PETALING JAYA: The biggest free trade agreement (FTA) in the world – the Regional Comprehensive Economic Partnership (RCEP) –signed by Malaysia with its Asean counterparts ensures the rights of the country and the nation are well protected, says Senior Minister Datuk Seri Azmin Ali.
The International Trade and Industry Minister said Malaysians and domestic businesses need not worry that RCEP would open the floodgates of foreign players into the country without any control.
“There is no need for Malaysians to worry that RCEP would make Malaysia vulnerable to foreign investors.
“The Malaysian government, during negotiations, made sure that RCEP puts us on the same level playing field with Asean members as well as Asean Plus One nations.
“The main objective of Malaysia signing RCEP is to offer Malaysian businesses, whether big or small, greater access to markets, eliminate some tariff for RCEP members.
“This would make our economy more sustainable in facing the current challenges, especially in the post-Covid-19 economic situation where we cannot but actively trade globally, ” said Azmin.
RCEP was finally signed yesterday during the 37th Asean annual summit after going through 31 rounds of negotiations over the past eight years.
Azmin pointed out that Malaysia had signed 14 FTAs before RCEP – seven bilateral and seven regional.
“RCEP is the combination of it all. This will now make things easier for Malaysia as our trade with different countries would now be under one agreement.
“Currently, if we have a bilateral FTA between another country, for our exporters to export an X product and to enjoy the preferential tariff, the local components must meet certain thresholds, let’s say 35% to 40%, so that you can combine local component with both parties.
“With RCEP, you will enjoy Rules of Origin (ROO) involving 15 parties and preferential tariffs with 15 other countries, something we need to expand our trade into the global market, ” said Azmin.
“This FTA is also not directed by superpowers and Asean members are the main drivers.
“Our economy relies on small and medium enterprises (SMEs). Realising that, when we negotiated, we made sure that SMEs would be the biggest benefactor and that Malaysia’s sovereignty is upheld as a main trading partner, ” he said.
The Chief Negotiator of Malaysia for RCEP Datuk Seri Norazman Ayob said RCEP would assist Malaysian companies, especially SMEs, mainly through integration of global supply chains.
“This is pertinent as RCEP will enable investments to be further encouraged, particularly from the RCEP participating countries.
“As investors invest in Malaysia, they will be sourcing their parts and raw materials from local vendors and suppliers.
“Malaysian companies would be able to take advantage in this way. By being part of the supply chain for foreign investors, Malaysian companies would also be able to expand to overseas markets, ” said Norazman.
The MITI Deputy Secretary-General (Industry) also said that with an array of markets spread out for Malaysian companies, they would be able to source from far greater number of suppliers from RCEP member countries.
“The imported parts and components sourced from RCEP member countries by Malaysian companies will be counted as part of the originating parts and components in the finished products.
“When these finished products are exported to RCEP participating countries, they will enjoy zero or reduced import duties.
“This is of course better than the Asean Plus One regional FTAs”, ” said Norazman.
Under FTAs comprising Malaysia and another country only, the parts and components sourced will only count if they are from either party.
“The main benefit of RCEP will be greater market access and reduction of import duties for Malaysian companies exporting their finished products to overseas.
“With 15 countries in RCEP, both with developed and developing economies, Malaysia would soon see a vibrant exchange of talent and greater transparency.
“There will also be information exchange on technical, conformity assessment procedures, regulations and standards providing greater clarity, allowing us easier access into foreign markets, ” said Norazman.
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