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How RCEP could shape Asia‘s recovery of its economy and service industries

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Representatives of signatory countries are pictured on screen during the signing ceremony for the Regional Comprehensive Economic Partnership (RCEP) trade pact at the ASEAN summit held virtually in Hanoi, Vietnam, on November 15, 2020. AFP

How RCEP could shape Asia‘s recovery of its economy and service industries

In a time when many economies still navigate their recoveries from the impacts of Covid-19 and the high oil prices brought about by the Russia-Ukraine crisis, the Regional Comprehensive Economic Partnership (RCEP) represents a timely opportunity to pursue and leverage liberalised trade and supply chains in kick-starting Asia Pacific’s ailing economies.

RCEP is an important geostrategic initiative that consolidates smaller existing agreements to create a comprehensive partnership fit for Asia in the 21st century. This largest free trade agreement (FTA) in the world covers one third of the world’s GDP and one third of the world’s population.

For more than two years, Covid-19 caused global disruptions to production and supply chains and stalled growth, recovery and progress everywhere. Against this backdrop RCEP is a solid support to global trade and would place the region in the forefront of global economic recovery and continue to be an attractive investment destination.

An effective RCEP would broaden and deepen economic linkages with the additional preferential Trade in Goods market access coverage notably into China, Japan and South Korea where tariff elimination and expeditious clearance of goods access and concessions would cut down cost for sectors supplying to these markets. It would enhance foreign equity participation across various services sectors with government guarantees or support on their investment. Emerging trade fields would also be empowered through the RCEP including e-commerce and intellectual property (IP) rights, providing a more conducive digital trade environment and offer greater access to markets.

Upon the ratification by participating countries of the RCEP Agreement, an opportune platform would be in place for business-to-business negotiations. For Cambodia, the RCEP provides a strong foundation for it to spur its economy and help overcome the challenges caused by the pandemic.

The Cambodian economic outlook is for a 4.5 per cent growth in 2022 as we emerge from a slowdown at the height of the pandemic. This recovery is underpinned by domestic economic activity as well as agricultural and agri-processed exports. Cambodia’s export-oriented manufacturing is expected to grow favourably, following external environments shaped by other larger economies like the US and China, and less affected by energy and food price hikes stemming from the Russia-Ukraine conflict.

Domestic laws and FTAs within the RCEP agenda can help boost investment and trade over the coming years. The economic recovery plan to improve Cambodia’s external competitiveness should address supply side bottlenecks by reducing costs of doing business, logistics, and energy, while enhancing regulations to boost job creation and GDP. Our MSMEs should be given opportunities to access cheaper raw materials for production and manufacturing and access to bigger markets for their products. Farmers can benefit from having access to cheaper farm inputs and farm implements that can be used to boost production, yields and quality.

Cambodian businesses, through direct investments and business-to-business partnership, should be given chances to optimise the benefits of these agreements, try to improve their business environment, skills, and innovation, and strengthen their competitiveness. This could all happen through RCEP’s impetus.

We look forward to the RCEP promoting a practical narrative on trade and investment. We would like to see how inclusive economic participation through digital economy and technology would lead to innovation and digitalisation among governments, businesses and people, especially women. We also want to see how RCEP food security agenda would proceed on enhancing the global food supply chains that ensure sufficient, safe, and nutritious food to people. Amid our fragile dependence on limited energy sources, we look forward to the RCEP agenda for affordable energy and transitions to cleaner energy.

We also want to see how the RCEP cooperation platform address the challenges of climate change, extreme weather and natural disasters, and strengthen emergency preparedness.

Song Saran is co-founder and CEO of Amru Rice (Cambodia) Co Ltd and president of the Cambodian Rice Federation.

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