Speech by Ms Indranee Rajah, Senior Minister of State for Law and Finance, at the Launch of Chartered Valuer and Appraiser Programme

Mr. Chaly Mah, Chairman of the Singapore Accountancy Commission
Mr. Eric Teo, Chairman of the Institute of Valuers and Appraisers of Singapore
Prof K Ravi Kumar, Shaw Chair Professor and Dean of Nanyang College of Business, Nanyang Technological University
Distinguished guests
Ladies and gentlemen:

Introduction

1. Good morning. Thank you for inviting me to the launch of the Chartered Valuer and Appraiser programme.

2. Two years ago, many of you witnessed the launch of the Institute of Valuers and Appraisers of Singapore, or IVAS for short. IVAS was formed to develop and grow Singapore into a Centre of Excellence for business valuation. Since its formation, IVAS has made good progress and in two years, it has developed Singapore’s first Chartered Valuer and Appraiser programme to provide a structured and formal pathway for existing and aspiring business valuation professionals.

Growing Prominence of Business Valuation

3. As you have heard from Mr Eric Teo and Prof Ravi Kumar, business valuation plays an important role in the corporate environment. Over the last decade, business valuation has gained prominence in Singapore due to four key trends:
a) First, the increase in merger and acquisition (M&A) activities in Singapore and the region;
b) Second, Singapore’s growth as an arbitration centre and centre for litigation proceedings;
c) Third, the emphasis of fair value measurement in financial reporting framework; and
d) Lastly, the importance of intellectual property in business.

Increase in M&A activities in Singapore and the region

4. Let me elaborate on these trends. First, M&A deals have grown. Based on the “Transaction Trail” publication by Duff & Phelps, the value of M&A deals in Singapore doubled in one year, from about US$51 billion in 2014 to over US$100 billion last year. 

5. A good understanding of business valuation can lead to better decision-making, such as whether or not to make an acquisition, and how much to pay for it. Business valuation professionals thus play a key role in helping decision makers understand how the valuations are derived.

Rise in arbitration and litigation proceedings

6. Next, let me touch on the second trend - which is Singapore’s growth as a dispute resolution centre. We’ve seen a rise in international arbitration with the Singapore International Arbitration Centre. Last year, we launched the Singapore International Commercial Court, which handles international litigation. Both of these are attracting major international commercial cases. Last week, I tabled the Choice of Court Agreements Bill for a Second Reading in Parliament. Basically, this Bill seeks to give effect to the Hague Convention on Choice of Court Agreements, which establishes an international regime for upholding exclusive choice of court agreements in international civil or commercial cases, and governs the recognition and enforcement of judgments amongst parties to the Convention. Implementing and ratifying this Convention is beneficial to Singapore’s position as a dispute resolution hub, as it enhances the enforceability of Singapore judgments in other jurisdictions. 

7. The ability to enforce our judgments more widely will give parties an added incentive to choose Singapore courts as the dispute forum. When parties resolve disputes here, business valuation professionals will play an important role in assessing the value of the assets being contested by the parties or the damages that should be awarded to the winning party. This is critical to augment Singapore’s status as a legal arbitration hub. Hence, there is a need to build a pool of competent business valuation professionals who can provide the necessary expert services.  

8. On this note, I would like to suggest that IVAS conduct seminars for law firms and run through with them the whole suite of valuation trends and services that you have. As a past law practitioner, I believe that this will be very helpful to them. 

The emphasis of fair value measurement in financial reporting framework

9. The third trend is the growing emphasis on fair value measurement in financial reporting. The concept of fair value has wide implications for the economy. KPMG issued a useful publication, titled “Hard facts about accurate estimates: A study of financial reporting in Singapore.” It noted that more companies are now moving from financial reports, based on historical information in the balance sheets, to focus on having more current information, which reflects a “fair value” for balance sheet items. 

10. Business valuation professionals, with their skills in and knowledge of valuation models and techniques, can help determine the fair value for the balance sheet items. This will result in a more accurate representation of a company’s financial position.

