RCEP to boost our property market

RCEP will promote and facilitate international trade among the 15 participating countries in the Asia-Pacific region and the expected increase in free trade will have a significant impact on the Malaysian property market. -NST/file pic.

The signing of the Regional Comprehensive Economic Partnership (RCEP) signifies the world's largest trade agreement and will contribute towards sustaining Malaysia as a preferred trading hub and investment destination.

RCEP will promote and facilitate international trade among the 15 participating countries in the Asia-Pacific region and the expected increase in free trade will have a significant impact on the Malaysian property market.

Higher trade and economic activities will impact on the occupation, investment and development sectors of the property market. Real estate space is a local input in the production and supply of goods and services. Increased exports lead to the expansion of domestic production.

Increased domestic production increases the demand for industrial space. Imports also have an impact on demand for real estate space. Goods imported need to be stored and distributed through warehouses and logistic properties.

These goods are then displayed and marketed at various outlets points thereby increasing the demand for retail spaces in retail malls.

Regional trading bloc and trade liberalisation will encourage foreign direct investments (FDI). These FDIs will create demand for industrial land and buildings. New capital investments will spur demand for more financing activities from the banks.

Once the plants and machines are in operations, it will create employment and demand on other factors of production. Higher economic growth will drive the capital market which will attract more foreign investment fund flows investing into local equities.

With increased economic activities, occupation demand for real estate space will cause rental increase. With inelastic new supply, potential future rental growth and prospective capital appreciation, investors will start to invest in real estate leading to an active investment market with the more participation from the institutional investors.

Developers will react to prevailing rents and capital values when they appear to signal a profitable opportunity. If prices rise, more developers will respond to these signals, the aggregate flow of supply into the market increases.

These new spaces will meet the requirements of the occupiers and investors e.g. floor plate size, specification and network connectivity requirements

Real estate service providers such as property consultants played an important role in the whole process by aligning their service standards to the requirements of the regional and global clients.

It is envisioned that the RCEP will open up markets and help in the recovery post Covid-19 pandemic. With increased economic activities, it will give rise to more derived demand for various real estate spaces thereby leading to an improved property market performance in the future.

DR. TING KIEN HWA

Professor of Property Investment

Centre of Real Estate Studies

Faculty of Architecture, Planning & Surveying

Universiti Teknologi MARA

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RCEP puts Malaysia on par with super economies

Azmin showing the RCEP agreement document during the signing ceremony witnessed by Muhyiddin on Nov 15. – fotoBERNAMA\

 ON behalf of the Government of Malaysia, I signed the historic Regional Comprehensive Economic Partnership (RCEP) agreement together with 14 other RCEP participating countries (RPCs).

Being an integral part of the week-long 37th Asean Summit, led by Prime Minister Tan Sri Muhyiddin Yassin, the signing of the RCEP agreement represents the high point of the summit which was convened virtually in its entirety.

Witnessing this momentous occasion, the prime minister said that the signing signifies to the world that Asean, with its five Free Trade Agreement (FTA) partners, places utmost priority on regional economic integration that facilitates cross-border trade, investments and the easing of non-tariff measures.

The signing is the culmination of eight years of arduous and protracted negotiations involving 31 rounds of negotiations, eight ministerial meetings and four summits.

Undoubtedly, it represents a significant and imperative milestone in the integration and revitalisation of economies of the 15 parties.

Further, this will also be a testament to the strengthening of the multilateral trading system as well as upholding the development agenda in the WTO.

Being the largest FTA in the world, covering 15 countries with 2.2 billion people or nearly a third (29.7%) of the world’s population, RCEP represents US$24.8bil or almost a third (28.9%) of the world’s GDP based on World Bank’s 2018 data.

With different economic development levels of all parties, RCEP will contribute to sustaining Malaysia as a preferred trading hub and investment destination.

To Malaysian businesses, it will mean tariff elimination and reduction for merchandise goods, including the facilitation of export and import of goods among the RCEP countries.

Service providers including e-commerce will be able to enjoy greater market access in terms of cross-border supply and establishing commercial presence in the RCEP markets.

In addition, RCEP will promote, facilitate and protect the investment climate of participating countries within the region. This also includes information exchange and promotion of transparency measures to facilitate business and investment within the RCEP area.

