Written by: Sebastian Bango Samparan
In the light of the Coronavirus pandemic, countries within Southeast Asia have taken a bold move in their efforts to revitalize their economy in the form of the Regional Comprehensive Trade Deal. This trade deal was ratified by 15 countries which include ASEAN members, such as Indonesia, Malaysia, and Vietnam. Countries outside of ASEAN also joined in, with China, Australia, and Japan being one of the large players in this agreement.
This trade agreement is massive, as it encompasses over 30% of the world’s population. With the main goal of removing trade limitations, the RCEP aims at giving significant assistance towards business proprietors in reducing their financial burden, allowing nations to revitalize their economic growth and stability to overcome the effect of the Coronavirus pandemic .
However, the creation of this trade agreement was not received with universal acceptance. India was able to join the RCEP trade deal, however they declined due to ongoing border disputes that they currently have with China. This has also had an effect on the United States, as this has reduced the influence that the United States has within Southeast Asia.
In the light of this however, China sees the RCEP as a big opportunity to increase their participation within Southeast Asia as a part of the Belt and Road initiative (BRI). The Belt and Road Initiative itself has seen China investing at larger quantities within Southeast Asia, and how this is further supported by the RCEP trade deal. With one of their largest investments being Singapore, Indonesia, and Malaysia, the RCEP has further tightened the bond between China and Southeast Asia.
With investments over 20 million dollars alone within Singapore and not including other regions within Southeast Asia, the relation between the RCEP and the BRI has reached a new milestone. This can be seen in how China sees this opportunity to expand on the BRI, and are establishing free trade zones rapidly. These free trade zones serve a purpose to implement duty free importation of goods, and its exemption from value added tax. Just this year alone, They have established 21 free trade zones in hopes of expanding trade with RCEP members and to further build upon regional cooperation within Southeast Asia.
This increase of free trade areas are targeted in order to further ease the day to day trading activities of members and by doing so, it increases the connectivity of each member, thus promoting more intertwined relations. This has also seen an increase in the building of infrastructure within the region with developments that include the connection of railways and urban development.
With this, it is expected that economic growth is to accelerate within Southeast Asia and development to follow suit. The relationship between the RCEP and the BRI program is one that supports each other within their goals. This removal for the limitations of trade the two are targeting fully complement each other, and further expand upon the agendas that each one has already set. As of now, the free trade regions are predicted to improve upon infrastructure and transportation and will, in the future, accelerate growth due to the improvement of logistics.
References
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