Following the ratification of the Regional Comprehensive Economic Partnership (RCEP) on 1 January 2022, Cheung Kong Graduate School of Business (CKGSB) hosted the event, “RCEP: Looking Beyond Ratification,” on 13 January in partnership with Asia House and with the support of the Associated Chinese Chambers of Commerce and Industry of Malaysia, Business China, Gao Feng Advisory Company, Prasmul Eli and SRW &Co. The webinar convened nine renowned experts from seven countries to discuss the likely impact of the agreement on economic development and geopolitics, and how businesses can practically benefit from the world’s largest trading bloc. Over 700 participants registered from around the world for this event.
The event addressed the notions of China’s centrality to RCEP, the challenges nations will face with increased competition in the region, the opportunities the agreement will bring in levelling the welfare gap, as well as RCEP’s implications for globalization.
CKGSB’s Founding Dean and Professor of China Business and Globalization, Dr Xiang Bing, kicked off the event with an opening keynote highlighting the importance of RCEP, which represents 29% of the global population, 36% global GDP and 34% of global trade. He emphasised how “RCEP represents Asia’s response to promoting free trade and globalization…The RCEP economies, despite having different levels of development and resource endowment, have strong economic and trade complementarity, and deeper economic and trade cooperation among them means better utilization of resources and higher levels of efficiency in production.” He also expressed his hope that “the RCEP undertaking will become a new catalyst for more collective and collaborative responses to many of the global issues we face today.”
Next, Jeremy Browne, UK’s former Minister of State for Asia Pacific, moderated a fantastic panel discussion, where experts weighed in on the broader economic and political implications of the agreement. The panellists – Anna Robeniol, Advisor to the Secretary-General of ASEAN and the Deputy Secretary-General for the ASEAN Economic Community; Andrew Sheng, former Central Banker, HKMA & Bank Negara Malaysia; Tao Zhigang, Professor of Strategy and Economics and Associate Dean at CKGSB; and Tetsuya Watanabe, Vice-President, Research Institute of Economy Trade, and Industry – discussed the importance of RCEP in facilitating trade in Asia Pacific, particularly in the context of a post-pandemic world.
The panellists started out by expressing their optimism for RCEP. Robeniol, who has been instrumental in the negotiation and signing of RCEP, started the panel by giving a backdrop to why RCEP was conceived. She discussed how there were initially doubts over whether countries would join RCEP back in 2011. However, six countries initially joined the RCEP negotiations, including India, which took eight years to complete, albeit without India in the end. Robeniol was also positive that RCEP will strengthen supply chains and “open up more market opportunities, jobs and consequently a closely-integrated economy.”
Emphasizing the new trade agreement’s role on globalization, CKGSB Professor Tao Zhigang explained that “RCEP represents a major departure from the trend of de-globalization that we have witnessed since 2017,” He expressed his confidence that despite possible challenges in its implementation, “RCEP will work for each of the member countries, paving ways for better and high-quality multilateralism.” In particular, Dr Tao stressed China, Japan and South Korea will have more collaboration in production under RCEP, since there was no previous bilateral agreement between Japan and China nor between Japan and South Korea. The agreement will also give other RCEP member states easier access to the Chinese market. Tao previously taught at the University of Hong Kong and Hong Kong University of Science and Technology (HKUST), and specializes in international economics, protectionism and regional specialization.
Watanabe – with over three decades of experience working as a trade policy maker and negotiator in Japan’s Ministry of Economy, Trade and Industry (METI), where he served as Director General for Trade Policy and was heavily involved in RCEP negotiations – also emphasized how RCEP will remove barriers in “trading goods, services and investment, and it will also provide rules in digital trade, intellectual property and customs facilitation.”
This view that the world needs to reverse its move towards protectionism was expanded further by Andrew Sheng. He highlighted the importance of plugging SMEs (small and medium-sized enterprises) into global supply chains: “it’s all about job creation and inclusive development”, he noted. He was also positive about the role RCEP can play on green infrastructure – “RCEP can actually take a pioneering role in raising long-term funds.” Sheng is a distinguished fellow at the Asia Global Institute of the University of Hong Kong, Chief Adviser to the China Banking and Insurance Regulatory Commission, and a former Board Member of Khazanah Nasional Berhad, the sovereign wealth fund of Malaysia.
The panellists also expressed their opinions on the addition of China, Japan and Korea to the original ASEAN countries through RCEP. Watanabe noted how RCEP has particularly affected Japanese companies, who are developing their supply chain throughout the RCEP region. He pointed out that RCEP will improve Japanese GDP by 2.7% in the long-term.
