Credit: Original article can be found here
‘RCEP pact can be lucrative but requires support’
Syed Husain Haider / Khmer Times Share:
The highly anticipated Regional Comprehensive Economic Partnership saw the ASEAN bloc form a trade deal with China, Japan, Korea, New Zealand and Australia after a lengthy eight-year negotiation which included India dropping out. The deal may take effect as early as the second half of 2021. AKP
With the Regional Comprehensive Economic Partnership’s (RCEP) ratification on the horizon, Asia Vision Institute co-founder Sok Siphana believes that the Kingdom’s small and medium-sized Enterprises (SMEs) need support for the pact to reach its full potential.
When ratified, the 15 signatory RCEP will represent some 30 percent of the globe’s population and nearly $49 billion of gross domestic product (GDP), making it the largest trade deal in the world. Experts believe that the deal may increase global trade by $500 billion over 10 years.
“I would like to caution that it will take some time before Cambodia [can] enjoy the full benefits of the RCEP. The obvious reason [being] that the agreement has yet to come into effect and secondly, it takes time to prepare the ground for the private sector to get up to speed with this new trade paradigm,” Siphana said.
The 14,000 pages outlining the RCEP, make it not only the biggest trade agreement in the world, but also the longest. The US-Mexico-Canada Agreement (USMCA), by comparison comprises only 1,812 pages, while the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) documentation spans just 631 pages. While the pact “is a major breakthrough for Cambodian companies to exploit the immense market potential open to them”, according to Siphana, it is critical for member nations to help Cambodia’s burgeoning economy navigate the intricacies of the agreement.
The National Bank of Cambodia (NBC) reported last year that around 95 percent of the 510,000 registered firms in Cambodia were SMEs. The sector employs more than two-thirds of the Kingdom’s workforce, according to the Economic Research Institute for ASEAN and East Asia.
“On [their] own, it would be an uphill struggle for Cambodian companies to understand all the specifics of the agreement and its schedules… most of them are small and would not have the resources or the expertise to grasp the intricacies of the trade rules.
“I would emphasise the provision of technical cooperation to address Cambodia’s productive capacity challenges,”.
“Advanced countries such as Japan, China, South Korea, Australia and New Zealand could assist Cambodian SMEs in developing better, more competitive products.”
Siphana, who has served on the Credit Bureau of Cambodia’s board since 2013, said SMEs must have reliable access to funding through commercial banks to help them reap the rewards of the deal, stressing that their biggest challenge is accessing trade finance.