KUALA LUMPUR: Malaysian companies as well as local and foreign business chambers are looking forward to expanding the global market and creating a more resilient supply chain with the signing of the Regional Comprehensive Economic Partnership (RCEP).
They state that the signing of the biggest Free Trade Agreement in the world by Asean members and Asean Plus One members on Nov 15 will also improve market access as well as ease the barriers to foreign direct investment (FDI) between RCEP countries.
The RCEP agreement was signed by trade ministers of 15 participating countries on the sidelines of the 37th Asean Summit, hosted virtually by Vietnam.
Malaysia was represented by International Trade and Industry Minister Datuk Seri Azmin Ali.
Participating countries include the 10 member countries of the Association of South-East Asian Nations (Asean), as well as China, Japan, South Korea, Australia and New Zealand.
Asean secretary-general Datuk Lim Jock Hoi hailed the signing of the RCEP agreement as a historic event.
“RCEP underpins Asean’s role in leading a multilateral trade agreement of this magnitude, despite global and regional challenges and eight years of negotiations, .
“It will give a much-needed boost for a swift and robust recovery for businesses and peoples in our region particularly during the current Covid-19 pandemic crisis, ” said Lim.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the RCEP will greatly contribute to the country’s post-pandemic recovery by creating resilient supply chains.
“FMM is a strong advocate of the RCEP agreement. We have always maintained that RCEP will contribute significantly to Malaysian companies to improve market access, participate in new value chains, increase economic activities, and strengthen supply chain links across Asia.
“Although Malaysia has implemented regional FTAs with China, South Korea, Japan, Australia and New Zealand through Asean, RCEP will see the integration of the Asean Plus One FTAs into a single and more cohesive trade and investment architecture in the region.
“Therefore, the signing of RCEP agreement on Nov 15 is very timely for Malaysian businesses.
“We expect that under the RCEP, the existing Asean Plus One FTAs will be streamlined and greater market access commitments will be made while gaps in the existing agreements will be reduced to create a highly competitive economic area, ” he said.
Soh said that for Malaysian companies, beyond the lowering of trade barriers, RCEP is expected to attract foreign companies keen on entering an integrated Asean market.
“This agreement will enhance transparency in trade and investment. The trade pact will also facilitate technical cooperation with advanced industrialised countries like Japan, South Korea, New Zealand and Australia which will assist Malaysian small and medium enterprises (SMEs) in developing better and more competitive products to enable their greater inclusion in global and regional supply chains.
“With the unprecedented challenges posed by Covid-19, it is imperative to stabilise manufacturing production while sustaining and diversifying supply chain connectivity within the region.
“FMM believes the RCEP will greatly contribute to the country’s post-pandemic recovery by creating resilient supply chains, ” he said.
Soh urged Asean members to ensure ratification by all its signatories by early 2021 so that RCEP is able to come into force at the earliest date to benefit businesses in this time of need.
The Malaysian Japanese Chambers of Commerce (Jactim) said that RCEP is a wide-area economic partnership agreement that accounts for about 30% of the world’s GDP, total trade and population, and about 50% of Japan’s total trade.
Japanese Prime Minister Yoshihide Suga and his Minister of Economy, Trade and Industry Hiroshi Kajiyama attended the virtual Asean Summit on Sunday to sign the RCEP agreement.
“Jactim recognises that Malaysia’s position in RCEP is very important and hopes that this will further promote trade and investment between Japan and Malaysia.
“We are confident that the Malaysian leadership in endorsing RCEP will further streamline the supply chain among RCEP members, especially by improving market access and lessening the barriers to FDIs.
“We hope that rules for intellectual property and electronic commerce will be established with various countries with different development stages and systems, ” Jactim said in a statement.
Chairman of E&E Productivity Nexus Datuk Seri Wong Siew Hai said that such an FTA provides the platform for a level playing field for both developing and developed superpower economies.
“The RCEP is comprehensive, of high quality and mutually beneficial to its member countries. The combined RCEP population is about 30% of the global population and it represents 30% of global trade.
“With RCEP, it will open Malaysia’s electrical and electronic industry to greater market access, especially the huge market of China.
“It will reduce barriers to trade, cost and time, and the regional supply chain will continue to improve.
“With the expected continued growth of the RCEP economies over the next few decades, Malaysia and all RCEP countries stand to prosper together towards a developed nation status, ” said Wong.
Asean Business Advisory Council Malaysia (Asean-BAC) chairman Tan Sri Munir Majid said it was pure perseverance on the part of Asean members which has finally resulted in such an FTA which would have far-fetching positive effects on a global economy ravaged by the pandemic.
“The signing of the RCEP is an auspicious event, even if it took a long eight years to get to this point.
“Perseverance in negotiation has brought 15 nations together, constituting one-third of world output which would be a formidable force for free trade and a rules-based international economic order.
“RCEP is an Asean initiative. On this one, well done Asean!” said Munir.
China Chamber of Commerce to the European Union (CCCEU) also applauded the economic cooperation between superpowers and developing economies.
“The conclusion of this agreement offers an uplifting example of international economic cooperation, which has been affected by protectionism and unilateralism, and it has also injected confidence to boost global economic recovery hit by the recession, ” said CCCEU chairwoman Zhou Lihong.
The United Nations Conference on Trade and Development (UNCTAD), in its special issue of Investment Trends Monitor released late Sunday, said RCEP is a positive push for global FDIs.
“RCEP is already an important foreign direct investment (FDI) destination. It accounts for 16% of global FDI stock and more than 24% of flows.
“While global FDI has been stagnant for the last decade, the RCEP group has shown a consistent upward trend until last year, ” stated UNCTAD.
Axi chief global market strategist Stephen Innes said such an FTA will be favourable to the ringgit.
“The signing of the RCEP will be favourable for the ringgit as is the general tailwind from the Covid-19 vaccine which would reduce the chances for some of the markets more downside extreme scenarios.
“The greenback should also weaken a touch broadly under this scenario which should boost the ringgit, ” said Innes.