MALAYSIA should ratify the Regional Comprehensive Economic Partnership (RCEP) as soon as possible as the country will only stand to gain from the world’s largest trade deal, economist Lee Heng Guie said today.
 
The executive director of the Socio-Economic Research Centre (SERC) said the deal would be a game changer for Malaysia, which is set to be the seventh largest trading partner in the grouping of 15 nations.

“We urge the government to quickly ratify the RCEP,” Lee told reporters at the think tank’s quarterly economic briefing.

He said this would allow more companies to prepare themselves to join the pact. While bigger companies may be ready, he said smaller companies might need some preparation.

Using China as an example, he said the country, which was the first to ratify the deal, had prepared its companies to penetrate bigger markets.

“RCEP comes with opportunity but also you have to brace for competition,” Lee said.

The deal accounts for 27.2% of global trade, 28.2% of global GDP, and about a third of the world’s population, he said.

He said that the free trade agreement allows the country to gain higher purchasing power, increase exports, gain access into bigger markets, and step-up demand for goods and services, said Lee.

The trade deal also allows member states to have increased commercial opportunities and partnership, attract investments, and boost digitalisation and e-commerce, he added.

The deal could also help the economy, especially in the time of the Covid-19 pandemic, Lee added.
 
For Malaysia, its trade with RCEP members accounted for 58% of the total trade recorded in 2020.

On the flipside, the adoption of e-commerce and digital technology is one of the possible challenges.

Local businesses may also become less competitive. A business’ competitiveness depends on its ability to upgrade and innovate.

As to what the government can do to help businesses navigate and thrive under the free trade agreement, Lee recommended setting up an e-commerce statistics and information database.

He also suggested that the government establish a strategic partnership with foreign e-marketplaces, expedite customs clearance for exports and imports, reduce corporate taxes, and form research and development and innovation consortiums.

The free trade agreement features the 10 Asean member countries, as well as Japan, China, South Korea, Australia and New Zealand.

Singapore, Thailand, China and Japan have ratified the RCEP.

Putrajaya is expected to do so by year end or by the first quarter of next year.

One of the highlights of the deal is that it is expected to eliminate a range of import tariffs with fellow members, thus easing the movement of goods.

It also includes provisions on intellectual property, telecommunications, financial services, e-commerce, and professional services. – July 22, 2021.