1. As the Regional Comprehensive Economic Partnership agreement entered into force for Malaysia on Friday, China and Malaysia began to impose RCEP tariffs on each other, which will bring new economic cooperation opportunities.
2. Within ASEAN, Malaysia is expected to be the largest beneficiary of the agreement in terms of gains in exports, with a projected $200 million increase, according to the country's International Trade and Industry Ministry.
3. Under the RCEP agreement, the two countries commit to expanding market opening on the basis of China-ASEAN Free Trade Area Agreement, and some goods can enjoy new tariff preferences.
4. China started to adopt the first-year tariff rates on parts of imports from Malaysia according to the RCEP agreement and new tariff reductions and exemptions are implemented on Chinese exports to Malaysia. They include processing aquatic products, cocoa, cotton yarn and fabrics, chemical fiber and stainless steel. Also included are Malaysian exports to China such as canned pineapple, pineapple juice, coconut juice, pepper and other agricultural products.
5. Malaysia is China's second-largest trading partner in ASEAN, while China has been Malaysia's largest trading partner for 13 consecutive years.
6. From January to February this year, bilateral trade volume between the two sides reached $29.45 billion, up 28.1 percent year-on-year, 12.2 percentage points higher than the overall growth rate of China's foreign trade in the same period, according to statistics from the General Administration of Customs.
7. In 2021, bilateral trade volume between China and Malaysia reached $176.8 billion, a year-on-year increase of 34.5 percent. While bilateral trade has grown, investment cooperation has continued to rise. By the end of 2021, China's cumulative direct investment in Malaysia exceeded $10 billion, while Malaysia's cumulative direct investment in China was nearing $8 billion.
8. The effectiveness of the agreement to Malaysia will further unleash the potential of trade in goods between China and Malaysia. It will also help transform and upgrade regional industries and inject new vitality into regional economic development, said the report.
9. Preferential policies of RCEP and the China-ASEAN Free Trade Area will help build a resilient industrial and supply chain between the two countries.
10. The RCEP has introduced unified e-commerce rules and trade facilitation provisions, which will further expand the scope of cooperation between China and Malaysia in areas such as cross-border e-commerce, digital transformation of traditional enterprises and digital infrastructure.
11. With the RCEP coming into Malaysia, many enterprises deeply invested in the Malaysian market are seizing new opportunities to enjoy more policy dividends.
12. After the RCEP takes effect in Malaysia, the customs clearance speed will be accelerated from 10 days to seven days, which will reduce the warehousing and logistics costs.
13. The orders from Malaysia are expected to grow about 20 percent this year with the company's products becoming more competitive in the Malaysian market. Company may enjoy about one million yuan ($157,270) in tariff reductions and exemptions after the implementation of RCEP in Malaysia.
14. Signed in November 2020 by 15 Asia-Pacific countries, the RCEP deal, which became operational on Jan 1, 2022 initially in 10 countries, is now effective in 12 out of 15 signing members, which are 10 ASEAN members and China, Japan, the Republic of Korea, Australia and New Zealand.
15. After eight years of negotiations that started in 2012, the trade bloc now covers nearly a third of the world's population and accounts for about 30 percent of global GDP. More than 90 percent of merchandise trade will eventually be subject to zero tariffs, according to Xinhua.
TARIFFS
1. Prior to the RCEP coming into effect, 64.6 percent of Malaysia's tariff items enjoyed zero tariff treatment with RCEP contracting parties, and eventually 90 percent of tariff items will enjoy zero tariff after entry, which will mean growth opportunities for a quarter of Malaysia's exports.
STUDY CASE EXAMPLE
1. Since the Regional Comprehensive Economic Partnership (RCEP) entered into force in January, trade costs have been further reduced among member countries and related companies have seen tangible benefits.
2. Customs data shows that, in the first half of this year, China’s trade with ASEAN countries reached 2.95 trillion yuan (about 437.8 billion U.S. dollars), a year-on-year increase of 10.6 percent.
3. Raw materials like wood chips, wood pulp, and starch imported from ASEAN countries now enjoy preferential tariffs thanks to the RCEP agreements
4. Companies believe that the implementation of RCEP enables ASEAN and Chinese enterprises to conduct business in a more transparent and clear environment, simplify customs clearance procedures, and facilitate trade and economic exchanges.
5. The simplified customs clearance brought by RCEP, the production and operation efficiency of the enterprise have greatly improved. “The time span from ordering raw materials in Malaysia to receiving goods has been shortened from 15 days to five days, which has greatly reduced our warehousing costs
Source:
https://www.ciie.org/zbh/en/news/exhibition/focus/20220321/32067.html
https://www.globaltimes.cn/page/202209/1275565.shtml
https://www.businesstoday.com.my/2022/07/31/how-rcep-improved-trade-between-china-malaysia-and-asean-this-year/
