Free trade agreements (FTAs) are signed between multiple nations to facilitate open trade. Brunei Darussalam sees FTAs as a vital part of its foreign trade policy to spur economic growth and ensure its people, goods, services and investments have access to wider markets around the world. The country’s first bilateral FTA, the Brunei-Japan Economic Partnership Agreement, was signed in 2007.
Brunei has been actively engaged in FTAs through its membership in ASEAN, establishing free trade with countries including China, South Korea, Japan, India, Australia and New Zealand. The ASEAN-Hong Kong, China Free Trade Agreement was signed in 2017.
In the pipeline is the Regional Comprehensive Economic Partnership (RCEP), a proposed FTA in the Asia-Pacific region between ASEAN and its FTA partners.
Through FTAs, local businesses can benefit from the reduction or elimination of tariffs. This will reduce trade transaction costs as a whole. As a result, the price of goods will also be lower.
In addition, reducing or eliminating tariffs promotes free flow of goods in the region, enabling local businesses to expand in a larger scale. Local businesses have the opportunity to enter the foreign market with cheaper costs to promote and sell their products.
FTAs also enhance trade facilitation by encouraging import and export activities between local businesses and their FTA counterparts. By facilitating the flow of goods, transaction costs for traders are lowered due to streamlined customs procedures and standards. Resources can be moved efficiently from one region to another with limited or without restrictions.
Local businesses can enjoy the benefits of the FTAs using the Certificate of Origin upon submitting their documents. The certificate is a document that certifies the origin of goods imported to any country, issued by the Trade Division, Ministry of Finance and Economy.
Lastly, FTAs allow the participating nations to share knowledge and expertise on achieving sustainable economic growth and creating foreign direct investment (FDI) opportunities.
In line with its Brunei Vision 2035, Brunei strives to diversify its economy by creating a more conducive economic environment to attract more FDIs.
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