SINGAPORE - The valuation industry in Singapore received a boost on Wednesday (July 6) when the International Valuation Standards Council launched its Asia office here.

Singapore is the first base for the Council outside Europe, meant to help it drive its advocacy efforts in the region.

The launch also marks a new milestone in Singapore's growth as a hub for intangible assets, said Minister in the Prime Minister's Office Indranee Rajah, who spoke at the event at Revenue House.

She said: "Intangible assets, in the form of patents, trademarks, brand image, software, are a major driver of business growth in today's economy. And their importance will only grow in the years to come, as the global economy becomes more digital, more innovative, and more connected than ever before."

Ms Indranee, who is also Second Minister for Finance, noted that the top companies today are all firms with significant intangible assets, such as Apple, Microsoft, Amazon, and Alphabet - Google's parent company.

Over the past three decades, the share of intangible asset market value among S&P 500 companies has also increased from about 60 per cent in the 1990s to about 90 per cent today.

"As a business hub, Singapore recognises the importance of valuation, particularly for intangible assets, to facilitate related transactions and business activities," she said, adding that Singapore and the Council have a shared goal to promote greater consistency and professionalism in the valuation profession.

This is especially important as South-east Asia - once a traditionally tangible asset-led economy - is shifting to intangible assets, with a growing presence from e-commerce and fintech businesses.

The technological boom in the region has also fuelled record mergers and acquisitions.

"Demand for merger and acquisitions will likely continue to rise, and valuation is critical to ensure that intangibles are fairly valued, so that they can be accurately reflected in their market value during deals," she said.

"One of the biggest challenges faced by such companies is how to value their intangible assets."

Companies tend to only disclose intangible value gained through acquisition, as there is an actual dollar figure tied to it, but leave out the value of intangible assets developed by the companies themselves, she added.

This causes a sizeable gap between the actual intangible asset value and what is disclosed.

"Systematic undervaluation of intangible assets can be a serious impediment to growth. It can result in unnecessarily higher financing cost, under-investments in innovation, and damage to long-term value," she said.

This is where the Council comes in to establish international valuation standards to provide an important guide for valuation professionals worldwide.

It also ensures consistency and credibility in valuations, which also enables comparison across different companies and supports the functioning of capital markets, she said.

Singapore is also working to advance standards and guidelines for valuing such intangible assets through the Singapore Intellectual Property Strategy 2030 masterplan launched last year, she said.

Minister for Culture, Community and Youth Edwin Tong, who is also co-chair of the steering committee for the masterplan, said: "Credible and trusted intangible asset valuation standards and guidelines are important enablers of (related) transactions and monetisation, which in turn support innovation and business growth."

Mr Nicholas Talbot, the council's chief executive, added that the organisation's presence in the region is important in driving consistency in valuations, especially during these uncertain times with inflation issues, supply chain problems, war in Europe, and other concerns such as greenwashing.

Accounting and professional services firms also welcomed this move.

"Increased adoption of international valuation standards in Asia will provide greater consistency, which in turn can build trust within the business community that valuation professionals are well equipped to provide the necessary expertise to help businesses navigate the uncertainties in the region and globally," said Mr Keoy Soo Earn, Deloitte South-east Asia's regional managing partner for financial advisory.

EY deputy area managing partner Harsha Basnayake added: "Singapore has been at the forefront in uplifting the standards and quality of our valuation professionals.

"My hope is that this Asia office will become a strategic linkage for the profession to be proactive in the whole standard-setting dialogue as well."