by FAYYADH JAAFAR / Pic by BLOOMBERG

Malaysia will become the twelfth member state of the Regional Comprehensive Economic Partnership Agreement (RCEP) on March 18, 2022, says the Ministry of International Trade and Industry (MITI) today.

This follows the successful submission of Malaysia’s Instrument of Ratification (IOR) to the ASEAN Secretariat on January 17.

As provided under Article 20.6 aof the RCEP Agreement, the agreement will enter into force 60 days after the IOR has been submitted to the ASEAN Secretariat.

With this latest submission of IOR to the ASEAN Secretariat as the Depositary of RCEP, Malaysia will join the eleven other signatory countries, namely, Singapore, China, Japan, Brunei Darussalam, Cambodia, Lao PDR, Thailand, Vietnam, Australia, New Zealand, and South Korea, that have completed the ratification process.

The RCEP is a free trade agreement that covers fifteen countries with 2.2 billion people, or nearly one third of the world’s population, representing US $25.8 trillion, or 29.4% of the world’s GDP based on the World Bank’s 2019 data.

“It bears stressing that RCEP is a testament to efforts to strengthen not only the multilateral trading system but also regional economic integration and uphold the development agenda of the World Trade Organization (WTO),” Miti said.

Malaysia is expected to benefit the most from this agreement as it would see an increase in its exports to the region worth US$200 million.

Based on the data by the United Nations Conference on Trade and Development (UNCTAD), these gains will result from tariff elimination and reduction for merchandise goods, including the facilitation of the export and import of goods among the RCEP countries.

E-commerce and other service companies will have easier access to the RCEP markets, both in terms of supplying goods across borders and establishing a commercial presence there.

The Ministry adds that the pandemic situation has shed light on how important it is for countries to work together in international trade to ensure that they are able to cope with any future crises that may arise.

The RCEP is believed to be the key enabler of Malaysia’s post-pandemic recovery as well as providing opportunities for businesses to expand their operations beyond our shores.

“Business communities, from large to small-scale entrepreneurs, are encouraged to take advantage of the vast investment opportunities and greater participation in regional and global value chains presented by this mega trade agreement.”

“As a trading nation, Malaysia will continue to be an open economy with business-friendly and pragmatic policies that foster a conducive investment climate in the country,” Miti said.