Hainan: The Regional Comprehensive Economic Partnership (RCEP) must evolve beyond traditional tariff reductions and simple transhipment towards high-complexity trade and integrated supply chains. Minister of Economic Affairs at the Embassy of Malaysia in China, Unny Sankar Ravi Sankar, said today's global landscape, marked by supply chain disruptions and geopolitical tensions, demands the creation of resilient hubs that prioritise digital and green economy integration.
According to BERNAMA News Agency, Unny Sankar highlighted that RCEP cooperation now requires hubs to deliver more than traditional tariff reductions. He emphasized the necessity of considering logistics efficiency and the creation of integrated platforms for rules of origin accumulation, supply chain diversification, and digital and sustainable growth. Speaking at the 'Thematic Dialogue: Building a Strategic Hub for RCEP Regional Economic and Trade Cooperation,' held in conjunction with the 2026 RCEP Media and Think Tank Forum, Unny Sankar stressed the importance of substantive transformation for RCEP member nations.
Unny Sankar further explained that this transformation is essential to fully utilise RCEP's accumulation rules and advance regional value chains beyond basic assembly. He pointed to the Hainan Free Trade Port (FTP) as a strategic 'stress-testing ground' for high-standard RCEP implementation, underscoring the importance of the island-wide special customs operations launched in December 2025 as a catalyst for ASEAN-China integration.
He noted that Hainan, as China's southernmost province and the gateway to ASEAN, combines geographic proximity with bold policy innovation. This includes zero-tariff regimes, low taxes, and simplified procedures, which should attract not only Chinese enterprises but also ASEAN enterprises to explore and thrive in the market, fostering inclusive growth for small and medium enterprises (SMEs).
On bilateral ties, Unny Sankar highlighted that Malaysia-China trade has reached RM753.26 billion (US$191.67 billion), mainly driven by the electrical and electronics, palm oil, and energy sectors. He suggested that Malaysian components and Chinese intermediaries could undergo substantial transformation in Hainan to create a more flexible and cost-effective backup system.
Unny Sankar proposed that Hainan could serve as a regional processing and distribution center for Malaysian palm oil and its derivatives, leveraging tax incentives for refining, packaging, and reprocessing before onward shipment to China or other RCEP markets. This approach adds value, ensures traceability, and supports sustainable growth.
Reaffirming Malaysia's commitment to World Trade Organisation principles and multilateralism as a means to bolster economic efficiency, Unny Sankar noted that the COVID-19 pandemic acted as a catalyst for the region to embrace digitalisation and stronger supply chain links. He emphasized the necessity of ensuring supply chains provide high value by increasing the economic complexity of goods rather than just exporting raw materials and basic commodities.
By enhancing production capabilities and increasing product complexity, Malaysian and ASEAN SMEs can broaden their market reach within the RCEP region. Unny Sankar added that the ASEAN-China Free Trade Area (ACFTA) 3.0 Upgrade, signed last year, now serves as the benchmark for this new era of regional collaboration.
The 2026 RCEP Media and Think Tank Forum was organised by China Daily and China Institute for Reform and Development (CIRD) to promote regional economic integration and high-level development of the RCEP amid global economic uncertainties.