China-led Regional Comprehensive Economic Partnership (RCEP) agreement is likely to boost foreign direct investment (FDI) in the Asia-Oceania region during the ongoing Covid-19 pandemic.
United Nations Conference on Trade and Development (UNCTAD) has expressed the optimism in its special issue of Investment Trend Monitor, released on Sunday.
“The agreement comes at a time of major upheaval caused by Covid-19,” said the report. “The pandemic will lead to a drop in FDI in the region of about 15.0 per cent. However, this compares favourably to a fall of 30-40 per cent in global FDI, and the region looks set to lead the FDI recovery.”
UNCTAD also mentioned that RCEP is already an important FDI destination as it accounts for 16.0 per cent of global FDI stock and more than 24.0 per cent of FDI flows which was $364 billion last year.
“While global FDI has been stagnant for the last decade, the RCEP group has shown a consistent upward trend until last year,” it added.
The RCEP agreement, signed by 15 countries on November 15, is one of the world’s largest trade and investment pacts.
The members of the agreement are ten ASEAN (Association of South-East Asian Nations) member countries (Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam), plus Australia, China, Japan, South Korea and New Zealand.
“The investment provisions in the agreement mostly consolidate existing market access as contained in myriad bilateral agreements,” said the UNCTAD publication.
“However, the provisions related to market access and disciplines in trade, services and e-commerce are highly relevant for regional value chains and market-seeking investment,” it pointed out.
RCEP is also a big source of FDI in Bangladesh. In FY20, at least one-fifth of net inflow of FDI in the country came from the RCEP countries.
In FY20, net inflow of FDI in Bangladesh was US$ 2370.45 million, of which $532.71 million came from five RCEP countries – China, Japan, Malaysia, South Korea and Singapore.