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Important to factor intangible assets and sustainability into a business' value: Indranee Rajah

The pandemic has underscored the need for companies to be resilient, which in turn means paying more attention to their intangible assets and sustainability, said Second Minister for Finance and National Development Indranee Rajah on Wednesday (Oct 6).

"Business valuation globally is increasingly driven by intangible assets, environmental, social and governance (ESG) factors and long-term value... There is growing recognition of, and support for, long-term enterprise value creation and the use of sustainability metrics," she said.

Ms Indranee was giving the opening address at a virtual conference by the Institute of Valuers and Appraisers, Singapore and the International Valuation Standards Council.

Intangible assets such as patents and trademarks have become more important as the economy is increasingly driven by innovation and new technologies, she noted.

The global value of such assets stood at a record high of more than US$65 trillion (S$88.4 trillion) last year.

"Being able to reliably value these critical assets is thus necessary to help enterprises effectively unlock the value of their intangible assets and use them for growth," said Ms Indranee.

Singapore has made progress to encourage better disclosures by businesses, she added, citing the Singapore Intellectual Property Strategy 2030 that was launched in April to strengthen the regime for intangible assets and intellectual property.

There is no standardised reporting framework internationally for these as yet, said Ms Indranee, adding that an industry-led working group is being formed to develop a disclosure framework.

"While (it) is still a work in progress, I am confident that it will help Singapore businesses better communicate the value of their intangible assets," she said.

Meanwhile, a pillar of the Singapore Green Plan 2030 is to pursue a green economy and develop Singapore into a leading centre for finance in this arena.

"Valuation in relation to green finance would contribute to the urgent efforts to address climate change, and at the same time, help Singaporean professionals gain access to a growing high-value industry," said Ms Indranee.

The Monetary Authority of Singapore has launched several initiatives to improve disclosures, including an implementation guide for climate-related disclosures by financial institutions.

Ms Indranee also urged business valuers to acquire the technical competencies to conduct valuations - one way is through the Chartered Valuer and Appraiser programme - and keep abreast of trends and opportunities in the space.

 

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