Indonesia’s RCEP entry gives Cambodia trade a boost
Trade ties between Cambodia and Indonesia are expected to rise further and cross $1 billion this year as the latter’s entry to the Regional Comprehensive Economic Partnership (RCEP) came into effect last Monday.
Indonesia, the largest economy in Southeast Asia, put in place a new set of liberalised regulations for its trade with other members of RCEP in the wake of the implementation of the pact.
Cambodia implemented the free trade pact on January 1, 2022.
The General Department of Customs and Excise (GDCE) of Cambodia estimated that the trade volume between the Kingdom and Indonesia has grown by 46.4 percent to about $629 million in January-September 2022 from $417 million in the same period of 2021.
Cambodia exported $5.6 billion worth of goods to the RCEP member countries in eleven months of last year, an increase of five percent compared to the same period last year, data from the Ministry of Commerce showed on Tuesday.
Cambodia’s top three RCEP export destinations were Vietnam, China and Japan with shipped products worth $1.8 billion, $1.1 billion, and $1.06 billion, respectively.
So far the trade pact, the world’s largest free trade deal in terms of population and trade size, has taken effect for 14 of the 15 members of the RCEP.
Besides the 10-member Asean, the trade pact comprises China, Japan, the Republic of Korea, Australia and New Zealand. In addition to Cambodia, the RCEP agreement entered into force on January 1, 2022, for Australia, Brunei Darussalam, China, Japan, Lao PDR, New Zealand, Singapore, Thailand and Vietnam.
It has also entered into force for South Korea on February 1, Myanmar on March 4 and Malaysia on March 18 last year, according to Singapore’s Ministry of Trade and Industry.
The Senate of the Philippines is expected to ratify the agreement early this year, said the country’s Trade Undersecretary Ceferino S. Rodolfo recently.
Indonesia’s new regulations on the origin of goods and issuing documents of origin for goods exported from were put in place starting from Monday, as part of implementing the RCEP agreement, the country’s Trade Minister Zulkifli Hasan said in a press release in Jakarta.
The business sectors in Indonesia can also choose between the two types of documents, a certificate of origin and a declaration of origin to claim ‘preferential rates.’ Both documents can be issued independently.
“This new rule is in line with a trade commitment facilitated by the RCEP,” Hasan said. “Business sectors will be benefited from this measure as the RCEP scheme will make the flow of exported goods in the region become smoother,” the minister added.
Over the past year, the free trade agreement has helped lower the cost of trade, facilitated the integration of industrial chains, and benefited consumers in the region.
According to the minister, the agreement is expected to boost competitiveness, promote regional supply chains by increasing export market access for goods and services, reduce or remove trade barriers, and increase technology transfer in the region.
According to Peter Petri and Michael Plummer of the Brookings Institution, the RCEP could add $209 billion annually to world incomes, and $500 billion to world trade by 2030, and that “the new agreement will make the economies of Southeast Asia more efficient, linking their strengths in technology, manufacturing, agriculture, and natural resources.”
Shujiro Urata, Advisor to President of Economic Research Institute for ASEAN and East Asia (ERIA), said RCEP played a big role in the region for bringing back the economies to the path of recovery from Covid-19.
“This role should continue for the future economic growth of the region as well. For this, implementation of the commitments given by the partner countries is important,” he said while participating in a high-level forum to commemorate the 10 years of RCEP in Phnom Penh recently.