ASEAN and the six FTA partners are significant trade and investment partners of Malaysia.
A total of 61.7% or US$223.07bil of Malaysia’s trade is within RCEP countries.
A total of 60.6% of Malaysia’s exports are destined for RCEP countries and similarly these countries supply 63.3% of Malaysia’s import requirements.
Of the 16 countries, 10 (China, Singapore, Japan, Thailand, Indonesia, South Korea, India, Australia, Vietnam and the Philippines) are among Malaysia’s top 16 trading partners.
India, China, Indonesia, Cambodia, Lao PDR, Myanmar, Vietnam, the Philippines and Thailand are among the fastest growing economies in the world. In 2050, India is expected to overtake the US to become the second largest economy in the world.
Asean is expected to grow by 5.1% (2017-2021). India and China are expected to sustain growth exceeding 6%.
Malaysia is an open economy. Greater trade openness and reduced barriers among the 16 participating countries will provide additional benefits for Malaysia, such as:
> Greater market access for export of goods and services.
> Opportunities for Malaysian companies to enhance their participation in the regional and global supply value chain.
> Attractive base for Malaysian companies’ cross-border investments.
Malaysian companies’ investments in the region is expected to increase as these countries open up their economy. The goal is also to see more and more Malaysian companies expanding their base to these neighbouring countries.
The RCEP services market exceeds US$1.27tril (2015) and is growing rapidly. Four of the RCEP countries are the top 12 exporters and importers of services in the world. Other markets for services are still relatively not developed and offer huge potential.
RCEP will offer new opportunities in the services sectors, especially now when e-commerce and digital trade are becoming a critical part of global trade. Telecommunication, banking and finance, consultancy, construction, hotel and recreation, travel and airlines are some sectors ion which Malaysia can benefit from liberalisation in the RCEP. Malaysia is well placed to benefit from the market liberalisation in the services sector.
Rules of origin are one of the important areas of RCEP negotiations. Currently, the businesses in the region have to cope with multiple sets of rules of origin to enjoy preferential tariff concessions under various Asean Plus One FTAs.
In RCEP, Malaysia’s goal is to have more streamlined rules of origin that are trade-facilitative and user-friendly which can boost exports, especially by SMEs.
Malaysia as a highly trade-dependent nation has always subscribed to progressive trade liberalisation.
Malaysia needs to expand exports by securing market access for her goods and services, and at the same time attract foreign direct investments to sustain economic growth. Trade liberalisation has been one of the Government’s key strategies to achieve objectives of securing newer markets and sustaining a competitive economy.
While the withdrawal of the US from TPP is rather unfortunate, Malaysia is moving along with the negotiations for RCEP.
Today, Malaysia has signed 14 bilateral and regional agreements.
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