RCEP to boost FDI in the region, lead global recovery

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RCEP to boost FDI in the region, lead global recovery

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RCEP accounts for 16 per cent of global FDI stock and more than 24 per cent of flows. While global FDI has been stagnant for the last decade, the RCEP group has shown a consistent upward trend until last year.
Niti Kiran, Mohsin Shaikh

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The agreement comes at a time of major upheaval caused by COVID-19. The pandemic will lead to a drop in FDI in the region of about 15 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.

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Intra-regional investment, at about 30 per cent of total FDI in RCEP, has significant room for further growth. It is relatively low compared to other major economic partnerships. Already about 40 per cent of investment in ASEAN comes from RCEP members.

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The least developed country (LDC) signatories Cambodia, Myanmar and Lao People's Democratic Republic respectively receive more than 70 per cent, 80 per cent and 90 per cent of their FDI from other RCEP members.  

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RCEP inititaive was launched in November 2012 and the negotiations of the agreement started in May 2013. The agreement, signed on November 15 2020, is a major undertaking involving 15 countries, including 10 ASEAN member states, plus Australia, China, Japan, the Republic of Korea and New Zealand.