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ASEAN and the six NAFTA partners are major trade and investment partners for Malaysia.
A total of 61.7% or US $ 223.07 million of Malaysia’s trade takes place within the RCEP countries.
A total of 60.6% of Malaysia’s exports go to 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 People’s Democratic Republic, Myanmar, Vietnam, the Philippines, and Thailand are among the world’s fastest growing economies. By 2050, India is expected to overtake the United States 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 maintain growth above 6%.
Malaysia is an open economy. Greater trade openness and lower barriers among the 16 participating countries will provide additional benefits for Malaysia, such as:
> Greater access to markets for the export of goods and services.
> Opportunities for Malaysian companies to enhance their participation in the regional and global supply value chain.
> Attractive base for cross-border investment by Malaysian companies.
Investments by Malaysian companies in the region are expected to increase as these countries open up their economies. The aim is also to see more and more Malaysian companies expanding their base to these neighboring countries.
The market for RCEP services exceeds US $ 1.27 trillion (2015) and is growing rapidly. Four of the RCEP countries are the top 12 exporters and importers of services in the world. Other service markets are still relatively underdeveloped and offer enormous potential.
RCEP will offer new opportunities in the service sectors, especially now that e-commerce and digital commerce are becoming a critical part of global commerce. Telecommunications, banking and finance, consulting, construction, hospitality and recreation, travel, and airlines are some of the sectors in which Malaysia can benefit from RCEP liberalization. Malaysia is well placed to benefit from market liberalization in the services sector.
Rules of origin are one of the important areas of RCEP negotiations. Currently, companies in the region face multiple sets of rules of origin to enjoy preferential tariff concessions under various ASEAN Plus One FTAs.
At RCEP, Malaysia’s goal is to have more simplified rules of origin that are easy to trade and easy to use, which can boost exports, especially by SMEs.
Malaysia, as a highly trade dependent nation, has always subscribed to progressive trade liberalization.
Malaysia needs to expand exports by ensuring market access for its goods and services while attracting foreign direct investment to sustain economic growth. Trade liberalization has been one of the Government’s key strategies to achieve the objectives of securing newer markets and maintaining a competitive economy.
While the US withdrawal from the TPP is quite regrettable, Malaysia is moving forward alongside the negotiations for the RCEP.
Today, Malaysia has signed 14 bilateral and regional agreements.
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