ASEAN Countries to get economic boost by joining RCEP
One of the many things that the pandemic has taught us in terms of business advancement and survival is the importance of digital trading and marketing. It is an encouraging news and glad tidings to economic and business scene in Malaysia that RCEP (Regional Comprehensive Economic Partnership) will come into force on March 18, 2022.
RCEP is by far the world’s largest free trade agreement that covers 15 countries with 2.2 billion or nearly a third (29.5%) of the world’s population and that is such a huge deal! This represents US$25.8 trillion or 29.4% of the world’s gross domestic product (GDP), and account for US$ 12.7 trillion, over a quarter of global trade in goods and services, and 31% of global FDI inflows based on the World Bank’s 2019 data.
The key visions and missions of RCEP are to keep the markets open as this deal serves as a manifestation or solution for the region’s issue in sustaining businesses, this will further robust the economic integration between the member states and sets an open, free, fair, inclusive and rules-based multilateral and diversities of the trading system and eventually will contribute to global economic advancement and increment especially when all of the economic sectors in all countries are badly affected by pandemic. In short, this agreement will serve as a post-pandemic recovery effort to global economy scene!
To further focus down in the small sector setting, RCEP is dedicated to bring or provide new businesses and employment opportunities and growth, indurate and secure the supply chains in the signatories’ regions and further boost the participation of micro, small and medium enterprises into the chains and production hubs.
On January 1, 2022, the agreement has entered into force for Australia, Brunei Darussalam, Cambodia, China, Japan, Lao PDR, New Zealand, Singapore, Thailand and Viet Nam. Republic of Korea will soon enter the agreement on February 1, 2022. Malaysia not exceptionally to enter into RCEP as we will be the 12th signatory country joining other countries.
According to International Trade and Industry Ministry of Malaysia, Malaysia has submitted its Instrument of Ratification (IOR) to the ASEAN Secretariat of January 17, 2022 and as provided under Article 20.6 of the RCEP, the agreement will enter into force after 60 days of the IOR submission. Thus, the agreement will officially enter into force in Malaysia on March 18, 2022.
Economists opined that the RCEP is a new strategy to boost the economies game globally and Malaysia is definitely making the smart move by joining RCEP as Malaysia is reportedly to be an important player in the ASEAN region in the areas of manufacturing, information communication and technology and commodities especially in oil and palm oil. Therefore, following the trade and commerce strategy in the new bloc is definitely going to push Malaysia’s economic growth in the next three to five years!
Dr. Mohd Afzanizam Abdul Rashid, Bank Islam chief economist further said that any multilateral trade agreement should be a positive move for Malaysian economy as RCEP will lay a patch new market that are to be accessed by all types of businesses, be it listed entity, non-listed entity and the micro-SME firms.
Malaysian Rating Corp Bhd (MARC) chief economist and head of research, Mr. Firdaos Rosli said that the RCEP is said to support trade by 1.0 or 2.0 percentage points higher in the middle term. Malaysia’s participation in RCEP will also increase the trade intensity between Malaysia and its members, cementing the increasing agglomeration process of the region along the way.
We could foresee that RCEP will eventually be the foundation for a free trade agreement of the Asia Pacific that will push and further boost the trade among the region. By looking into all the good measures and efforts taken by all parties concerned in order to boost and recover the economy post-pandemic, we could positively hope and work that 2022 could be the year of recovery and further enlargement of economy scene in Malaysia and globally.
Stay tuned for more info on RCEP as we will discuss further on outtakes of signatories’ countries in our next articles!