J.S. Held's Contribution to Enhancing Intangible Asset Valuation in ASEAN

The global consulting firm J.S. Held has recently announced a significant collaboration aimed at influencing the understanding and valuation of intangible assets within ASEAN capital markets. Partnering with the International Valuation Standards Council (IVSC), the Intellectual Property Office of Singapore (IPOS), and the National University of Singapore, J.S. Held is taking a pivotal role in a research study that examines the trends and existing gaps in the recognition of intangible assets across the region.

Importance of Intangible Assets

In recent years, there has been a marked increase in the acknowledgment of intangible assets by companies, especially within their financial statements. However, a report detailing this collaboration reveals a stark contrast between this growing recognition and the actual value reflected. While recognized intangible assets have seen a growth from 1% of enterprise value in 2005 to over 2.5% in 2022, the absolute values remain surprisingly low, particularly among ASEAN companies listed on local exchanges.

Insights from the Study

The study shines light on the nuances of intangible asset reporting—or the lack thereof—among publicly listed enterprises in the ASEAN-5 nations: Indonesia, Malaysia, Philippines, Singapore, and Thailand. One of the critical findings indicates that recognized intangible assets (RIAs) are not evenly distributed; a significant concentration exists among a limited number of companies, primarily tied to key components such as concession rights, licenses, and university-developed intellectual property.

On a comparative basis, foreign-listed ASEAN companies report a higher proportion of intangible assets associated with intellectual property, while their locally listed counterparts tend to emphasize infrastructure-related concessions. This juxtaposition underscores a persistent and notable gap between market valuation and what the book value currently represents, suggesting that many significant intangible assets remain unrecognized in financial statements.

The Call for Policy Review

In light of these findings, the study advocates for a reassessment of the existing financial reporting standards, particularly highlighting the International Accounting Standard (IAS) 38. The goal is to better align these standards with contemporary business environments and sectors that heavily depend on intangible value. Recommendations from the report propose a more comprehensive approach to the recognition of intangible assets, an improved disclosure framework, and harmonization of financial reporting with valuation realities.

James E. Malackowski, Chief Intellectual Property Officer at J.S. Held and Co-founder of Ocean Tomo, emphasized the significance of IPOS’s leadership in highlighting the value of these assets. The collective aim of this collaboration is to assist regulators, investors, and policymakers in adapting to the evolving role that intangible assets play in capital markets.

Conclusion

As the study signifies, the importance of intangible assets is only set to grow, and creating a supportive framework for their recognition could bolster innovation, enhance transparency, and lead to more efficient capital allocation. By learning from this research, businesses can benchmark their own processes against industry standards and gain insights into the valuation of intangible assets that are critical for their future success.

To explore the IVSC study further and discover how your enterprise can leverage these insights, J.S. Held encourages direct contact via their official communication channels.

About J.S. Held

J.S. Held is a global consulting firm committed to using its extensive expertise to help clients effectively realize value and mitigate risks. With over 1,500 professionals operating across six continents, J.S. Held offers a wide range of services designed to navigate the complexities of high-stakes situations while maintaining transparency and integrity.