Growing importance of intellectual property in business

11. The fourth trend is the growing importance of intellectual property (IP) in business.  In 2014, slightly over 26,000 IP registrations were granted, representing an increase of 32% from 2013. There are companies that monetise their IP assets by licensing their technologies to other companies.  Business valuation professionals play an important role in helping companies review their portfolio of IP assets from time to time to extract maximum value.

12. We have also positioned Singapore as an IP Hub. And one of the areas we are encouraging is the use of IP as collateral for loans and financing. In order for banks and financial institutions to determine how much to lend against the IP as collateral, many will need to get a valuation of the IP. This is where the valuation service comes in. This is a new and an exciting area. It is yet another growth area.

Significance of the Chartered Valuer and Appraiser Programme and Certification

13. Given the growing prominence of business valuation, Singapore needs to ensure that we have a pool of qualified professionals in business valuation. Currently, individuals who wish to embark on a career in business valuation can only rely on ad-hoc and unstructured on-the-job training to pick up the relevant skills and knowledge. EY and IVAS conducted a market study two years ago, and 80% of the respondents, who included accountants, auditors, business valuers, investment analysts and finance executives, felt that there was a need for formal and structured training programmes to enhance practice standards of business valuation in Singapore. 

14. I commend IVAS for responding to the feedback and appointing Nanyang Technological University (NTU) to develop and administer Singapore’s first Chartered Valuer and Appraiser programme. In developing the programme, NTU sought inputs from the business valuation community, and took reference from the competencies advocated by the International Valuation Standards Council, the international standard setter for valuation.

15. The Chartered Valuer and Appraiser programme will equip participants with technical competencies in valuation concepts, principles, applications as well as the approaches and methodologies for conducting valuations. It will also provide participants with an understanding of statistics, accounting, finance, law and economics, which will help them in performing valuations. Over time, I am confident that this programme will raise the bar for the profession and set high standards of ethics and professionalism.
 
16. Individuals who complete the programme and have the relevant working experience may apply to IVAS for certification. Over time, the Chartered Valuer and Appraiser title is envisaged to become a mark of quality for business valuation professionals who exhibit professional excellence and integrity. Certification will also give employers and buyers of business valuation services greater assurance of the competency and professionalism of individuals who are certified as Chartered Valuers and Appraisers.

Establishing the benchmark professional development programme for business valuation

17. The Chartered Valuer and Appraiser programme is intended to meet the needs of the market and will build up business valuation expertise in Singapore. More importantly, this is an opportunity for Singapore to establish the programme as the benchmark professional development programme for business valuation in the region.

18. As you may know, Mr Chaly Mah and I are co-chairing a dedicated working group under the Committee on the Future Economy. The working group is developing strategies to position Singapore’s Legal and Accounting Services sector for the future. During our working group meetings and subsequent focus group sessions with a broad spectrum of stakeholders, business valuation was identified as a potential growth area for Singapore. The Chartered Valuer and Appraiser programme will tie in well with the efforts of the working group. I hope this programme will help put our firms that provide business valuation services on a trajectory of growth.

19. It is, therefore, with great pleasure that I announce the launch of the Chartered Valuer and Appraiser programme. Already, I hear that thirteen of the largest accounting entities in Singapore and a global valuation and corporate finance advisory firm will be sending their staff to this programme. Strong commitment and support from the industry are important to ensuring its success and sustainability.

20. I am also pleased to announce that the Singapore Accountancy Commission and the Monetary Authority of Singapore will be offering the SkillsFuture Study Award to eligible candidates from the accountancy sector and financial sector respectively. This is in line with the SkillsFuture objective to build career pathways and encourage skills mastery. I hope the study awards will attract even more candidates to the programme.

Conclusion

21. Ladies and Gentlemen, let me conclude by congratulating IVAS and NTU on the launch of the Chartered Valuer and Appraiser programme. I wish IVAS success in your journey to grow Singapore into a Centre of Excellence for business valuation.