An analysis by Professor Patrick Ziltener on behalf of Switzerland Global Enterprise (S-GE) shows that the free trade agreement has a maximum savings potential of around USD 39.3 million per year. The MEM, food, chemical and pharmaceutical industries are likely to benefit the most.

Supply Chain Diversification

It is not just since the Covid 19 pandemic that weaknesses in global supply chains have increasingly been brought to the surface, but it has become more obvious: Indonesia is an increasingly attractive destination for foreign investment in the manufacturing sector, offering numerous growth opportunities thanks to its young and steadily growing population, ongoing urbanization and the implementation of structural reforms. The country's manufacturing sector is now the 12th largest in the world.

Access to 650 million consumers 

The country is on an industrialization path and plans to increase the manufacturing sector's contribution to GDP from 20% in 2019 to 25% in 2025. Manufacturing in Indonesia also gives Swiss companies access to 650 million consumers within the ASEAN bloc, one of the fastest growing regions in the world.

The Southeast Asian country offers Swiss exporters promising opportunities. Find factsheets for download as well as the most important market and industry information in the following overview:

• The agreement improves legal certainty and planning reliability in economic relations with Indonesia, an emerging economy, and creates new opportunities for Swiss companies.
• In the area of trade in goods, Switzerland will be able to eliminate the current discrimination in favour of countries that already have trade agreements with Indonesia, such as Japan and Australia. Swiss companies will gain a competitive edge on competitors from countries that have not signed a free trade agreement with Indonesia as Indonesia’s tariffs are relatively high.
• The European Union is also currently negotiating an agreement with Indonesia. Swiss exporters would thus risk being discriminated against their main competitors in the EU.
• At the end of the tariff elimination periods, 98 per cent of Switzerland’s current exports to Indonesia will be free of duties. This will allow all Swiss exporters – both industrial companies and agricultural producers – to benefit from the agreement.
• Based on current trade levels, Swiss companies will be able to save some CHF 25 million in tariffs once the tariff elimination periods have come to an end.
• Abolishing tariffs is likely to open up new export opportunities for Switzerland that are currently prevented by Indonesia’s high tariffs on industrial goods (average tariffs of 8 per cent).

This list and more detailed information on the free trade agreement can be found in the publication from the State Secretariat for Economic Affairs SECO.

The full EFTA-Indonesia agreement is available in English on the EFTA website: Indonesia | European Free Trade Association. You can download the circular of the Swiss Federal Customs Administration (FCA) as PDF, for the moment only available in German, French and Italian.

Of central importance for the MEM industry

Indonesia is a promising future market for the Swiss MEM industry. Moreover, the comprehensive free trade agreement creates a beneficial regulatory framework. You can read more about its industry impact on the Swissmem website (in GER).

Three things you maybe didn't know

In the Economiesuisse web dossier, you will find further information and viewpoints that are relevant from the perspective of Swiss foreign trade (in GER).