Reproduced with permission from International Trade Reporter, 33 ITR 1399 (Sep. 29, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.
- TPP luring property buyers to Vietnam
- Manufacturers, processing industries already scooping up land
- Companies specializing in tourism, recreation and health care also to benefit
By Lien Hoang
23 September 2016 — A trade deal spanning a dozen Pacific Rim nations would be a main driver of Vietnam’s property sector, a construction official told Bloomberg BNA.
Vice Minister of Construction Do Duc Duy said that because of the Trans-Pacific Partnership (TPP), Vietnam already has seen an influx of foreigners scooping up land to be used in the manufacturing and processing industries. He did not give figures, but the controversial trade pact is predicted to multiply Vietnam’s exports of clothes, shoes and fish.
“When the TPP takes effect, then clearly we will see that it is one of the factors pushing stronger growth in the real estate market,” Duy said Sept. 22 on the sidelines of the Australian Chamber of Commerce’s Vietnam Real Estate Market Symposium. “At that point there will be a lot more foreign investors entering the market in many sectors, especially real estate, heavy industry, infrastructure in industrial parks, and factories.”
Vietnamese officials often say “when,” rather than “if,” when speaking of the trade pact championed by President Barack Obama as a done deal. But the TPP criticism roiling this year’s U.S. political campaigns is infecting politics even in Vietnam, once seen as the most ardent backer of the trade bloc. This month Vietnam’s parliament revealed it is pushing back TPP ratification, in a sign that it may be coming wary of U.S. politics (182 ITD, 9/20/16).
“That’s some not-so-good news about TPP,” Nguyen Quang Trung, a business professor at RMIT University Vietnam, said of the parliamentary delay.
He told the real estate symposium that this country of 92 million people would “earn a lot” if it could join the trade zone, which would include Japan, Australia, Mexico, Chile and others.
The World Bank said in January that Vietnam and Malaysia would see the biggest windfall among the 12 nations in the Asia-Pacific region that signed the TPP. It could add 10 percent to Vietnam’s gross domestic product by 2030, the bank said.
Investors Making Contact
Duy thinks the Pacific trade agreement could boost investor interest in real estate across his country, with particular impact on companies specializing in tourism, recreation and health care.
“Recently, there have been many foreign investors making contact, doing research through state agencies and through business associations,” he said.
Duy added that although the Pacific trade deal, which could cover 40 percent of the global economy, is prompting Vietnam to revise many laws, that’s not the case with the property sector. The much-anticipated Housing Law of 2014 was drafted in parallel with TPP commitments, he said.
Under the law, foreigners with a visa to enter Vietnam can buy and sublet apartments and houses in the communist country, enjoying 50-year leases and fewer limits on the number of properties owned. At the same time, Vietnam is careful to avoid a repeat of the property bubble that burst in 2011, while sponsoring efforts to build low-income housing in lieu of the luxury over-supply.
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For More Information
For the World Bank’s TPP report, click here.
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