Trade & Investment between Indonesia & Switzerland
Indonesia's Industry Ministry is eager to intensify cooperation with Switzerland. On Tuesday (02/08) Indonesian Industry Minister Airlangga Hartanto stated that the European nation selected Indonesia as a key priority country in terms of economic cooperation and partnerships in the industry sector. Indonesia is ranked fourth in terms of priority investment destinations in Asia for Switzerland's foreign direct investment (FDI). Both nations have had positive diplomatic relations that date back to 1952.
Switzerland, a USD $665 billion economy (2015 data), will also provide assistance and support for the development of Indonesia's small and medium sized enterprises, the agriculture industry and vocational education. Minister Hartanto hopes that Switzerland will also raise investment in Indonesia's manufacturing, pharmaceutical and bio-energy sectors. He added that Indonesia can benefit significantly from cooperation with Switzerland - particularly regarding the usage of technology and development of human resources for industrial purposes - as the latter is one of the most advanced industrial economies of Europe.
Currently, economic cooperation between both nations involve various sectors including the processing industry, tourism, agriculture, education and aviation.
Meanwhile, in 2015, the overall value of Indonesia-Switzerland trade showed a remarkable growth pace of 124 percent (y/y) reaching USD $1.7 billion. This marked growth performance was mainly attributed to a 300 percent (y/y) increase in Indonesian exports to Switzerland. Indonesian exports to Switzerland stood at USD $1.07 billion in 2015, while imports from Switzerland reached USD $0.63 billion that year, hence Indonesia now has the "upper hand" in this trade relation (trade surplus).
Yvonne Baumann, ambassador of Switzerland to Indonesia, stated that she appreciates the economic policy packages that have been released by the Indonesian government since September 2015. These packages make is easier for foreign investors to invest in Indonesia. As such, it makes it easier to tap the huge potential of Switzerland-Indonesia relations. Currently, there are some 150 companies from Switzerland operating in Indonesia (generating 60,000 jobs for the local population). One of the key strengths of Indonesia that attracts Swiss companies is Indonesia's huge population and its expanding middle class segment.
These Swiss firms are active in various sectors ranging from food, chemical and the pharmaceutical industry to construction, energy, manufacturing and services. Over the last couple of years Swiss companies have been building new production plants in Indonesia, and there are still many more Swiss companies that have shown interest in setting up a branch in Indonesia, Baumann stated recently.
Indonesia-EFTA Comprehensive Partnership Agreement (IE-CEPA)
Currently, Indonesia is negotiating with non-EU countries Iceland, Switzerland, Norway and Liechtenstein terms and conditions regarding an Indonesia-European Free Trade Association (EFTA) partnership. The EFTA was established in 1960 as a trade-bloc alternative for those European countries that were unwilling or unable to join the European Economic Community (now the European Union). If Indonesia could secure a free trade deal with this block it should boost Indonesia's textile and footwear industries. Currently, import tariffs into these four European countries range between 11 and 30 percent, hence curtailing competitiveness of Indonesian products.
Indonesia exported nearly USD $47 million worth of footwear to the four EFTA countries in 2010. These exports nearly doubled to USD $93 million in 2014. With lower import tariffs, exports are expected to grow further. Indeed the population size of these four EFTA countries is small. However, the per capita income in the region is relatively high. Minister Hartanto said he hopes negotiations will go smoothly.
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