Investors put off by high costs and strong franc

Swiss investors target machinery and equipment, as well as electronics Keystone

2012 was the worst year for foreign direct investment (FDI) in Switzerland since 2005, with the number of FDI projects falling more than a third, a survey by consultants Ernst & Young has found.

High operating costs, a strong Swiss franc and weak growth, particularly in export markets and in the surrounding eurozone, are curtailing Switzerland’s appeal for investors, according to the 11th European Attractiveness Survey.

Last year, Switzerland attracted only 61 FDI projects, down from 99 the year before.

Although companies from the United States remain Switzerland’s largest FDI investors, even they are turning elsewhere. The number of projects originating in the US fell from 50 in 2010 to 41 in 2011 and then to just 28 in 2012.

German companies are also more cautious, launching only two projects in 2012, down from 13 in 2011.

By sector, business services, software and financial services all posted large declines in project numbers, while Switzerland captured only three manufacturing projects, compared with ten in 2011.

“Room for improvement”

Overall, the 3,797 FDI projects started in Europe in 2012 represented a slight reduction (-2.8 per cent) on 2011 figures, while the number of jobs created increased by eight per cent.

Though concerned about Europe’s economic prospects, foreign investors seemed optimistic that the continent would weather these hard times and emerge stronger, the authors believed.

Britain and Germany remain Europe’s top destinations for foreign investors, with 697 and 624 FDI projects respectively.

Switzerland was put in the “room for improvement” category – alongside France, the Netherlands and Italy – for attracting relatively fewer projects and jobs. However, these four economies together netted more than 750 FDI projects, 20 per cent of the 2012 total.

Swiss and US companies are the biggest investors in Germany: during 2012, Swiss companies launched 42.2 per cent more projects there and US companies 6.5 per cent more.

US and British companies invested in more business services projects while Swiss, Chinese and Japanese investors targeted machinery and equipment, as well as electronics.