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New Straits Times
15-07-2025
- Business
- New Straits Times
RCEP and the future of Asean's economy: Between potential and pitfalls
The Regional Comprehensive Economic Partnership (RCEP), signed on Nov 15, 2020 and entering into force on Jan 1, 2022, is the world's largest free trade agreement (FTA). It brings together all 10 Asea member states with five of their FTA partners — China, Japan, South Korea, Australia and New Zealand — into a comprehensive trade bloc encompassing around 2.2 billion people and 30 per cent of the world's gross domestic product (GDP) and global trade. RCEP is a landmark Asean-led initiative that aims to harmonise and deepen existing Asean+1 FTAs under a unified, modern, and inclusive framework. With 20 chapters, including trade in goods, services, investment, intellectual property, e-commerce, competition, SMEs and dispute settlement, RCEP is expected to catalyse trade flows, strengthen regional value chains (RVCs) and boost post-pandemic economic recovery. Does RCEP genuinely empower Asean economies? Or does it risk reinforcing asymmetrical benefits that favour larger, more developed partners? WHAT MAKES RCEP UNIQUE? Unlike agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the EU Single Market, RCEP reflects Asean's distinct model of "soft regionalism": voluntary, flexible and consensus-based. It is designed not to impose deep political integration or rigid regulatory convergence but instead to create a pragmatic and inclusive economic partnership adaptable to development diversity among member states. RCEP's key innovations include: (1) Consolidated Rules of Origin (RoO): A single RoO framework that simplifies trade documentation and reduces compliance costs, thus enabling firms to source inputs from across RCEP countries without losing preferential access. (2) Differential Tariff Concessions: These allow flexibility for countries to maintain sensitive sector protections while still advancing gradual liberalisation. (3) Special and Differential Treatment (SDT): Targeted support for Least Developed Countries (LDCs) within Asean—especially Cambodia, Laos, Myanmar and Vietnam (CLMV)—to facilitate their integration into regional trade. (4) Living Agreement Structure: RCEP includes institutional mechanisms (e.g., RCEP Joint Committee, subcommittees) to review and expand the agreement's scope to address emerging challenges like digital trade, climate change and pandemics. However, RCEP remains modest in ambition in areas like labour protections, environmental standards, data flows and state-owned enterprise (SOE) disciplines—areas where the CPTPP sets higher benchmarks. Critics argue that without stronger commitments in these domains, RCEP's long-term contribution to sustainable development may be limited. BENEFITS AND RISKS FOR ASEAN: STRATEGIC LEVERAGE OR UNEQUAL PROMISE? In principle, RCEP offers numerous strategic advantages to Asean: (1) Enhanced Economic Centrality: Asean remains at the centre of the agreement's architecture, reinforcing its convening power and diplomatic relevance in the Indo-Pacific. (2) Trade and Investment Gains: According to CGE simulations (Itakura, 2022), Asean countries stand to experience notable gains in GDP, exports and welfare by 2035, especially under scenarios that include tariff reductions, trade facilitation and services liberalisation. (3) SME and GVC Participation: The agreement promotes inclusive integration by helping SMEs join RVCs through simplified customs procedures and regional trade facilitation. Yet, benefits will be asymmetrical. Countries such as Singapore, Malaysia and Vietnam, already integrated into global value chains (GVCs) and possessing strong digital infrastructure, are well-positioned to benefit early and significantly. Conversely, CLMV countries with weaker institutional capacity, infrastructure deficits and limited trade readiness may struggle to fully leverage RCEP without capacity-building support. Moreover, the pandemic and the US-China trade war have exposed Asean's dependency on external markets. There is growing concern that RCEP could entrench such dependencies further, particularly on China, unless balanced by internal Asean Economic Community (AEC) integration. KEY ENABLERS OF SUCCESS FOR ASEAN To transform RCEP from a legal agreement into a transformative engine for inclusive growth, Asean must prioritise the following policy enablers. 1. Domestic Readiness and Reform (a) Upgrade trade infrastructure and adopt paperless trade systems. (b) Strengthen digital and human capital, particularly for SMEs and underserved populations. (c) Encourage private sector engagement and public-private partnerships (PPPs). 2. Deepening Asean Economic Community (AEC) Integration (a) Eliminate non-tariff barriers (NTBs), harmonise standards and streamline customs procedures. (b) Strengthen intra-Asean connectivity and production networks. (c) Develop unified digital and green standards to align Asean with future trade demands. 