeC would help the MSC to develop Malaysia’s high-value economy by continuing to drive the uptake of information and communication technology (ICT).

He said the first four years of the MSC Malaysia Phase 3 plan aimed to see MSC companies achieve a 21% increase in gross domestic product (GDP sum of good and services produced) contribution to RM42bil. This compares with the RM34.57bil it recorded in Phase 2 which ran from 2004 to 2010.

Badlisham said at the end of the four years (end-2015), MSC companies’ revenues were expected to increase to RM142bil from the RM103.8bil recorded in Phase 2. A 75% increase in exports to RM58bil from RM33bil and a 47% increase in job creation to 160,000 from the 111,367 in the previous phase are expected.

“We want ICT to be more pervasive with a wider economic footprint. Our strategies in the three main clusters of creative multimedia, shared services outsourcing and InfoTech have been realigned to put stronger emphasis on wealth creation and high-value investments,” he said.

Badlisham added that MDeC was very confident going forward into the MSC Malaysia Phase 3 as it had gained above its target in Phase 2.

“Phase 2 is about creating economies of scale while Phase 3 is focused on empowering the rakyat, further enabling the Government and enhancing the ICT sector towards achieving the goal of an innovative, high-income and developed nation by 2020 in line with the New Economic Model,” he said.

Other core initiatives under Phase 3 include the establishment of two new cybercities each year and completing the Innovative Digital Economy framework by the second half of this year.

MDeC is an organisation that directs and oversees MSC Malaysia, the national ICT development initiative, by advising the Government on legislation and policies, developing industry-specific practices and setting the standards for multimedia and digital operations. The group is also responsible for promoting MSC locally and globally, while providing strategic support to MSC Malaysia’s status companies.

Focus on new creativity

By Farrah Naz Karim
farrah@nst.com.my

PUTRAJAYA: The country’s animation and creative content future is hinged on new creative growth drivers and a more market-friendly environment that is conducive to innovation and investment. Deputy Prime Minister Tan Sri Muhyiddin Yassin said digital entrepreneurs must from now adopt a more focused and coordinated effort to identify their comparative advantage in the global animation industry. He said creative content providers needed to carve a niche globally by identifying appropriate opportunities in the industry’s value chain.

“Truth be told, Malaysia cannot compete with its emerging regional competitors purely on basis of cost.

“One way of moving up the value chain is to capitalise on our rich heritage and cultural diversity to create full-fledged homegrown intellectual properties.

“This will allow our companies to gain multiple revenue streams from different sources from television, publishing, licensing and merchandising,” he said when launching the Multimedia Super Corridor’s Malaysia Animation and Creative Content Centre’s (MaC3) rendering facility yesterday.

The rendering facility is basically a computer server cluster that is used to generate CGI (computer generated imagery for animation, film and television). This technology allows local creative content companies to have the technological edge as well as lowering their costs of rendering and production.

“Malaysian-based animators can just focus on what they do best, that is developing contents rather than being sidetracked with the financial and technical platform concerns.”

Muhyiddin also said industry players required integrated skill sets developed beyond mere animation and expanding into story boarding and telling. In creating full-fledged home grown intellectual properties, animators, he said needed to continuously learn outside their niche areas and develop themselves into more complete content providers.

“To succeed, Malaysian animators have to build an ecosystem that nurtures innovation and foster creativity as well as incentives novelty. It is paramount for our creative content providers to push beyond their comfort zone, encourage productive dissent and incentivise contributors of unconventional ideas,” he said.

Muhyiddin also pointed out that while the global animation market was estimated to grow at 16.5 per cent to US$79.7 billion (RM259 billion) this year from US$68.4 billion in 2008, the animation market size in Malaysia was merely US$50 million. The government strongly recognised the potential of the creative industry with the 10th Malaysia Plan having identified Information and Communications Technology as one of the 12 National Key Economic Areas (NKEAs) for the country to become a high-income nation. The emphasis, he said would partly be on creative multimedia, particularly animation for simulation, advertising and entertainment as well as games development.

He said with fresh focus on the sector, the 10MP was expected to provide additional funding to MSCMalaysia and MaC3 to help them move forward.

With the allocation, Muhyiddin said MaC3 could continue providing funding opportunities to local content creators to commercialise their content for the global market. This, he added would also enable MSC Malaysia to help develop intellectual properties by providing grants and financing to secure global opportunities in the creative content market. Earlier, at another function Muhyiddin, who is also education minister, launched the Second Asean School Games 2010′s logo and mascot — “Juara” the tiger.

The games will be held from July 12 to 21.