What’s next for real estate in Mekong River countries if TPP fails?
What’s next for real estate in Mekong River countries if TPP fails?
The impact on ASEAN signatories
Most signs point toward the dissipation of the Trans-Pacific Partnership (TPP), the US-proposed trade agreement that will bolster economic ties between 12 nations, including Japan, Malaysia, Vietnam, Brunei, and Singapore. The US presidential election win of Donald Trump, who was adversarial to the agreement during his campaign, is widely seen as the end of the TPP.
The Vietnamese government announced last month that it would not ratify the pact. “As the US has announced to suspend the deal, there would be no sufficient conditions for Vietnam to submit its proposal for ratification,” said Vietnamese Prime Minister Nguyen Xuan Phuc.
China has stepped up to the plate with an alternative to the abortive agreement, the Regional Comprehensive Economic Partnership (RCEP). Along with other initiatives, the RCEP will induce large-scale infrastructure projects and private capital investment in countries around the Mekong River, according to Stephen Wyatt, Jones Lang LaSalle Vietnam’s country head. “Real estate in Lower Mekong will benefit from increased connectivity from these infrastructure developments and trade flows as the formation of the ASEAN Economic Community gains traction,” he said.
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The One Belt, One Road development strategy is a particularly opportune program by China, since it includes the USD40 billion Silk Road Fund that covers infrastructure projects near the Mekong River.
Japan has grand plans of its own. The TPP signatory has set aside a third of the 750 billion yen (USD6.8 billion) in planned assistance to Mekong countries (Cambodia, Laos, Myanmar, Thailand, and Vietnam) over the next three years for infrastructure projects.
“These initiatives bode well for the Mekong region and could prompt a rapid roll-out of regional infrastructure investment, which has seen slow progress in the past,” Wyatt said.
Source: Property Report