Analysis

Free trade agreement with Indonesia: The potential for Swiss exporters

The free trade agreement between the EFTA states and Indonesia will eliminate customs tariffs from more than 98 percent of Swiss exports. This is set to create a maximum annual savings potential of around 39.3 million US dollars, as an analysis by Professor Patrick Ziltener for Switzerland Global Enterprise (S-GE) shows. The MEM, food, chemical and pharmaceutical industries are those most likely to profit from this.

Indonesia counts 260 million inhabitants
Indonesia counts 260 million inhabitants

The major part of exports will be immediately duty-free or is already free. The rest 18.5.% of our actual exports that are not covered, will be duty-free in 5 to 12 years. Major beneficiaries are the food industry (4.8 Mio USD potential savings p.a.), the chemical/ pharmaceutical industry (16.1 Mio USD), the MEM industry (9.7 Mio USD), and the instruments and watch producers in Switzerland.

Elimination over twelve years

In the following years, further tariff reductions are planned for trade between Switzerland and Indonesia: After five years, the tariffs for the next 20 percent of Swiss exports will be eliminated; the last two stages are set to follow after nine and twelve years. Thus, at the latest twelve years following commencement of the free trade agreement between EFTA and Indonesia, 98 percent of Swiss products will reach the archipelagic state without tariffs, increasing the annual savings to 39.3 million US dollars.

Particular benefits for the MEM, food, chemical and pharmaceutical industries

According to Patrick Ziltener's analysis, the greatest savings potential lies in the MEM industry, food as well as in the chemical and pharmaceutical sectors. This is where tariff exemptions on medicines, perfumes, toiletries and cosmetics are likely to have a major impact. In the MEM sector, the elimination of customs duties on turbines and machinery for the food industry is of particular significance. The food industry will also benefit from massive reductions in customs duties; for example the customs tariff on certain confectionery products will be reduced from 19 percent to 0 percent.

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