KUALA LUMPUR : The recent signing of the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade agreement, will go a long way in establishing both a framework for cooperation and a spark of hope for an earlier economic recovery.
Malaysia Global Business Forum (MBGF) founding chairman Nordin Abdullah said Malaysia, which is currently in the 25th spot in terms of exports globally, has considerable trade links with all the signatories of the RCEP and this would give Malaysia a natural advantage.
He said out of Malaysia's top 15 trading partners, 10 countries are signatories to the RCEP, which bodes well for Malaysia as there are strong existing trade ties and considerable existing cross-border investments.
"Central to the success of the RCEP will be ASEAN. The grouping of 10 nations that started their collective journey some 53 years ago will be the engine of growth despite larger economies like China, Japan, Australia, South Korea and New Zealand bringing massive amounts of production, capital and population to the table," he said in a statement today.
In addition, Nordin, who was a former vice president of the Malaysian International Chamber of Commerce and Industry, said Malaysian businesses should see this as an opportunity for international expansion and domestic consolidation while taking advantage of existing market share to partner with new firms, ideas and capital to grow revenue in Malaysia.
"This is the time for small and medium enterprises (SMEs) and government-linked companies (GLCs) to stand up and be counted as the rules of the game will change.
"At the same time, this means that Malaysia is now playing a more open game in the big leagues. It will be an opportunity for Malaysia to improve on the country's competitive ranking, a catalyst to attract foreign investment from nations who are not signatories to the RCEP but looking to take advantage of the new trade arrangements," he said.
Meanwhile, Nordin said international expansion strategies should include collaboration between designated lead companies with SMEs driving innovation and agility, while the larger companies providing the strength in resources and staying power required to penetrate new markets.
He said it will take several years for the RCEP to come into force and this time should be used to prepare for potential gaps that Malaysian companies will need to address, including understanding the impacts on intellectual property and rules around the digital economy.
"While barriers will be reduced, there will still be a requirement for increased government relations and a better understanding of regulatory frameworks coupled with the need to bridge language and cultural gaps.
"Additionally, the programmes already established by the Malaysian government to upskill and reskill those impacted by COVID-19 need to be aligned to the new reality that RCEP will usher into being," he said.
As many Malaysian companies and individuals look to Budget 2021 for signs of economic growth, the broader picture of high growth regional markets that RCEP brings into focus should be part of the near to medium-term strategic horizon for business expansion and employment prospects, Nordin said.
"The preferred future is that of trade, prosperity and regional resilience as this groundbreaking agreement will open doors to new opportunities.
"But it will be the individuals who have to step through them and build the bridges that will ensure that future becomes a reality," he added.