High costs mar Swiss business environment

Founding a firm in Switzerland can be costly compared to other countries Keystone

Switzerland offers a good environment for entrepreneurs seeking to set up in business, but the costs involved can be high, according to a new report by the World Bank.

“Doing Business in 2004” found that Switzerland was amongst the countries with the least bureaucracy, ranking in the top ten of the 130 countries surveyed.

The findings come amid moves to make Switzerland more attractive for start-ups and small and medium-sized enterprises (SMEs).

The study considered criteria including the complexity of starting and winding up a business, the ease with which workers can be hired and fired, availability of credit and how easily contracts can be enforced.

It gave Switzerland high marks for flexibility of hiring and firing and above average ratings for its procedures governing business start-ups and contract enforcement.

But it found that Switzerland was more expensive than its European neighbours when it came to setting up in business.

“For someone who wants to start or operate a business, it’s fairly easy and there’s not too much of a burden on the entrepreneur,” the World Bank’s Giles Garcia told swissinfo.

“So overall the position of Switzerland is quite good. But I think getting credit and closing a business are two areas where improvements can be made.”

Setting up

According to the World Bank survey, it costs $3,230 (SFr4,233) to register a company in Switzerland.

This compares to no charge in Denmark, $190 in Sweden and $1,340 in neighbouring Germany. But Switzerland is still less expensive in this regard than most other countries surveyed.

Recovering debts in Switzerland could be a lengthy and costly operation, according to the survey, taking 224 days and costing $1,490.

By comparison, in Sweden it takes only 190 days but is more expensive at $4,590 and it Italy it takes 640 days but costs just $780.

Closing down

One of the most revealing indicators was bankruptcy procedure. The results showed richer and more developed countries tended to have faster and cheaper liquidation processes.

Finland was ahead with 0.9 years on average, while Germany recorded 1.2 years. But in Switzerland, bankruptcy proceedings took 4.6 years as compared with a regional average of 1.8 years.

Christian Weber of the State Secretariat for Economic Affairs (Seco) commented that although Switzerland came out of the report quite well, it recognised the need to do more to encourage SMEs to set up in the country.

“In an international comparison we were just above average,” Weber told swissinfo. “But it’s our goal to be among the best when it comes to reducing red tape.”

Battling bureaucracy

Weber said that moves were underway to simplify the process of setting up a company in Switzerland, and that firms could now be registered via the internet.

Switzerland has recently been making huge efforts to increase its attractiveness to start-ups and young companies – which are known to stimulate the economy.

In particular, economics minister Joseph Deiss has been trying to encourage SMEs, which make up 99.7 per cent of the 300,000 registered companies in Switzerland.

Seco has founded an SME task force, with its own web portal and promotional website.

Deiss wants his department to act as a point of contact for these firms, which have been hit hard by the economic downturn.

swissinfo

In brief

The Doing Business in 2004 report compares data from 130 countries.

It provides indicators of the cost of doing business by identifying specific regulations that enhance or constrain business investment, productivity, and growth.

Switzerland was found to offer a good business environment, but setting up and closing down involved high costs.