Local SMEs to benefit from RCEP, but brace for competition
02 Jul 2021
Local manufacturers are poised to gain from the ratification of Regional Comprehensive Economic Partnership (RCEP) through wider market access for volume growth and technology transfer.
Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai said the small and medium enterprises (SMEs) would face severe competition from China, a participating nation in the regional free trade agreement negotiation, but the ratification would be positive in a longer run, provided suitable plans are implemented.
He said SMEs would need to improve their competitiveness via local talent development and technology adoption to reduce the reliance on foreign labour.
“This involves cost. The government, banks and the manufacturers must have an ecosystem to work together,” he said in a roundtable recently.
Soh said some local SMEs are losing their competitive advantage against regional counterparts who enjoy cheaper labour costs.
As such, he said Malaysian SMEs need to adopt the Industrial Revolution 4.0 to move up higher in the value chain.
“There should be a commitment from both the government and the private sector for the change,” he said.
Soh said Malaysian SMEs could leverage China-based SMEs for technology transfer in various areas including telecommunications.
RCEP member states — 10 Asean countries plus five nations namely Australia, China, Japan, New Zealand and South Korea — form nearly a third of the global economy.
The Asean Business Advisory Council has recently urged the government to ratify both the RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership by year-end.
Former ambassador to the World Trade Organisation, Datuk M Supperamaniam said more targeted approaches are needed, especially in the production of goods to capture the demand in other countries.
He said Malaysia needs to have specific programmes with milestones and this requires public-private involvement.
Supperamaniam said RCEP would attract investments due to lower tariffs, hence, lower cost of production.
Source: The Malaysian Reserve