While the addition of China, Japan and Korea has expanded the trading block, Browne asked the panel of experts how ASEAN countries can ensure they still play an essential role in the RCEP agreement.
“It’s been a difficult ten years for ASEAN,” Robeniol replied. Even when negotiating the RCEP agreement, she discussed how the political and economic tensions were starting to show due to the diverse countries involved. When negotiating the new regional agreement, she did not anticipate the geo-political tensions that would arise. She also highlighted that those involved in the CPTPP agreement were “TTPonising” RCEP; so “that’s where ASEAN put its foot down, playing its central role.”
Sheng also argued that, “People tend to forget ASEAN as a group will be the fourth largest economy in the world, even by GDP. The latest estimates are by 6.7 trillion dollars. Don’t dismiss ASEAN as the junior partner in this [RCEP agreement],” he stated. “What I really like about RCEP is that we treat everybody as equal partners.”
To conclude the first panel’s discussion, Brown brought up the elephant in the room. “Does it matter that India has not signed up?”
To which Sheng responded: “In ASEAN, we don’t criticise each other.”
Following the lively discussion, Brown brought on the second panel to discuss the impact of RCEP for businesses in Southeast Asia. Panellists included: Shinta Kamdani, Owner and Chief Executive Officer of the Sintesa Group; Tao Zhigang, Professor of Strategy and Economics at CKGSB; and Robert Yap, Executive Chairman of YCH Group.
Shinta Kamdani is the owner of a 100-year-old family business in Indonesia that today is a conglomerate with 16 subsidiaries operating in the property, energy, industrial products, and consumer products sectors. With extensive knowledge of the business landscape in Indonesia, Kamdani gave a detailed account of what RCEP means for Indonesian businesses. Kamdani mentioned how the ratification of RCEP will be extremely important for businesses, yet the agreement is still being delayed in Indonesia. She discussed how RCEP will encourage domestic reform, pushing the country to level-up its competitiveness with “enhanced rule for transparency and predictability on regulations, including financial services.”
When asked by Browne what the cause of “foot-dragging” may be, she explained that in Indonesia, 90% of businesses are MSMEs (micro, small and medium-sized enterprises), which currently lack the knowledge in trade finance. She discussed how the government needs to step in to raise the competitiveness of these MSMEs through export education programs.
Professor Tao went on to discuss the impact RCEP will have on countries, such as Indonesia, with regards to production. He highlighted that production will gradually move out of China and into Southeast Asia. However, “the key is to make sure you have re-distribution programs helping those who suffer from the process of globalization, such as re-training, economic assistance and common prosperity.”
Despite the challenges, all panellists agreed that RCEP will provide broader market access, better supply chain integration and business standardization. Coming from Singapore, Dr Robert Yap, the Executive Chairman of YCH Group, Singapore’s leading end-to-end supply chain management company with operations across Asia Pacific, expressed that “RCEP will provide bigger opportunities for all of us, so businesses should be very positive. The only slight negative is that India somehow did not join the party.”
Finally, the event concluded with a fireside chat with Indonesia’s former Trade Minister Gita Wirjawan. As a well-known entrepreneur, investment banker, and philanthropist, Wirjawan has been a long-term proponent for easing trade barriers.
Wirjawan echoed the first panel by emphasizing the importance of ASEAN countries in RCEP. He stated that “there is a recognition with regards to the risk of this being perceived as a China-led initiative, as opposed to an ASEAN-led initiative. Originally, this would have been perceived as an ASEAN led initiative.” But he did not understate the importance of China’s inclusion in the agreement: “without China this would still be a very good framework, but with China this is a much better framework.”
His discussion was largely framed around the relevance of RCEP today in the 21st century, and whether the agreement has the potential to address problems today – such as cross border data flows and data localization. He emphasized that “for the average Laotian, Cambodian and Indonesian, what matters more is to be able to create jobs, by way of building up a factory, the typical brick-and-mortar, before we start talking about data privacy. We first have to recognize the lack of symmetry of welfare on a per-capita basis in Southeast Asia, but I do believe RCEP is a really good starting point.”
Brown also asked Wirjawan: “If I am writing a history of the 21st century seventy-eight years from now, will there be a big chapter on RCEP”?
Wirjawan replied that “it deserves at least a paragraph. We have seen the death of multilateralism in the last decade. This is attributable to how conversations have polarized in many countries. I think the polarization of conversation has entailed too much nationalism, which tends to make multilateralism more difficult than ever.” Wirjawan went on to say, “The fact that the member countries of RCEP have decided to move ahead and show to the world that this is a good piece of multilateral understanding; I think it is equity, it’s equity for humanity’s ability to re-multilateralize.”
Event Video in Chinese
Event Video in English