Malaysian businesses should start thinking ASEAN in their strategy moving forward, if in the past regularity and bureaucracy hurdles prevented company’s to look outside the country the recently signed Regional Comprehensive Economic Partnership (RCEP) Agreement will soon pave way for more Inter-ASEAN trade.
Economic Minister Datuk Seri Azmin Ali has formally signed the RCEP together with 14 other participating countries after what had been the longest wait for a trade agreement. At the backdrop of the week-long 37th ASEAN Summit, led by Prime Minister Tan Sri Muhyiddin Yassin, the RCEP Agreement clearly represents the high point of the Summit which was held virtually.
The signing is the culmination of 8 years of arduous and protracted negotiations involving 31 rounds of negotiations, 8 Ministerial Meetings and 4 Summits. Azmin Ali notes that the agreement represents a significant and imperative milestone in the integration and revitalisation of economies of the 15 parties. This will be regarded as the largest Free Trade Agreement (FTA) in the world, covering 15 countries with 2.2 billion or nearly a third (29.7%) of the world’s population, RCEP represents US$24.8 billion or almost a third (28.9%) of the world’s GDP based on World Bank’s 2018 data. Malaysia hopes with different economic development levels of all parties, RCEP will contribute to sustaining the country as a preferred trading hub and investment destination.
For Malaysian businesses this will a historic moment as it will mean doing business between these nations will be much more conducive, with RCEP there will be tariff elimination and reduction for merchandise goods, including the facilitation of export and import of goods between these 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 these markets. In addition, the agreement will promote, facilitate and protect the investment climate of participating countries within the region. Including information exchange and promotion of transparency measures to facilitate business and investment within the RCEP area.
SMEs on the other hand, could see the agreement providing 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. Furthermore this can be viewed as an economic recovery tool against the pandemic which can help to ensure opening of markets as well as uninterrupted supply chain.
With the signing, the RCEP brings together ASEAN+1 FTAs involving Japan, Korea, China, Australia and New Zealand into an inclusive and comprehensive unit that will enhance inter and intra-regional trade and investment, strengthen regional value chains, and smoothen the trade flow well into the coming decades.