Asia House brought government ministers, business leaders and officials from across Asia together to discuss the impact of the world’s largest trade deal on the region’s digital economy.
Held in partnership with CKGSB, the dialogue explored how the Regional Comprehensive Economic Partnership (RCEP) could shape digital trade across Asia since coming into force on 1 January.
In a keynote speech, Tran Quoc Khanh, Vice Minister for Industry and Trade, Vietnam, highlighted the landmark nature of RCEP’s digital provisions.
“The ecommerce chapter under RCEP is considered more advanced than those in FTAs between Vietnam and the European Union and UK,” he said, with RCEP providing detailed obligations in areas such as paperless trading, electronic signatures and online safety.
The Vice Minister also underlined the international significance of RCEP, which is “the first ever FTA where China made commitments on ecommerce, and is the first FTA with ecommerce commitments that ASEAN has ever signed with Australia, New Zealand, Japan and Korea.”
This was something that Dr Xiang Bing, Founding Dean and Professor of China Business and Globalization, CKGSB, echoed. “The importance of RCEP cannot be overstated,” he said, adding that the Association of Southeast Asian Nations (ASEAN) deserves much credit for getting the deal over the line.
WATCH THE DISCUSSION IN FULL HERE
RCEP therefore comes at a critical time for the region as ecommerce and digital trade grows in importance as economies seek to recover from the COVID crisis.
Boosting digital trade
In Southeast Asia, the digital transformation “propelled” growth as the region navigated the pandemic, Satvinder Singh, Deputy Secretary-General, ASEAN Economic Community, told the conference, underlining the importance of digital trade in driving the regional recovery.
“ASEAN’s digital economy is already expected to add as much as US$1 trillion to the region’s GDP over the next ten years,” he said. “Growth in jobs and economy is being boosted by the presence of a lot of digital activities.”
The sense of openness that RCEP has introduced has contributed to this growth, the Deputy Secretary-General added, highlighting the deal’s standalone chapter on economic and technical cooperation, which aims to narrow the development gaps among RCEP members and aid capacity building.
“This will be extremely important in areas like ecommerce and intellectual property.”
The Asia House discussion delved deep into the RCEP deal, with particular focus on Chapter 12 – the section of the agreement dedicated to digital trade and ecommerce.
Hanim Hamzah, Regional Managing Partner, ZICO Law, spoke on the legal aspects of RCEP, saying it will bring a “regulatory tailwind” for sectors such as FinTech.
“The equal treatment for both local and foreign suppliers will provide a new wave of innovative players to emerge from the RCEP bloc,” she said, stating that the deal will also boost micro, small and medium sized enterprises (MSMEs) and drive a growth in internet payments across the region.
Professor Li Haitao, Dean’s Distinguished Chair Professor of Finance, CKGSB, said that China’s digital economy could be a useful model for RCEP members to look towards as they seek greater standardisation.
“China has been a leader in this area,” he said, highlighting how companies such as WeChat and Alipay have been driving epayments in recent years and have developed practices that the wider region can emulate.
“We can learn something from this in terms of building a collective system accepted by all regulators of RCEP countries,” the professor said.
Indeed, RCEP has the potential to enable smoother cross-border payments, Vince Iswara, CEO and Co-Founder of DANA Indonesia, said, citing the various payment methods used in different countries that are not currently aligned.
“How we can make sure that [these methods] can talk and settle with each other is where we can use this platform. I truly believe it’s not complicated or challenging – it is about realising that this benefits everyone,” he said, adding that RCEP “can become a platform for all of us to work together.”
More detail to come
However, while there are many positives to RCEP in terms of cross border trade, including fast-moving express clearances and WTO+ provisions, there is more to be done in bolstering the deal, Raymond Yee Woon Ming, Vice President, Customs and Regulatory Affairs, Asia Pacific, DHL Express, told the audience.
“A lot of the commitments in the RCEP agreements are very general,” he said, which introduces regulatory risk to businesses investing in the region. The deal also does little to address a trend of increasing taxation on cross-border digital trade, which will impact on MSMEs the most.
“RCEP doesn’t really deal with taxation issues on ecommerce,” Raymond said, adding that there is a risk of stifling the region’s nascent innovation economy.
However, the general nature of some RCEP commitments introduces much-needed flexibility in areas such as the highly-sensitive issue of data, David Hardoon, Chief Data and AI Officer, Union Bank of the Philippines, suggested.
“I would advocate that, while detail is important, in this particular [data] scenario it is more important to be non-prescriptive and allow a degree of flexibility from an implementation point of view,” he said. However, this could in turn lead to over-caution, David warned.
For Allan Gepty, Assistant Secretary for Industry Development and Trade Policy, the Philippines, it is important to see RCEP as an international treaty, with the focus being on developing rules and commitments that members agree to. Finer details will follow as RCEP is implemented and reviewed, he said. “One thing is clear: the direction has been set, and that provides stability for our stakeholders and investors.”
Moderated by Asia House Chief Executive Michael Lawrence, the dialogue was supported by BritCham Indonesia, Canada-ASEAN Business Council, and EU-ASEAN Business Council.
WATCH THE DISCUSSION IN FULL HERE
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