Singapore as an IP hub for Asia – To be or not to beBY SAMIR DIXIT
While there is growing advocacy for the importance of intangibles in every country, organisation, and industry segment - big or small, the recently held IP week in Singapore forces you to think that perhaps a lot more needs to be done to establish the importance of the country as an IP destination of choice where organisations and brands of repute can effectively park and manage their IP, most important of which is the brand.
If one were to consider an IP management destination, there are already several options that are available globally. Most of them are driven by the financial advantage that a company evaluates in the form of lower tax rates and other related benefits offered by the local governments and relevant authorities.
So how will Singapore be able to compete and become a preferred IP destination?
To begin with, if managing an IP or a brand and creating a valuable intangible was all about saving money, Apple would not have been the world’s most valuable brand at US$ 70 over billion. So clearly there is more to IP governance and management than just the monetary aspects. This is where Singapore can make a huge dent to some of the tax havens and take the lead as an IP hub of Asia.
It is however easier said than done. Malaysia announced their intent of being the IP hub in 2007. A National Intellectual Property Policy (NIPP) was drafted and it a very good and well thought through policy indeed. A tax free haven called ‘Lebuan’ was made available to compete with the likes of Switzerland and Geneva to make it even more attractive for individuals and organisations to create or transfer their IP to Malaysia and manage it more effectively and efficiently.
The effectiveness of Malaysia’s 5 year old initiative however is yet to be proven. Malaysia is currently ranked at # 19 globally for the intangible value contribution, far behind Indonesia which is ranked as 6th , and behind countries like Sri Lanka (17th), Australia (11th) and Saudi Arabia (18th).
All these countries are not necessarily known for driving the IP space and the value of the Intangibles as aggressively and in as structured a manner as Malaysia has been doing since 2007.
So what will be the secret recipe for Singapore’s success in this space given that they have successfully crossed the first and biggest hurdle of announcing the “INTENT”.
· First would be learning from other countries. Where did they not succeed? Why did they not succeed? What are the things they ignored or did not do correctly? What is it that organisations did not find exciting and compelling enough to consider? Etc.
· The second would be to understand the IP universe and the dynamics of various moving parts, their interconnectivity and interdependence, the vastly different outlook and view towards IP by each industry, etc.
· The third and most critical would be to do a self-examination of the IP and intangible space and see where the gaps are. What are the loose rivets? What are the competitive advantages or disadvantages? What are the weaknesses and theats?
While all the pieces of the puzzle are available, the big picture is yet to emerge and perhaps what is not very clear is ‘What is the definition of an IP Hub’.
Being one of the smallest countries in the region, Singapore clearly cannot be an IP hub if one were to use the absolute number of trademarks and patent registrations as a measure. Neither can Singapore be an IP hub by the number of companies opting to reside their IP in Singapore. Even having the best judiciary and IP protection mechanism may not be a sufficient enough measure to define Singapore as an IP hub.
So how will Singapore measure the success of being an IP hub? A good starting point would be to manage and increase the value of intangibles of the existing companies and brands in Singapore. The following illustrates the degree of effort required.
- Singapore is currently ranked one of the lowest in ASEAN at # 37 for the value of their intangibles vs. tangibles.
- At only 36% of the total enterprise value, the intangibles in Singapore are way below the global average of 47-48%.
- A ten year straight line comparison indicates a decline of the intangible value.
- Comparison with 2011 shows the decline to be even sharper (see below chart)
- Overall, at 36%, the value of the intangibles has declined to 2003 level.
Clearly, it is not going to be an easy journey ahead. The key success will depend on understanding the IP Ecosystem and having a clearly drafted agenda to address each and every aspect of this ecosystem for a healthy and wholesome IP growth.
The IP Ecosystem is typically made up of the following
IP Creation ⇒ IP Protection ⇒ IP Enforcement ⇒ IP Maintenance ⇒ IP Governance ⇒ IP Rejuvenation ⇒ IP Enhancement ⇒ IP Commercialisation ⇒ IP Exploitation
While most countries and organisations are able to do a stellar job across the first 5 aspects due to a robust legal/ judiciary and IP governance infrastructure in terms of patent and trademark lawyers, M&A advisory, dispute redressal etc., it is the last 4 that are all left for the industry and sometimes an individual’s understanding and self-initiative to manage it, especially the commercialisation and exploitation aspects.
Ask any decent company CEO about the value of their IP and what are they doing to grow it consistently and they will start to stare away from you. Try convincing them to put a plan and structure that will grow the value of their IP and they will direct you their healthy balance sheets indicating that there is no need to focus on the IP.
There is another critical aspect that the countries are unable to exploit or tap upon to help drive a successful IP agenda. It is their own image, their own IP.
The country as a brand is extremely vital and Singapore has an enormous advantage in the form of “Brand Singapore” equity that almost none of the ASEAN countries have.
The question remains that of exploitation and commercialisation. Can Singapore successfully exploit and commercialise the advantage of their own IP, the “Brand Singapore” which will help bring about all the other ingredients together to create a successful recipe that will get organisations and individuals equally excited to consider moving and managing their IP out of Singapore.
The only caution – such an agenda cannot be driven by the legal fraternity alone and must include global practitioners who have experience in how to manage, enhance and exploit the value of the IP from a commercial point of view. The legal fraternity alone will likely remain focused on the protection, enforcement and maintenance aspects which are only half the ingredients. It has also been done for ages and the results are what they are.
Can Singapore do it? I believe the answer is yes. In fact if there is anyone in the region that can do this successfully in the shortest possible timeframe and with thorough planning, it is Singapore.
Look out for part two in a weeks’ time where I will outline the various moving parts of an IP Ecosystem.