Shared wish for growth

There is greater potential for improved trade ties between Malaysia and China in the context of regional integration

Last year marked the 20th anniversary of China's accession to the World Trade Organization and also the 30th anniversary of the Association of Southeast Asian Nations-China Dialogue Relations.

To me, that these anniversaries have come so close to one another reflects another fact－that the destinies and future progress of Malaysia, China and ASEAN are inextricably linked. Developments in global and regional economies will strengthen this fact further.

By the hard work of its people and good policies of its government, Malaysia is well on course to achieve its developed country status. ASEAN is critical in the East Asian regional architecture, and is the fifth-largest economy in the world with a GDP of more than $3 trillion. China is the second-largest economy in the world and has eliminated absolute poverty. In the first quarter of 2022, ASEAN-China trade value reached 1.35 trillion yuan ($206 billion) and ASEAN and China are pivotal players in the world's largest free trade area.

The Regional Comprehensive Economic Partnership covers 15 countries with 2.2 billion people or nearly one-third (29.5 percent) of the world's population, and represents $25.8 trillion or 29.4 percent of the world's GDP based on the World Bank's 2019 data.

Malaysia stands to benefit greatly from this larger market integration. Reduced trade barriers and better trade facilitation will enhance market access to other countries with lower costs for businesses.

Indeed, within ASEAN, Malaysia is expected to be the largest beneficiary of the RCEP agreement in terms of gains in exports, with a projected $200 million increase. According to a report by the United Nations Conference on Trade and Development (UNCTAD) published on Dec 15,2021, these gains will result from tariff elimination and reductions for merchandise goods, including the facilitation of export and import of goods among the RCEP countries. Furthermore, service providers including e-commerce portals will be able to enjoy greater market access while establishing a commercial presence in the RCEP markets.

However, the COVID-19 pandemic has underscored the paramount importance of international trade and cooperation as well as the inter-linkages of regional supply chains. In this regard, the RCEP will be a key enabler for all signatory countries, including Malaysia and China, to revitalize the domestic and international business activities in the post-pandemic era.

As a trading nation, Malaysia will continue to be an open economy, with business-friendly and pragmatic policies that foster a climate conducive to investment in the country. At the same time, the Malaysian government is committed to providing an ecosystem conducive to nurturing the growth of local businesses through policies, programs and continued support to facilitate companies venturing into new industries and markets.

Governments are playing their due role. Now, it is businesses which should act fast, embrace the changes and seize the opportunities. Business communities, from large to small scale entrepreneurs, should take advantage of the vast investment opportunities and greater participation in regional and global value chains presented by this mega trade agreement.

To achieve this, businesses should focus on four aspects.

They should embrace change and reform while intensifying cooperation with regional partners. Specifically, businesses must leverage on new technologies and digitalization as the driving force of this transformative process. This will enable businesses to compete efficiently in the global market.

They should explore the capacity-building programs available in the RCEP framework, as these enable the development and expansion of supply chains among members. The capacity-building arrangement will help to ensure that economies at different levels of development and businesses of varying sizes have the opportunities to maximize the benefits from implementing their commitments.

Malaysian businesses on their part should capitalize on the strong ties between Malaysia and China to collaborate with foreign businesses wanting to expand into China's huge market or working with Chinese businesses to expand into markets beyond China.

Business should also race to take advantage of new developmental paradigms such as China's vision of a unified domestic market and the dual-circulation development paradigm.

Beyond the RCEP, there is a vision to upgrade some aspects of the ASEAN-China Free Trade Agreement as well as to improve its utilization; China has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. All these developments are clear indications of the region-wide desire to further strengthen trade links between countries.

Certainly, this is the desire of both Malaysia and China and it portends well for a brighter future for our bilateral relations.

The author is Malaysia's ambassador to China. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn