THE Asean+6 grouping is expected to declare the outcome of free- trade talks under the Regional Comprehensive Economic Partnership (RCEP) at the Asean Summit in Kuala Lumpur from November 19 to 22. The joint declaration will pave the way for the China-led trade bloc to become enforced next year.
A total of 16 RCEP members tentatively agreed at the 10th meeting of negotiation teams from October 12 to 16 in Busan, South Korea, to eliminate tariffs on 65 percent of all goods, amounting to 8 to 9,000 items,
under the RCEP plans.
Of the 35 percent of total products not included in the initial agreement, RCEP members are expected to gradually cut tariffs to zero within 10 years after 2017 for 20 percent, while further talks are needed for the other 15 percent of products, which are mostly sensitive items.
The RCEP was launched in November 2012, with the aim of establishing deeper economic cooperation between the 10 Asia-Pacific Economic Cooperation (Apec) members and Australia, China, India, Japan, New Zealand and South Korea, with a focus on trade in goods, services and investments.
If signed, the agreement will create an economic block with a combined population of 3.5 billion and a trade volume of $10.7 trillion, accounting for nearly 30 percent of the world’s trade.
China has been seen as the key driver of the regional trade pact, which is viewed as an alternative to the US-led Trans-Pacific Partnership (TPP), from which the world’s second-biggest economy was excluded.
Within the RCEP, seven countries—Australia, Japan, Malaysia, New Zealand, Singapore, Vietnam and Brunei Darussalam—are part of the 12-nation TPP.
Thailand is taking these new RCEP activities seriously and believes that they will benefit more from RCEP than from Asean or TPP. The Thai government plans to introduce more measures to tempt investment in 10 targeted industries:
- Next-generation cars
- Smart electronics
- Affluent, medical and wellness tourism
- Agriculture and biotechnology
- Food
- Robotics for industry
- Logistics and aviation
- Biofuels and biochemical
- Digital sector
- Medical sector
Similar to the Philippines, Thailand is developing road maps; the study reported that if Thailand seriously promoted the 10 industries, GDP growth could reach 5 percent to 6 percent a year based on private investment, which is expected to increase by 10 percent in 2016.
The study also suggested Thailand to support other incentives such as corporate income-tax limit of not more than 15 percent, a personal income- tax limit for foreign experts of not more than 15 percent and facilitation of their work permits (Philippines watch out!).
Foreign investors should also be allowed to hold 100 percent of the first stage of research and development projects and the leasehold for land plots for 99 years before selling them back to the government once due.