Regional Comprehensive Economic Partnership (“RCEP”) in Malaysia

On 21 January 2022, the Ministry of International Trade and Industry (“MITI”) has issued a media release to announce that Malaysia’s Instrument of Ratification (“IOR”) has been submitted to the ASEAN Secretariat on 17 January 2022.

With this, Malaysia will become the 12^th signatory country on 18 March 2022 to implement the RCEP Agreement, joining Singapore, China, Japan, Brunei, Cambodia, Laos, Thailand, Vietnam, Australia, New Zealand and South Korea that have completed the ratification process.

RCEP is effectively the world’s largest free trade agreement covering 15 countries, which would serve as an overarching mechanism for free trade among the participating countries with a single set of rules and procedures for accessing preferential tariffs across the region (e.g. harmonizing the disparate rules of origin required to satisfy access to preferential duties across multiple countries).

RCEP covers, amongst others:

1. Elimination or reduction of import duties;
2. Promotion, facilitation, protection and investment liberalization;
3. Protection of intellectual property rights, facilitation in e-Commerce; and
4. Economic and technical cooperation.

The immediate priority for organisations is to review its current supply chain and examine the requirements of existing FTAs as well as what RCEP offers to identify opportunities to optimise sourcing and processing arrangements and to take advantage of any incremental benefits.  Equally important is formulating an effective strategy to gear up for higher level of competition in a single, wider market with the elimination of tariff and non-tariff barriers.

Please click on the above link for the Media Release on the Ratification of RCEP from MITI.

Our highlights are intended to provide a general overview of the key proposed tax changes and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions.

Should you have any questions or require further clarification, please do not hesitate to email or contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization.