Jakarta. The world’s largest trade pact Regional Comprehensive Economic Partnership (RCEP) can be a guiding light for ASEAN members to navigate the global supply chain disruptions.

However, RCEP’s entry into force does not mean that the job is done. There are still many things that the pact’s members have to work on at the domestic level to make sure that businesses can truly enjoy the trade facilitation that the RCEP has promised, according to Rebecca Sta Maria, the executive director of the Asia-Pacific Economic Cooperation (APEC) Secretariat.

“Yes, we have set the stage as a grouping to facilitate business, investment, and trade flows [through RCEP]. … But we need to do more than that to ensure that the work that we have done makes sense for businesses,” Sta Maria told the 2024 BNI Investor Daily Summit in Jakarta on Wednesday.

“When we are looking at supply chains, each of us needs to look at what we are doing domestically,” Sta Maria said.

RCEP brings together all 10 ASEAN members --Indonesia, Malaysia, Singapore, Thailand, Vietnam, Brunei Darussalam, Cambodia, the Philippines, Vietnam, and Myanmar– as well as its external trading partners: China, Australia, Japan, South Korea, and New Zealand. India opted out of the negotiations in fear of being flooded by Chinese imports. RCEP represents 30 percent of the world’s global domestic product (GDP). The pact promises to eliminate up to 90 percent of the tariffs on the goods traded between the signatories over 20 years of coming into effect. 

“You need to do things in parallel. Even if you are negotiating market access, investment facilitation, you also need to work on structural and economic reforms, as well as the infrastructure,” Sta Maria said.

The trade facilitation would be pointless if the RCEP countries do not build their logistics infrastructure and interoperability of digital systems.

“We can have all the duty-free access for your products, but it will take an eternity to go from the factory to the port because you lack the proper physical and digital infrastructure,” Sta Maria said.

She added: “Trade is not just about the physical movement of goods, but it is also about data. That’s another choke point that we need to focus on for a seamless supply chain.”

Sta Maria also urged ASEAN economies to also make sure that the region’s micro, small, and medium enterprises (MSMEs) could enter the global supply chain, among others, by equipping them with the necessary digital skills. 

ASEAN data showed that there were at least 70 million MSMEs spread across the Southeast Asian bloc. MSMEs contribute 44.8 percent to the region’s GDP. The government reported that Indonesia was home to at least 64 million MSMEs, although only 15 percent of these small businesses contributed to the national exports.

“You have to make your own economy attractive to facilitate your businesses so the benefits of RCEP flow to all of us,” Sta Maria said.

In 2022, ASEAN recorded $3.8 trillion trade in goods throughout 2022. The region’s trade in services totaled nearly $935.6 billion. RCEP came into effect in Indonesia early 2023, although the pact entered into force in 2022 for some member parties such as Australia, Vietnam, Thailand, among others.