3. Digital and Services Integration (a) Expand the scope of digital trade rules within RCEP by advocating for stronger provisions on cross-border data flows, cybersecurity and digital inclusion. (b) Enhance services liberalisation through a negative-list approach and stronger regulatory frameworks. (c) Support skills upgrading for workers in ICT-enabled and high-value services sectors. 4. Institutional Governance and Implementation Monitoring (a) Empower the RCEP Joint Committee and subcommittees to carry out robust implementation reviews. (b) Create inclusive, transparent and participatory mechanisms to monitor RCEP's impact on SMEs, women, informal workers and rural communities. (c) Provide technical assistance and dispute resolution access for smaller and less developed member states. ASEAN LEADERSHIP AT AMM 58: WHAT MUST BE DONE Strong political direction is needed to steer RCEP implementation toward equitable outcomes. Recommended actions include: (1) Establish a Regional RCEP Implementation Taskforce under the Asean Secretariat to assess commitments, facilitate peer learning, and enhance transparency. (2) Create an Asean RCEP Transition Fund, contributed by more advanced economies, to support institutional capacity-building, regulatory reform, and infrastructure enhancement in CLMV countries. (3) Reaffirm Asean Centrality in RCEP Governance, ensuring the Asean Secretariat works closely with RCEP institutional bodies to steer policy alignment and manage tensions between large partners. (4) Mainstream Sustainability and Inclusivity, embedding Sustainable Development Goals (SDGs), gender equality, labour safeguards, and environmental sustainability into RCEP's evolving work programme. BETWEEN OPPORTUNITY AND TEST RCEP is a reflection of Asean's ability to lead regional integration in an era of fractured globalisation. It offers a unique opportunity to bridge development gaps, modernise economies and reassert Asean's relevance in global economic governance. But it also poses a test of political will and institutional coherence. Without urgent reforms, the agreement may inadvertently deepen regional inequalities and reinforce asymmetric dependencies. The success of RCEP, therefore, depends on Asean's commitment to leadership, solidarity, and shared prosperity. The message from Kuala Lumpur must then be bold and clear: Asean does not merely seek a seat at the table but it aims to lead, shape and humanise the future of regional economic integration.
New Straits Times
11-07-2025
- Business
- New Straits Times
Asean urges major powers to resolve differences through regional mechanisms
KUALA LUMPUR: Asean foreign ministers have urged major powers to manage their differences constructively and responsibly, including through Asean-led mechanisms such as the Asean Outlook on the Indo-Pacific (AOIP). Malaysia's Foreign Minister Datuk Seri Mohamad Hasan said the move is to ensure that the region remains peaceful, stable and prosperous. "We underscored the importance of dialogue and cooperation through Asean platforms, with focus on commonalities rather than differences," he said during the exit press conference of the 58th Asean Foreign Ministers' Meeting (AMM) and Related Meetings today. Mohamad said the AMM meeting also heard a briefing by the Asean Geoeconomic Task Force on the subject "Asean Economic Outlook in a Fragmented Global Economy". "We have also decided that ahead of the upcoming 47th Asean Summit in October, we will involve the ministers of economy or investment from each member country, so that we can coordinate our efforts more effectively, as politics and the economy now go hand in hand. "Many of the agreements we've made have not yet been translated into action," he added. Meanwhile, Mohamad said Asean continues to gain the trust of major powers, with the bloc now widely recognised as a respected entity in a peaceful region with strong economic growth. "Many countries are lining up to sign the Treaty of Amity and Cooperation in Southeast Asia (TAC) as a first step towards becoming Asean's partners," he said. He said Asean, which began with five member states, expanded to ten, and will grow to eleven member states by the end of the year, with Timor Leste. "Interest in becoming dialogue partners continues to grow, with many countries currently waiting to be accepted as sectoral dialogue partners, a status that typically precedes full dialogue partner recognition," he said. He, however, said Asean currently maintains a moratorium on accepting new dialogue partners. "That said, there are one or two cases that may be considered, especially if the country in question can add value to Asean. "While the moratorium remains in place, it should not be applied too rigidly. We must assess whether there is a real need and whether the country can bring added value to the region."
