RCEP to Benefi t Malaysian Entrepreneurs

RCEP to Bene t Malaysian Entrepreneurs

The RCEP supports an open, free, fair, inclusive and rulesbased multilateral trading system, the vital ingredients to global postpandemic recovery e orts.

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alaysia’s International Trade and Industry Ministry (MITI) said the Regional Comprehensive Economic Partnership, or RCEP, has come into force as of March 18 2022, almost 10 years a er discussions rst began at the 21st ASEAN Summit in Cambodia.

The RCEP, a trade agreement between the 10 members of ASEAN, Mainland China, Japan, South Korea, Australia and New Zealand, will economically integrate these 15 countries.

The objective of RCEP is to streamline and amalgamate the ASEAN FTAs with its dialogue partners (ASEAN + 1 FTAs) into a single regional trade agreement. This agreement will strengthen regional value chain activities and make RCEP more user-friendly for the small- and medium-sized enterprises.

The ministry added that Malaysia is expected to be the largest bene ciary of the trade agreement among Southeast Asian countries in terms of export gains.

Besides economic and technical cooperation, the agreement also covers the elimination or reduction of import duties, investment promotion, facilitation, protection and liberalisation, the protection of intellectual property rights, the facilitation of e-Commerce as well as legal and institutional issues.

According to Ernst & Young, Malaysia stands to bene t greatly as it has access to a wider market. Here are some of the bene ts:

• World’s largest free-trade bloc

RCEP members comprise nearly one-third of the world population and account for almost 30% of global gross domestic product.

• Regional trade facilitation

Some 90% of import tari s will be progressively phased out between members. Common rules and provisions will be set up to better facilitate the movement of goods, funds and people across the region.

• Access to China market and

investors The RCEP allows Chinese companies to invest in regional markets and likewise, for RCEP members to access the Chinese market.

• North Asian investment

interest The RCEP may further drive North Asian investments into ASEAN. Between 2015 and 2019, Mainland China, Japan and South Korea registered some of the largest FDIs into ASEAN.

• Wider regional opportunities

for SMEs The RCEP contains provisions targeted towards small and medium enterprises, providing a more level playing eld for Malaysian SMEs and facilitating their access to the larger regional market.

The major bene ciary of this agreement will be ASEAN, said MITI. Looking at 2018 data from the World Bank, the 15 RCEP participating countries account for a total of 29.7% of the global population or 2.2 billion people. It holds a combined gross domestic product of US$24.8 trillion or 28.9% of the world’s GDP, and accounts for US$10.7 trillion or 27% of global merchandise trade.

Mainland China, Japan, South Korea, Australia and New Zealand, meanwhile, are major investors in ASEAN contributing US$42.3 billion (27.7%) of the total foreign direct investment flow of US$153.1 billion.

RCEP will o er Malaysian companies market access to a third of the world’s population where intra-regional sourcing of raw materials at competitive prices will also integrate the supply chain between the players.