Impact of Regional Comprehensive Economic Partnership (RCEP) on Malaysia (July 2025)

The Regional Comprehensive Economic Partnership (RCEP) represents a pivotal moment in global trade architecture, establishing the world's largest free trade agreement by GDP. This comprehensive accord unites 15 Asia-Pacific nations- all 10 ASEAN member states plus China, Japan, South Korea, New Zealand, and Australia- creating a unified economic framework that encompasses 30% of global GDP and facilitated approximately USD2.5 trillion in intra-regional trade as of 2019. Following its official signing on November 15, 2020, and entry into force on January 1, 2022, RCEP has emerged as a transformative force in international commerce. The agreement's provisions for tariff reductions, improved market access, and strengthened trade relationships position member nations as an increasingly dominant trading bloc, fundamentally reshaping regional economic dynamics. This study uses the WITS Smart Simulator and Trade Complementarity Index (TCI) to analyse RCEP's trade impact on Malaysia and the partner countries, with particular focus on rubber and rubber products sectors. While the overall trade performance effects may be moderate, RCEP's framework for tariff reduction and enhanced market access underscores its significance as a vital instrument for promoting regional economic development.