Swiss look to Asia for closer trade ties

Singapore has invested a great deal in research and innovation Keystone

Economics Minister Doris Leuthard will travel to Indonesia and Singapore this week in a bid to boost bilateral relations with two of Asia’s most dynamic economies.

The visits by Leuthard, who also holds the rotating Swiss presidency, are part of the government’s strategy to develop closer ties with the two key countries.

Indonesia is “above all a market of 230 million consumers and very attractive growth rates of about six per cent”, says Massimo Baggi who heads the Asia/Oceania desk at the State Secretariat for Economic Affairs.

“It is also one of the countries with an important growth potential,” says Peter Flückiger of the Swiss Business Federation, the largest umbrella organisation representing the Swiss economy.

He refers to a recent survey among its members adding that Indonesia is a “stable country with low debts”.

Bilateral trade between Switzerland and Indonesia – a country which relies primarily on its huge domestic market – is relatively modest at the moment: about SFr370 million ($342 million) worth of exports against SFr170 million of imports in 2009.

Swiss exports include machines, measuring instruments, as well as pharmaceutical and chemical products, while Indonesia sells mainly agricultural products and textiles

Strategic

Indonesia fits perfectly into the wider context of Switzerland’s strategy in Asia, says Baggi.

“Our most important trading partner is the European Union, ahead of Asia, but not North America despite expectations to the contrary,” he adds.

The region makes up between 11 and 13 per cent of Switzerland’s total foreign trade.

“This is why we aim for a modern regulatory framework with all partners in the region, including Japan, China, India and of course Indonesia. This will allow us to benefit fully from the consolidated growth rates,” Baggi says.

He adds that a free trade accord has already taken effect with Japan.

But Indonesia is also a key partner for Switzerland’s development aid and cooperation efforts.

Investment

A committee has been set up to examine concrete measures to boost economic ties, including an agreement to do away with double taxation while increasing promotion and investment protection.

A study has just been concluded to examine the possibilities of an agreement on partnership and free trade.

“A number of issues have been resolved and others are underway. We hope the state visit will help us to push ahead,” says Baggi.

The Business Federation is also convinced that a broad accord would be useful and facilitate trade as well as attract more Swiss companies to invest in Indonesia.

Baggi points out that Indonesia is a role model for religious tolerance. It is the largest Muslim country in the world, with small Christian, Hindu and Buddhist minorities, and its religious leaders are known for their moderation.

Moreover, the capital Jakarta is the seat of the Association of South-East Asian Nations (Asean), founded in 1967 and comprising ten countries of the region.

Officials hope that Leuthard’s visit will allow a better understanding of the organisation, its role for the integration of the region and for the conclusion of agreements.

Finance and research

The second leg of her trip will focus on relations with Singapore, a financial centre and hub for research and technology.

“Singapore has invested a great deal in research and innovation, which puts it – alongside Switzerland – at the forefront on an international level,” notes Baggi.

He says it is not a coincidence that the Swiss authorities opened a Swissnex office in Singapore, one of five locations for an institution which encourages cooperation between public-private partnerships in areas of science, education, art and innovation.

Baggi says it will be interesting to learn more about the policy adopted by Singapore to promote research in an effort to boost the country’s competitive edge.

For its part, the Business Federation highlights the role of the country as a gateway to the whole of Southeast Asia.

“Singapore is like Switzerland, a small country with an export-oriented economy,” says Flückiger, who is responsible for foreign trade issues at the Business Federation.

More than 200 Swiss companies are present there now.

But Flückiger says closer ties are also in the interest of Singapore. Its state-owned investment fund became a key shareholder of the troubled Swiss bank UBS in 2007.

Andrea Clementi, swissinfo.ch (Adapted from Italian by Urs Geiser)

Key facts

Exports from Switzerland to Indonesia amounted to SFr371 million last year. Imports stood at SFr170 million according to the State Secretariat for Economic Affairs.

Swiss exports to Singapore in 2009 stood at SFr2.01 billion, against imports of SFr614 million.

The Swiss expat community in Singapore counts 2,304 people. In Indonesia there are 874 registered Swiss citizens, according to 2009 figures by the Organisation of the Swiss Abroad.

Context

Switzerland recognised Indonesia in 1949 four years after Jakarta gained independence from Dutch colonial rule. The Swiss embassy in Jakarta opened in 1952.

Indonesia was one of the key countries for Swiss development aid until 1997 when it received SFr277 million annually.

Since then Switzerland played a major role in the promotion of human rights in the country, notably in the province of Aceh on the northern tip of the island of Sumatra.

Switzerland also provided financial support following the devastating tsunami in December 2004.

Economics Minister Doris Leuthard is in charge of foreign trade in the seven-member Swiss government.

This year she also holds the rotating post of Swiss president, a largely ceremonial position.