Realising that SMEs play a pivotal role to the backbone of every economies, RCEP could provide a level playing field between developed and least developed countries.

There is a specific chapter on SMEs providing provisions for information exchange and promotion of transparency measures to facilitate business and investment within the region, including providing economic and technical cooperation especially to SMEs.

RCEP can be an economic recovery tool against Covid-19 which will help to ensure opening of markets as well as uninterrupted supply chain.

The RCEP amalgamates and streamlines the existing Asean Plus One FTAs involving Japan, South Korea, China, Australia and New Zealand into an inclusive and comprehensive agreement that will enhance inter and intra-regional trade and investment, strengthen regional value chains, as well as facilitate transparency, information sharing and harmonisation of technical regulations and standards.

RCEP reflects our strong commitment for international trade, connectivity, rules-based multilateral trading system and enhancing free flow of trade and investment.

Datuk Seri Mohamed Azmin Ali Senior Minister Minister of International Trade and Industry

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China and 14 other economies signed the world's largest trade deal, the Regional Comprehensive Economic Partnership (RCEP), on Sunday to form a free trade zone in the Asia-Pacific region that will encompass a third of the global economy, in what Chinese officials and experts call a historic win for multilateralism that would help the regional and global economies cope with the COVID-19 pandemic and rising protectionism.

Chinese Premier Li Keqiang said that signing of the RCEP is not only an achievement of landmark significance in East Asian regional cooperation, but is also a victory of multilateralism and free trade.

"Signed after eight years of negotiation, the RCEP lets people see brightness and hope in shadows, proving that multilateralism and free trade remain the main and correct course as well as the right direction for the global economy and mankind," Li said.

Signed at a critical turning point in the global political climate – when the next US administration is set to come into office and the world is grasping for solutions to tackle challenges arising from the coronavirus pandemic, the new regional deal would also help the Asia Pacific region take the global lead in recovering from the COVID-19 pandemic and reduce US hegemony in the region, experts said.

The deal, which encompasses Japan, China, South Korea, Australia and the 10 members of the Association of Southeast Asian Nationals, will create what is believed to be the world's largest free trade zone, covering about one-third of the world's total population and GDP. It will be also Japan's first free trade framework with its vital trading partners China and South Korea.

Notably, two major economies – the US and India – were left out of the trade pact. The US, under President Donald Trump, has been pushing for bilateral deals rather than multilateral ones. India was part of the negotiations, but did not join the final agreement.

The RCEP, which contains 20 chapters covering a wide range of areas from merchandise trade to investment to e-commerce, is “modern, comprehensive and high-level win-win agreement,” China’s Finance Ministry said on Sunday, adding that under the deal, members will aim to reduce tariffs to zero in the coming decade.

Bao Jianyun, professor of the School of International Studies and director of the Center for International Political Economy Studies at Renmin University of China, said that signing of the RCEP showed China, which played a very active role in pushing for the deal, has led the way in liberalizing trade and promoting a global market order of free competition.

"At the same time, China provides the world with a Chinese model and a Chinese solution on the open platform, where it serves the world," Bao told the Global Times, explaining that China as an emerging power has been a major promoter of trade and investment integration of RCEP.

Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, also stressed that the successful and long-awaited signing of the megapact has rekindled the world's 'hope and confidence" about a model of cooperation.

"Global cooperation has been defeated in recent years because of rising protectionism and China-US trade friction. But the RCEP's signing is a signal that cooperation does work today, which I think is even more important withthe lift it gives to specific countries' GDP growth," Chen told the Global Times.

Liu Kuikui, a Beijing-based consultant of international transport and trade, told the Global Times that the RCEP will establish a common framework of rules of origin for Asia-Pacific countries, reduce investment barriers, and expand trade and investment. The participation of Japan, South Korea, Australia and New Zealand, allies of the US, demonstrates that the four countries are opposed to the trade protectionism and the economic bullying launched by the US.

Signing of RCEP a victory of multilateralism and free trade: Chinese Premier Li Keqiang RCEP will end US hegemony in West Pacific Not joining RCEP a strategic blunder that will lead to India’s isolation in globalization 

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