Banks in Vietnam need to facilitate intellectual property financing and make it easier for businesses, especially start-ups, to leverage assets such as patents and trade marks for loans, experts have said.
Considering that the real estate market has remained stagnant, affecting the use of tangible property like land and buildings as collateral, lenders have all the more reason to help businesses gain access to credit with intellectual property, experts said at a symposium held in Ho Chi Minh City on Thursday.
Tran Thi Hong Hanh, General Secretary of the Vietnam Banks Association, said that banks have to closely monitor business trends and operations to provide new financing services.
“Banks of course need to maintain safety for their own operation. But in addition to other assets, intellectual property should also be used to secure loans,” she said.
Nguyen Xuan Thao, director of Indiana-based Center for Intellectual Property & Innovation, said that the use of intellectual property assets as security for loans came into existence a long time ago.
However, this option has only been available in Vietnam very recently and at insufficient levels, she said.
John Kinzer, an Intellectual Property Financing Expert from the US, said that as for early-stage businesses, intellectual property is often the borrower’s primary and most valuable asset.
“When a lender is successful in obtaining a lien on intellectual property, it typically results in an improved risk-reward balance and a reduced probability of loan loss,” he said.
Kinzer said there are different types of intellectual property assets that can be used, including copyright, patents, trademarks and even trade secrets.
Companies may have intellectual property of high value include software, biotech, medical devices, e-commerce and services.
Ho Quang Huy of the Ministry of Justice said relevant laws offer sufficient protection for intellectual property financing in Vietnam, including the 2005 Civil Code, the 2005 Intellectual Property Law and the 2006 Technology Transfer Law.
"However, banks are recommended to mitigate risks and pay more attention to issues such as intellectual property registry, description of collateral, intellectual property valuation, and agreement on foreclosure," he said.