Tran Thi Hong Hanh

IP financing is a rising trend in the global financing market, which aims to help businesses secure bank loans by using their patents as collateral. This scheme is gaining interest from local small- and medium-sized enterprises (SMEs) as well as banks, though uncertainties persist regarding the legal framework and methods being used to evaluate IP (intellectual property) assets for collateralisation.

Viet Nam News reporter Mai Huong interviewed Tran Thi Hong Hanh, general secretary of the Vietnam Banks' Association, seeking her thoughts on the IP landscape in Viet Nam as well as the challenges facing local businesses in developing this lending tool.

What is the current state of local SMEs?

Most of the SMEs are trending toward recovery and expansion. However, if these companies do not change their approach to doing business, the banking sector may suffer many challenges. Many businesses cannot prove they have a stable input and output operation, making it risky for banks to lend to them.

Therefore, in this time of international integration, apart from focusing on building a business development plan, SMEs should cultivate their value-added services chain to sustain long-term growth. In doing so, the banks' capital will be used more efficiently.

How easily can SMEs access bank loans?

SMEs remain the priority targets of bank loans, but in the current context, many businesses cannot prove they have stable, long-term operations, so lenders are reluctant to provide loans.

In recent years, banks have offered many solutions to expand credit, such as lowering lending interest rates and offering various financing schemes suitable for many SMEs. However, if this business sector cannot improve its capital and goods flow to ensure stable production, they will continue to have difficulty in accessing bank loans.

What opportunities are presented by IP financing in Viet Nam?

The development potential of IP financing is enormous in Viet Nam. The country adopted the Law on Intellectual Property in 2005 and issued a decree with instructions on implementing the law in 2006. However, local businesses' understanding of IP regulations is inadequate, while law enforcement is weak and sanctions against violations are still insufficient.

Recently, many Vietnamese companies filed for patents. Patent filings and payments of maintenance fees are the initial efforts made by businesses, but if violations of IP rights cannot be handled strictly, this financing scheme is very risky.

I think Viet Nam should learn from the experiences of the international community with regard to this trend. On the other hand, managers need to embrace this new trend and develop a new management approach by creating a comprehensive legal framework to facilitate the operations of both businesses and banks in order to optimise potential economic development.

How do the banks view this trend?

This is a new trend in Viet Nam, even though it was adopted long ago by the rest of the world. IP financing dates back over 200 years in the United States. As a new lending tool, the legal framework for this scheme is not yet complete here. In the coming period, the Viet Nam Banking Association's Legal Club plans to work with the competent authority to build legislation for this activity.

In fact, some Vietnamese banks have been arranging loans under IP financing. For example, they have offered credit based on the company's brand value. We hope managers will soon issue specific guidelines on this issue, particularly regulations regarding the valuation of IP assets and sanctions for violations of IP rights, to promote this lending form. — VNS