The Regional Comprehensive Economic Partnership (RCEP) agreement officially became effective in November 2020, with the signatories including 10 ASEAN (Association of Southeast Asian Nations) Member States, China, Japan, South Korea, Australia, and New Zealand. In January 2022, the execution phase of the RCEP kicked off among the signatory States: first approved by Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia, followed by South Korea in February, Malaysia in March, and Myanmar in May. By August 2022, the only signatory States yet to have ratified and joined the agreement are Indonesia and Philippines, while India has been invited to join the RCEP.

The RCEP is a recognition of the centrality of ASEAN in the emerging regional economic architecture and the interests of ASEAN’s free trade agreement (FTA) partners. The RCEP has addressed the cultural diversity and other differences among signatory States, making it the most business-driven and economic-cooperation focused FTA so far. While all signatory States will benefit from the economic integration of the RCEP, ASEAN nations will benefit the most in the areas of industrial and manufacturing transfer, investment, supply chain shifts, agriculture export and infrastructure development.

Business opportunities

The formation of the RCEP provides significant business opportunities in the East Asia region, with the 16 signatory States accounting for almost half of the world’s population, approximately 30% of global GDP and 30% of world exports, making it the largest, most comprehensive regional FTA in the world. The RCEP covers trade in goods and services, investment, economic and technical cooperation, dispute settlement, e-commerce, small and medium enterprises (SMEs) and other issues.

The rules of origin play a key role in optimizing regional economic cooperation, facilitating signatory States’ deeper integration in industrial chains, supply chains, value chains and others.

The RCEP recognises the importance of being inclusive, especially to enable SMEs' to leverage on the agreement and have the ability to cope with challenges arising from globalisation and free trade. SMEs make up more than 90% of business across all the RCEP signatory States and are important to each country’s endogenous economic development by facilitating SMEs active engagement in regional market access and supply chains.

Regional cooperation

Chapter 8 of the RCEP covers comprehensive regional cooperation in the service sector in the areas of mutual acceptance of professional service certification, standards, codes of conduct and ethics, professional development, scope of service, and consumer protection, all of which represent great opportunities for professional services in cross-border advisory, accounting, asset appraisal, taxation and audit services. It also paves the way for greater market access opportunities for investment in the region by businesses all around the world.

The RCEP is a historical achievement and a milestone for Asian nations, with lasting implications for the future of the region. The world’s largest regional free trade agreement will hopefully provide a much-anticipated uplift to the global economy in 2022 and beyond.