The ten member states of the Association of Southeast Asian Nation (ASEAN) together with five other Asia-Pacific countries: China, Australia, New Zealand, South Korea, and Japan, agreed to sign the world’s largest Free Trade Agreement (FTA) also called as the Regional Comprehensive Economic Partnership (RCEP) on Sunday, 15^th November 2020. Hosted by Vietnam virtually, this deal aims at establishing a modern, comprehensive, high-quality, mutually beneficial economic partnership and promote investment. 

         “The signing, marks our strong commitment to multilateralism. This is a historic day.” said Indonesian President, Joko Widodo. It is due to RCEP is a mega regional trade deal that involve a third of the world’s population, and about 30% global gross domestic product.

What is the benefit for the importers?

This pact brings several benefits for the importers as countries agree to simplify their customs procedures and enhanced trade facilitation provisions, eliminating tariffs of at least 92% of goods amongst the participating countries within 20 years, and straightening the rules of origin.

Furthermore, as an importer, it will facilitate to expand your source countries since this agreement is allowing you to reduce costs and time by authorizing you to source your product anywhere within the bloc without meeting separate requirements for each country. For instance, under the RCEP, China commits to eliminate tariffs on 86 percent of Japan’s exports. Another benefit is for importers to get more profit and boost the sales from the lower prices of some countries like Indonesia.

What you should consider before importing?

1. A high integrity supplier.

Indonesia as one of the participating country of this FTA is bring several benefits for the importer. Moreover, Indonesia is home of good quality products with affordable prices especially for furniture and décor. You can easily find the products that you want in Indonesia.

However, as an importer you should have a great eye in choosing your suppliers to avoid a fraud and bad managed factory. Because this kind of supplier will cost you more in the future rather than a good, well managed supplier. Having a sourcing agents as your business partner on the ground will become your savior in this time and conditions.

2. The hidden costs of importing.

         Importing is a hard work to do, beside paying for the goods prices, you have to pay shipment costs, handling costs, insurance for transportation, custom brokerage service fees for custom clearance, custom tax (differs according to transacting countries and type of good), VAT, any additional regulation fee, terminal fees, warehousing costs during custom clearance, any certification fees, any custom’s examination fees, and so on. Having a sourcing agent means you cut out all the legwork and your products will arrive at your warehouse while you are focusing on your core business: sales and development. It becomes as simple as buying products from your local area, order – pay – and your product will be delivered.

Asean Sourcing will be your procurement support center in Indonesia, especially in Java and Bali. Our goal is to establish a durable partnership that will provide you with a reliable supply base by setting a strategic sourcing in Indonesia over a full year with distribution of purchases.