How RCEP Will Shape the Recovery of Asia’s Economy and Service Industries

Saran Song, Co-Founder and CEO of Amru Rice (Cambodia) Co. Ltd, CKGSB ASEAN Global Leadership Program Alumnus

Song Saran is the Co-founder and CEO of Amru Rice (Cambodia) Co. Ltd, the prime leader in the country’s organic rice export, the President of Cambodian Rice Federation, Member of Cambodia Chamber of Commerce, Member of AmCham, Board member of Cambodian Investment Club, PhD Candidate at Royal Academic of Cambodia, and an alumus of CKGSB’s AGLP Program.

RCEP is an important geostrategic initiative that consolidates smaller existing agreements to create a comprehensive partnership fit for Asia in the 21st century.

At a time when many economies are still navigating their recoveries from the impact of COVID-19 and the high oil prices brought about by the Russia-Ukraine war, the Regional Comprehensive Economic Partnership (RCEP) represents a timely opportunity to pursue and leverage liberalised trade and supply chains to kick-start Asia Pacific’s ailing economies.

RCEP is an important geostrategic initiative that consolidates smaller existing agreements to create a comprehensive partnership fit for Asia in the 21st century. This is the largest free trade agreement in the world and covers one third of the world’s GDP and population.

For more than 2 years, COVID-19 caused global disruptions to production and supply chains and stalled growth, recovery and progress everywhere. RCEP is a solid support to global trade and would place the region at the forefront of the global economic recovery and continue to be an attractive investment destination.

An effective RCEP would broaden and deepen economic linkages with the additional preferential trade in goods, and market access into China, Japan and South Korea. Tariffs and expedited procedures would cut down the cost for companies supplying to these markets. It would enhance foreign equity participation across various sectors with government guarantees or support on their investment. Emerging trade fields would also be empowered through RCEP, including e-commerce and intellectual property (IP) rights, providing a more conducive digital trade environment and offer greater access to markets.

Upon ratification by participating countries, RCEP will provide a platform for businesses to collaborate and negotiate new ties. For Cambodia, RCEP provides a strong foundation for it to spur its economy and help overcome the challenges caused by the pandemic.

The Cambodian economic outlook is on track for a 4.5% growth in 2022 as we emerge from a slowdown at the height of the pandemic. This recovery is underpinned by domestic economic activity as well as agricultural and agri-processed exports. Cambodia’s export oriented manufacturing is expected to grow, on the back of external environments shaped by larger economies like the U.S and China, and less affected by energy and food price hikes stemming from the Russia-Ukraine conflict.

Domestic laws and free trade agreements within the RCEP agenda can help boost investment and trade over the coming years. The economic recovery plan to improve Cambodia’s external competitiveness should address supply side bottlenecks by reducing costs of doing business, logistics, and energy costs, while enhancing regulations to boost job creation and GDP. Our small-and-medium enterprises should be given opportunities to access cheaper raw materials for production and manufacturing and access to bigger markets for their products. Farmers can benefit from having access to cheaper farm inputs and farm implements that can be used to boost production, yields and quality.

Cambodian businesses, through direct investments and business-to-business partnerships, should be given chances to optimize the benefits of these agreements in order to improve their business environment, skills, and innovation, and strengthen their competitiveness. This could all happen through RCEP’s impetus.

We look forward to RCEP promoting a practical narrative on trade and investment. We would like to see how inclusive economic participation through the digital economy and technology would lead to innovation and digitalisation among governments, businesses and people, especially women. We also want to see how the RCEP food security agenda would proceed on enhancing the global food supply chains that ensure sufficient, safe, and nutritious food to people. Amidst our fragile dependence on limited energy sources, we look forward to the RCEP agenda for affordable energy and transitions to cleaner energy. We also want to see how RCEP will address the challenges of climate change, extreme weather and natural disasters, to strengthen emergency preparedness.