Commodities-based sectors early RCEP beneficiaries

“I think the immediate winners will be commodities-based players like palm oil players and palm oil-related products, rubber and rubber-related products and wood and wood-related products which include furniture. We are already quite strong in these industries, ” said independent project consultant Guanie Lim.

PETALING JAYA: Commodities-based industries are expected to be one of the early beneficiaries of the Regional Comprehensive Economic Partnership (RCEP) given Malaysia’s strong position in the sector.

The trade agreement will see member countries reducing 80%-90% of tariff lines and maintaining carve-outs for agricultural products.

“I think the immediate winners will be commodities-based players like palm oil players and palm oil-related products, rubber and rubber-related products and wood and wood-related products which include furniture. We are already quite strong in these industries, ” said independent project consultant Guanie Lim.

He added that finance, telecommunications and finance-related services players would be the next line of winners.

Lim’s views were shared by Lee Heng Guie (pic below), executive director of the Socio Economic Research Centre.

“For those in telecoms, finance and consultancy, it opens up a lot of room for enhanced cooperation between Malaysian service providers and other RCEP members, ” Lee said.

Other sectors expected to benefit from the trade deal include F&B, chemical products, rubber products, plastic products as well as machinery and equipment.

Lim and Lee, along with International Trade and Industry Ministry Deputy Secretary-General (Industrial Development) Datuk Sri Norazman Ayob, were panellists at the “What New Business Opportunities Can RCEP Bring To Your Company and Malaysia” webinar organised by Star Media Group.

The session was moderated by Associated Chinese Chambers of Commerce and Industry of Malaysia national council member and chairman of SMEs committee Koong Lin Loong.

The RCEP, signed on Nov 15, aims to create an integrated market among the 10 Asean countries and Australia, China, Japan, South Korea and New Zealand.

The deal is touted as the largest free trade agreement (FTA) that Malaysia has ever signed. The 15 countries’ populations account for 28.2% of the world’s population and 31.6% of global gross domestic product (GDP) with total trade amounted to US$12.4 trillion.

“Through this RCEP, we try to balance the objective of promoting international trade as well as ensuring sustainable domestic industrial development.

“Once the RCEP is enforced, from the GDP point of view, the estimation is we will see an increase of nominal GDP by 1% for the next 10 years, ” said Norazman.

Exports, meanwhile, could increase by at least 24%.

He added that the agreement would offer local businesses a wider market access and the opportunity to be integrated into the regional, and possibly global, supply chain. This would also mean that companies will have access to a wider and more diverse base of suppliers and raw materials.

“The non-tariff barriers are also an important part in this because we are talking about industrial standards, technical regulations and conformity assessment procedures.

“In RCEP, our intention is to have the 15 countries to try as much as possible to adopt particular international standards when it comes to industrial standards as well as when it comes to technical regulation, and to the best endeavour for each country to accept the test results of the conformity assessment procedures conducted by another country.

“So you don’t need your products to be retested again once certified. This will help to reduce the cost of doing business. The other part of it is promoting greater transparency in terms of each country’s policies, laws and regulations as well as in terms of information sharing, ” he said.

Notably, a more open market would also lead to stiffer competition and local businesses will have to boost their capabilities to ensure that they remain relevant in a new market.

Lee opined that some sectors will have to be more aware of competition that will come from China and Vietnam, like the textile and apparels industry.

“At this point, it is hard to make a call on the electrical and electronics (E&E) sector because within Asean, it is deeply integrated along the supply chain. Based on the RCEP rules, we still have an edge to further add value to E&E. But we have to further upskill the value chain so that we can have a better edge in this area, ” he said.

Lee added that it is important for the government to continue to facilitate trade in terms of simplifying customs procedures to ensure that local businesses benefit from the FTA.

“We need something that is predictable, consistent, and transparent that will help to lower the trade transaction cost and enhance even more standard efficiency. There are a lot of costs associated with inefficient trade facilitation.

“Non-tariff barriers are more challenging for businesses that want to do cross-border trade and investment. There’s procedure delays, lack of clarity in the application and interpretation of guidelines. And they could lead to lost business opportunities, ” he said.

To know more about RCEP, join us for the Export Excellence Awards webinar on Dec 15 at 8pm. Senior Minister and International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali will also be delivering a keynote address on the RCEP at the event. Register at bit.ly/eeawebinar1