The results of this referendum provide convenience for the immediate implementation of the IE-CEPAJakarta (ANTARA) - Diplomatic relations between Indonesia and Switzerland have spanned decades, with the year 2021 marking the 70th anniversary of both nations' diplomatic relations since being first established back in 1951.
Relations have deepened not only between both governments but also between businesspersons and people-to-people contacts of the two nations.
Indonesia is one of Switzerland's priority nations through the Indonesia Cooperation Program 2021-2024, with funding support of CHF 65 million.
These programs, among others, focus on promoting “inclusive and sustainable development”, improving urban planning (effective public institutions), and developing MSMEs.
According to data from the Ministry of Investment (BKPM), Switzerland ranks among the top 10 for Foreign Direct Investment into Indonesia in the first semester of 2021. The value of Swiss investment in Indonesia reached US$469.5 million spread across 199 projects.
Currently, 150 Swiss companies in Indonesia have employed 50 thousand workers in Indonesia.
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According to data from the Indonesian Embassy in Bern, Switzerland, Indonesia recorded a trade balance surplus of US$715.34 million (Rp10.37 trillion) with Switzerland in the first half of 2021.
The value of Indonesia's exports to Switzerland increased in almost all major export commodities, except for precious metals and jewelry and gems.
Precious metals and jewelry and gems (HS 71) exports experienced a significant decline, from US$1.04 billion in the first half of 2020 to US$665.97 million during the corresponding period this year.
This resulted in a decrease in the Indonesia-Switzerland trade balance surplus, from Rp13.03 trillion in the first semester of 2020 to Rp10.37 trillion during the corresponding period of 2021.
Even so, a significant increase was still recorded in essential oil commodities by 36 percent; furniture, 22 percent; knitted textile products, 17 percent; and footwear, 15 percent.
Based on the order of their export values, Indonesia's 10 main export commodities to Switzerland were precious metals and jewelry/gems (HS 71), footwear (HS 64), non-knitted textile products (HS 62), knitted textile products (HS 61), electrical equipment ( HS 85), furniture (HS 94), coffee (HS 0901), essential oils (HS 3301.29), turbine engines and spare parts (HS 84), and organic chemicals (HS 29).
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Switzerland had earlier relaxed its policy on limiting economic and social activities on June 26, 2021, as the current global pandemic left a significant impact on the Indonesia-Switzerland trade surplus in the first half of 2021.
The State Secretariat for Economic Affairs (SECO) informed that the relaxation had triggered swifter economic recovery and expects Switzerland's GDP in 2021 to increase by 3.6 percent, from its three-percent forecast in March.
After experiencing a negative growth of 0.5 percent in the first quarter of 2021 and negative 2.9 percent in 2020, the Swiss economy is expected to enter the positive growth territory until the end of 2021.
Indonesian Ambassador to Switzerland and Liechtenstein, Muliaman Hadad, estimated the trade balance in the third and fourth quarters of 2021 to increase as was recorded during the same period last year.
Relaxation in community activities in Switzerland is expected to encourage an increase in Swiss economic activity and demand for Indonesian products.
Important partner
Indonesia is a vital trade and economic partner for Switzerland, Chair of the Swiss Parliament (President of the Council of States) Alex Kuprecht stated.
As the third-largest democracy in the world after the United States and India, Indonesia has the potential to become the world's fourth-largest economic giant, he noted at a meeting with the media in Jakarta, Monday.
Indonesia is one of the eight priority countries in the SECO economic development cooperation program since 2009, he added.
The economic development cooperation between Switzerland and Indonesia for the 2021-2024 period, among others, included the strengthening of public institutions through the efficient use of resources and strengthening the competitiveness of the private sector, especially MSMEs, and developing sustainable tourism that focuses specifically on issues of gender equality, climate change, and sustainable development.
He further informed that the Indonesia–European Free Trade Association Comprehensive Economic Partnership Agreement (IE-CEPA) with Switzerland, Liechtenstein, Iceland, and Norway will be applied starting from November 1, 2021.
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Based on results of the referendum held in March 2021, most Swiss people support the realization of a free trade agreement with Indonesia in the IE-CEPA, Kuprecht stated.
"The IE-CEPA agreement is expected to encourage increased cooperation between Indonesia and Switzerland," he affirmed.
The objectives of the IE CEPA encompass improving market access, legal certainty in products and services, procurement of goods and services, and labor rights.
"The positive impacts of the comprehensive economic partnership agreement include sustainable trade and creating jobs for EFTA countries that comprise Switzerland, Liechtenstein, Iceland, and Norway," he remarked.
Convenience
Indonesian Trade Minister Muhammad Lutfi welcomed the Swiss referendum results that approved comprehensive economic cooperation with Indonesia.
The results demonstrate Switzerland's commitment to supporting the realization of cooperation between the two countries in the IE-CEPA scheme.
"The results of this referendum provide convenience for the immediate implementation of the IE-CEPA," he stated.
The minister is optimistic that trade relations between Indonesia and Switzerland would improve with IE-CEPA.
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He echoed Indonesia's readiness to cooperate in increasing trade and investment under the IE-CEPA that recognizes the spirit of cooperation, mutual respect, and mutual benefit for Indonesia's flagship products, palm oil and its byproducts.
Majority of the support from 51.6 percent of the voters for IE-CEPA is positive news for the trade relations between Indonesia and Switzerland as well for Indonesia's economic integration with EFTA countries.
The result of this referendum is also an affirmation of Indonesia and EFTA countries to prioritize cooperation, not competition or confrontation, including in treating sustainability issues.
"Switzerland is an important trading and economic partner for Indonesia and vice versa, so this referendum demonstrates the efforts of Indonesia and Switzerland to ensure that open and fair trade becomes a pillar for trade agreements," Luthfi stated.
With the ratification of the IE-CEPA by Switzerland, Indonesia will also expedite the ratification process, so that the implementation of IE-CEPA can be conducted immediately.
Indonesia and Switzerland are committed to increasing trade for the sake of economic recovery, including increasing investment and supporting industrialization in Indonesia.
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Editor: Fardah Assegaf
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