HSBC: Many positives for Vietnam from RCEP

The Regional Comprehensive Economic Partnership (RCEP) not only helps boost exports but also has other indirect positive effects on a country’s earnings thanks to its depth, according to an HSBC report.

Officially coming into force on January 1, 2022, the signatories to the RCEP are Australia, China, Japan, New Zealand, South Korea, and the ten ASEAN members. Though its scope is modest, it has consistent coverage of trade rules and procedures, eliminating tariffs on more than 90 per cent of goods.

Many member countries are taking advantage of the Partnership to boost trade relations.

“The RCEP goes beyond existing ASEAN free trade agreements in terms of investment opportunities,” the HSBC report pointed out.

According to the Asian Development Bank (ADB), the impact on the exports of ASEAN members may not be as prominent as that of developed markets. ASEAN’s pre-existing free trade agreements with RCEP members have eliminated tariffs on 86 to 90 per cent of goods. RCEP members will contribute up to 30 per cent of global exports by 2030, it believes.

It also estimates that productivity “boosts” alone may increase real incomes by 5 per cent by 2035 in economies such as Thailand, Vietnam, and Malaysia.

By 2035, it has said, the three industries in Vietnam to expand the most will be leather and clothing, by 14.7 per cent, electrical equipment and machinery, by 12.1 per cent, and textiles, by 9 per cent.