Editor’s note: The "RCEP Rules Utilization Research Report" from the China Institute for Reform and Development, a think tank institution in China, highlights varying levels of RCEP rule utilization among member countries. While China, Japan, and South Korea show appreciable utilization rates, ASEAN countries, particularly Thailand, Vietnam, and Malaysia, exhibit significantly lower rates. This disparity poses a substantial obstacle to fully unlocking RCEP benefits.
In 2022 and 2023, Japan and South Korea achieved notable utilization rates for imports from China and each other, fostering greater market interconnection within the region. Conversely, Chinese enterprises lagged significantly with a utilization rate below 5% in 2023. For ASEAN exporters, the utilization rates for RCEP rules of origin were alarmingly low, such as 2.7% for Thailand in 2023, 0.67% for Vietnam in 2022 and 0.07% for Malaysia from April 2022 to February 2024.
Opportunities for enterprise benefits should have been significant. For instance, if China achieves a utilization rate similar to South Korea's (37%) for RCEP member imports in 2023, it could lead to a preferential import amount of 2.29 trillion yuan. This could potentially increase tax reductions from 2.36 billion yuan to 60 billion yuan.
What has led to varying levels of RCEP utilization and awareness among countries in the face of the enormous dividends and potential of the rule? How to improve the utilization rate? Izni Azrein Noor Azalie, currently serving as a lecturer at the Geography and Development department of University Brunei Darussalam. Izni Azrein share insights regarding the implementation of RCEP in Brunei based on the observations made during fieldwork or even when he is out and about in public.
If we are to look at RCEP itself, it can be traced back to 2006 and was officially proposed in 2012, culminating in ratification in 2020. Despite the advocacy of Brunei Darussalam in its establishment, there is a noticeable lack of knowledge and awareness among its populace regarding RCEP. Notably, there has been no official research to evaluate this paucity of awareness. Nevertheless, preliminary scrutiny of RCEP coverage in local traditional media outlets, such as the English-language Borneo Bulletin and the local Malay-language Media Permata newspapers, reveals a lower-than-anticipated number of articles. The Borneo Bulletin yielded approximately 16 to 25 articles covering RCEP, while Media Permata featured a slightly higher count of 59 articles, with mentions dating as far back as 2017. However, knowledge or even competency of writers and journalists of both conventional and digital media in Brunei on RCEP remained unknown. Hence there is also a need to empower and enrich these media players on the RCEP and any other regional and global initiatives. Effective knowledge dissemination on RCEP and the like may only be possible if the public and media themselves are well-versed in what they are doing. For it to be used towards mobilising national economic players, it must first be rooted among the citizens. The Whole of Nations Governance approach that Brunei is embarking on is central for this to materialize.
The effective dissemination of RCEP rules within Brunei faces a significant challenge due to the limited competency and knowledge within the business communities regarding the opportunities provided by RCEP. This includes export opportunities, market access, supply chain potentials, and other economic leverages. Over the past few years, organizations such as the ASEAN Business Advisory Council (ABAC) Brunei have actively participated in dialogues or workshops concerning RCEP and other regional trade and economic initiatives. However, questions persist regarding developing appropriate apparatus, capabilities, and capacities to foster positive business, economic, and industrial growth, particularly among Micro, Small, and Medium Enterprises (MSMEs). It is imperative to engage diverse stakeholders for enhanced civil participation and knowledge enrichment.
The real potential lies in utilising this knowledge to add value and co-create it as part of economic development. How it fosters innovation is also of high importance, as being able to adapt to the dynamic market condition ensures business and industrial competitiveness. The existence of effective enabling and facilitating mechanisms is central to its successful implementation. For instance, basic regulatory knowledge and information on RCEP, such as matters surrounding export dossier and documentation, protocols surrounding exports of goods, industrial standards required, visa requirements and exemptions for regional labour movements, among a few, need to be made available to stakeholders.
A centralised agency is needed to help assist or streamline all these requirements further. This is on top of other technical prerequisites. At this moment in time, of course, any workings on the RCEP trade agreements shall fall within the purview of the governing agencies. However, there is no harm if other independent, authoritative bodies can help the government to facilitate and be the enablers for this activity. Plus, more must be done to equip these agencies with the right capacity and capabilities. Competencies, capacities, and capabilities building should not be limited to the community or private sector only. Even governing agencies need to keep their human capital knowledgeable and updated on the recent trends and developments within any given field that they are managing or governing. An integrated approach towards RCEP knowledge dissemination and cross-sectoral implementation is needed. This is where academic institutions can play a greater role, particularly in identifying how the information and knowledge ecosystem can be improved, working on areas of strength and weaknesses that can be explored to further the RCEP agenda. Businesses need to be made aware of the opportunities and benefits of RCEP towards their businesses. No doubt that local businesses would be exposed to the doldrums of external market forces once they link up to the international market. But these firms must also equip themselves with the right knowledge and understand what they can offer and the niche they can create to become more competitive and innovative. The RCEP is supposedly a positive sum type of arrangement. Hence, there is more to benefit from. The potential is there.
The role of China within ASEAN as an important partner and collaborator is quite central. But yet again, we also have to acknowledge that each ASEAN member states have their own politico-economic and social goals that they want to address. Though the ASEAN Economic Community have been established, there are still areas of development which are quite uneven. However, I always believed that such diversity is what makes ASEAN unique. So apart from the regional approach, bilateral or multilateral arrangement is still important, and it is this unity in diversity that makes working with ASEAN more interesting and fruitful. Thus far, the existence of China 's regional investment into ASEAN is one of the strong points that can have some positive collaborative outcomes. Secondly, the continuous dialogue and exchange of information among the member states makes it an important way to iron out any misinformation or disinformation, which, unfortunately, are often weaponised to create hatred, confusion and distrust among partners. Continuous information bombardment may also create problems as there is a need to weight and decide whether such information is valid and trustworthy or vice versa. This is also imperative. Once trust can be strengthened and solidified further, the potential of future collaborations is endless, and more potential avenues can be explored together. As long as mutual respect, fairness and justice are upheld, it will become the foundation for an inclusive region.
At the end of the day, in our attempt to find what is the best way possible to implement effectively RCEP’s rules and arrangement, the question that should be asked is not what policy or measures we can write or formulate to address issues. Still, rather it should include, rationalized and address the ‘endgame’ that we want to achieve at the end of the tunnel. Truly, Rome was not built in one day. The only reason why it left such a deep impression on society was due to the heuristic (trial and error) processes, realignment, and renegotiations that it underwent before the final transformation that it achieved.
(The article reflects the author's opinions and not necessarily the views of China-ASEAN Observation. If you have a specific expertise, or would like to share your thought, please send us your writings at CAobservation@outlook.com)
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