KUALA LUMPUR: Companies, including small and medium enterprises, should leverage free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) to export to countries in the Asia Pacific region, according to speakers at the first Export Excellence Awards (EEA) 2021 webinar.
RCEP, Asean’s biggest free trade agreement (FTA) to date, comprises all 10 Asean member states and five of Asean’s existing FTA partners to cover a market of 2.2 billion people with a combined size of approximately US$25tril (US$101.21 tril), which is about 29% of the world’s gross domestic product.
Its primary purpose is to serve as an overarching mechanism to facilitate free trade between the 15 countries with a single set of rules and procedures for accessing preferential tariffs.
During his welcome speech, Star Media Group chairman Datuk Fu Ah Kiow highlighted the importance of RCEP as a significant development that will bring about change to the overall business environment and reignite economic growth in the region.
“As we all know, Southeast Asia – including Malaysia - will benefit significantly from RCEP as this could improve access to China’s Belt and Road Initiative (BRI) funds, as well as enhance gains from market access via transport, energy and communications links.
“And RCEP’s favorable rules of origin will also attract foreign investments into Malaysia and other member countries.
“This trade agreement is expected to make the Asean economies more efficient, linking their strengths in technology, manufacturing, agriculture and natural resources, ” he said.
Titled “Shaping The Future: Broadening Economic Networks and Opportunities”, the webinar saw keynote speaker International Trade and Industry Minister Datuk Seri Azmin Ali sharing insights into RCEP and its potential for Malaysian businesses.
“It will also open doors of opportunity to access a broader spectrum of new markets. With RCEP, import duties will be eliminated and reduced. There is no better time to consider exporting as barriers to entry and supply chains have been simplified. This will bode well with manufacturers who are seeking to make a mark in the international arena.
“The scope of RCEP includes reducing tariffs on trade in goods, as well as creating higher-quality rules for trade in services, including market access provisions for service sector suppliers from other RCEP countries.
“The RCEP agreement will also reduce non-tariff barriers to trade among member nations, such as customs and quarantine procedures as well as technical standards, ” he explained.
Standard Chartered Malaysia managing director and chief executive officer Abrar A. Anwar added that RCEP’s recent signing brings a ray of light and hope amidst the clouds of the Covid-19 pandemic.
He said, “RCEP will be able to give our economy a much-needed boost for a swift and robust recovery during these challenging times.
“In particular, SMEs stand to benefit with a more level field between developed and less developed economies, strengthening regional supply chains, and facilitating ventures into new opportunities.”
Understanding trade finance
Inseparable from export is trade financing, which Standard Chartered Malaysia transaction banking and cash products head Wendy Ang focused on during her session.
Trade financing includes making available working capital financing for corporates, such as when a company who needs to buy raw materials overseas has insufficient funding, she said.
Banks such as Standard Chartered will evaluate the company’s credit and provide the necessary trade financing facility to cover the company’s working capital requirements.
Noting risk management as one of the fundamentals surrounding trade finance, Ang said that it is important to work with banks to help facilitate trade transactions as they have the knowledge to advise on the correct princesses and risks to look out for, as well as how to manage them.
“It is also helpful to work with a bank that has the reach and network as well as an understanding of the markets that businesses are looking to venture into. This is particularly crucial when going into emerging or developing markets which have an added layer of complexity, ” she shared, adding that Standard Chartered has been in most markets for over a century, which has equipped it with deep knowledge of local markets, making it highly favourable for businesses looking for a partner in trade finance.
She added, “As a global bank, our forte lies in our network as we are present in close to 60 markets across the world. In Asia, Middle East and Africa particularly, we are usually the first point of call for advice or consultation on trade matters with these regions due to our deep understanding of the market.”
For trade finance, Standard Chartered has also gone a step further to support balance sheet management solutioning, which it calls the ecosystem business supporting its clients’ suppliers and buyers.
Moreover, with technology at the heart of its strategy, it has invested close to US$1bil (RM4.05bil) between 2015 and 2018 in digital, wealth management and infrastructure, including in areas such as artificial intelligence, chatbots and cybersecurity.
As Malaysia’s first bank with a 145-year history of facilitating trade and investment in the country, one of the ways the bank has embraced digitalisation is with its award-winning Straight2Bank suite of electronic channels.
The Straight2Bank suite enables corporate clients to securely and effectively run their cash management, trade finance, foreign exchange and securities services.
“The expansion of Straight2Bank Pay – a digital collections gateway for corporate clients – to additional markets in Asia is an example of how we have integrated technology with one of our biggest strengths which is our network, ” she said.
As a result of its efforts, Standard Chartered was recently named the Best Direct Debit Bank at the Malaysian e-Payments Excellence Awards 2020, based on the significant volume of direct debit transactions and strong annual growth in volume of transactions. It was the only international bank to win at the awards.
Helping exporters grow
Lastly, Malaysia External Trade Development Corporation (Matrade) exporters development deputy chief executive officer Sharimahton Mat Saleh shared information on how Matrade can assist SMEs in economic recovery, alongside giving an outlook on the potential of new markets - such as the halal market - and strategies to tap into them.
As the national trade promotion agency, Matrade’s core services involve assisting Malaysian companies in the areas of exporters’ development, export promotion, delivering trade and market information, as well as providing trade advisory services.
Moreover, Matrade is actively involved in linking foreign companies with Malaysian products and services sources, leveraging its 46 offices in major commercial cities around the world.
The EEA awards programme – aimed at recognising Malaysia’s leading exporters who have contributed to the country’s economy in the face of the Covid-19 pandemic – is back for the second year to acknowledge the contribution of businesses for their export achievements and success in the international arena.
This year, a total of 33 awards across five award categories will be honoured through the awards programme. The main award categories are machinery, electrical and electronics; agriculture, food and beverage; industrial products; consumer products and services, with special awards for halal products and Exporter of the Year.
There will be two tiers of the award, which are based on annual sales turnover, namely for small and medium enterprises with up to RM50mil revenue for products and up to RM20mil revenue for services; and mid-tier and large companies with more than RM50mil revenue for products and over RM20mil for services.
Companies can submit their entries from today until July 31,2021. Winners will be announced at the EEA Gala Night, which will tentatively be held in October 2021.
EEA 2021 is organised by Star Media Group in partnership with Standard Chartered, with Matrade as patron. It is audited by BDO.
Those keen to apply can visit exportawards.com.my, contact Pei Wen at email@example.com or call 03-7967 1388 (ext. 1857, Events Department).
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