Malaysiakini
11-07-2025
- Politics
- Malaysiakini
US hails Asean forum as 'extraordinary', reaffirms regional ties
The US has described its engagement at the Asean-led Foreign Ministers' Meetings (AMM) as "extraordinary". US Secretary of State Marco Rubio said the US reaffirmed its commitment to Asean as its main diplomatic gateway to Southeast Asia...
The Star
11-07-2025
- Politics
- The Star
Asean Regional Forum urged to focus on pressing challenges, says Mohamad Hasan
KUALA LUMPUR: Staying responsive to the region's most pressing challenges must be made a focus at the Asean Regional Forum (ARF), says Foreign Minister Datuk Seri Mohamad Hasan. "Maritime tensions continue in key waterways, raising the risk of miscalculation. Cyber threats are escalating, undermining infrastructure, spreading disinformation, and eroding public trust. Climate change, once a distant risk, now presents multiple threats that worsen insecurity and displace communities," he said in his opening remarks at the ARF here on Friday (July 11). Beyond dialogue, Mohamad said the ARF must be better equipped to respond swiftly and effectively. "It should play a stronger role in early warning and response, especially in humanitarian crises, health emergencies, and conflict prevention," he said, also highlighting the importance of moving from dialogue to action. "The gap between ambition and implementation must be closed," he added. Malaysia, Mohamad said, calls for stronger cooperation through joint projects in key areas, including maritime security, counter-terrorism, disaster preparedness, and better coordination with other Asean-led platforms. He added that the ARF's strength lay in its inclusivity, uniting 27 participants with diverse perspectives. "We must reaffirm our commitment to dialogue, consensus, and mutual respect. These principles have guided us in navigating differences and maintaining stability, even in challenging times," he said. "Together, we must strengthen the ARF as a stabilising force - a forum where trust is nurtured, differences are managed, and partnerships are strengthened," Mohamad added.
Borneo Post
10-07-2025
- Business
- Borneo Post
Anwar: US still values Malaysia ties, one month to avert 25 pct tariff
Rubio (left) meets with Anwar at the Parliament building in Kuala Lumpur today. – Bernama photo KUALA LUMPUR (July 10): Prime Minister Datuk Seri Anwar Ibrahim said the US still values its ties with Malaysia and also wants to continue working with other South-east Asian countries, after meeting US Secretary of State Marco Rubio here today. The US had earlier this week announced a new tariff rate of 25 per cent which will take effect on August 1 on goods imported from Malaysia, and Anwar confirmed that he had discussed this matter with Rubio today. 'We raised the issue of tariffs by President Trump. He said that letter is a general letter but there is still one month's time to negotiate. 'And he knows Malaysia is the US' main trade partner in this region and he will give consideration and present our views,' Anwar said in an audio recording made available to the media. Anwar said their discussion largely focused on the Association of Southeast Asian Nations (Asean). 'The US still considers its relationship with Malaysia to be important and also wants to maintain and increase cooperation with Asean and Asean nations, and understands our stand to have good ties and trade with all countries.' Anwar said Malaysia did not have to choose between its trade partners but could do business with all countries. 'While the US is an important trade partner, we will enhance our ties with China, Asean countries and other countries for the citizens' interest and for the nation's benefit.' Malaysia is currently chairing Asean, which has 10 members. Malaysia is also hosting the 58th Asean Foreign Ministers' Meeting from July 8 to July 11. Rubio arrived here today as part of the US delegation for a series of Asean-led meetings, and was reported to be expected to hold talks with senior Malaysian officials including Anwar. – Malay Mail anwar ibrahim malaysia Marco Rubio tariff us
