Swiss foreign investment surges ahead

Swiss company Holcim operates this cement factory in Serbia Keystone

Foreign investment by Swiss companies doubled to SFr68 billion ($56 billion) in 2005, the Swiss National Bank reported on Wednesday.

Swiss firms are well represented outside the country, said the bank, adding that for the first time ever, Swiss subsidiaries had employed more than two million people abroad.

“Robust global economic growth, the positive corporate earnings situation and a low interest rate level created favourable conditions for direct investment,” noted the bank in its December monthly statistical bulletin.

But the figures were still below the peak recorded in 2000 of SFr75 billion, it noted.

The bulk of the capital went to the European Union – Switzerland’s largest trading partner – and the United States. Asia attracted SFr6 billion in investment, of which SFr2 billion went to Singapore.

Swiss companies also boosted their presence in China, South Korea and the Philippines.

In total, Switzerland’s capital stock abroad increased significantly from SFr452 billion to SFr560 billion. Investment and the appreciation of the US dollar contributed to the rise, the bank commented.

Investment income from foreign direct investment reached an all-time high of SFr80 billion.

Boom

The bank noted that 2005 was the first time that Swiss subsidiaries abroad employed more than two million people. In comparison 3.6 million people were employed in Switzerland, it said.

More than half of the subsidiaries’ staff were working in industry and just under 50 per cent in services.

The national bank said that overall Swiss companies maintained an “above average” presence abroad by international standards.

This was seen by the ratio of Swiss direct investment abroad to nominal gross domestic product (GDP). For Switzerland this ratio amounted to 123 per cent for 2005, which was way above the ratio for comparable countries such as the Netherlands (91 per cent in 2004) and Ireland (52 per cent in 2004).

Foreign assets in Switzerland rose by SFr387 billion to SFr2,645 billion in 2005, influenced by investments abroad and valuation gains related to exchange rate and stock price movements.

But for the first time since 1993 foreign investors withdrew money from Switzerland – SFr2 billion. This was due to fiscal developments in US-controlled companies, said the bank.

The number of staff employed by foreign companies in the country rose from 190,000 to 200,000.

swissinfo with agencies

Key facts

Swiss corporate investment abroad (capital outflows) doubled to SFr68 billion in 2005.
The bulk of capital outflows was channeled into Europe and the US.
Switzerland’s capital stock abroad increased significantly from SFr452 billion to SFr560 billion
Investment income from direct investment abroad reached an all-time high of SFr 80 billion.
For the first time, subsidiaries abroad employed more than 2 million people.