The Association of Southeast Asian Nations (ASEAN) and Switzerland might seem an odd pairing at first glance. However, relations between the two have just begun to intensify over the past year.
In 2009, the European nation appointed its first ambassador to ASEAN and in 2016, it was conferred the status of sectoral dialogue partner of ASEAN at the 49th ASEAN Foreign Ministers’ Meeting (AMM) in Vientiane, Lao.
A fresh beginning
Much of ASEAN-Switzerland relations have centred on trade, aspects of humanitarian interest and environmental issues.
In conjunction with the elevation of Switzerland’s relations to sectoral dialogue partner, the first ASEAN-Switzerland Joint Sectoral Cooperation (AS-JSCC) Meeting was held in Jakarta in November 2016. The high-level meeting between the two included discussions on possible areas of ASEAN-Switzerland cooperation. This included, support for the realisation of the ASEAN Community Vision 2025 goals, capacity building programmes, human resource development and sustainable development.
In line with the AS-JCC, both sides have agreed to a List of Priorities for Cooperation for 2017-2018 and are actively developing the ASEAN-Switzerland Practical Cooperation Areas (2017-2021). Combined, these two initiatives will lay the foundations for a practical relationship between ASEAN and Switzerland which would be of mutual benefit to both.
In September last year, ASEAN and Switzerland further boosted their collaboration with the inauguration of the ASEAN Committee in Berne (ACB). ASEAN Committees are established to promote ASEAN interests in the host nation or international organisation. Besides enhancing cooperation, ASEAN Committees also help develop and maintain effective partnerships with external parties in line with the ASEAN Community Vision 2025.
Enhancing trade and business
A huge area of focus of ASEAN-Switzerland relations is trade and investment. According to data from the ASEAN Secretariat, two-way trade between the two had grown from US$18.3 billion in 2015 to US$24.5 billion in 2016. ASEAN’s exports to Switzerland nearly doubled from US$6.8 billion in 2015 to US$13.2 billion in 2016. However, imports from Switzerland decreased slightly from US$11.4 billion in 2015 to US$11.3 billion in 2016.
Besides that, foreign direct investment (FDI) flows from Switzerland to ASEAN increased by 63% from US$523 million in 2015 to US$851 million in 2016. A big chunk of Swiss FDI flows into the region via the manufacturing sector.
There is still plenty of opportunities and potential left for both sides to take advantage of in terms of trade and business. The current Swiss ambassador to ASEAN, Yvonne Baumann when assuming her position, expressed her commitment that she would actively promote and develop closer ASEAN-Switzerland ties, including via the European Free Trade Association (EFTA) – composed of Norway, Switzerland, Iceland and Liechtenstein.
Besides that, a huge macroeconomic boost to trade would come from a ASEAN-Switzerland FTA. So far, a comprehensive FTA between the two is still a long way to go. Nevertheless, under the ambit of the European Free Trade Area (EFTA), Switzerland already has an ongoing bilateral FTA with Singapore, signed an FTA with the Philippines in 2016 and is currently negotiating agreements with Malaysia, Thailand, Vietnam and Indonesia separately.
Another area of exploration is tourism. Tourist influx into ASEAN breached the 100 million mark since 2013 and continues to grow to reach 108 million in 2015.
Switzerland, is known for its hospitality industry and herein lies a huge goldmine for the ASEAN tourism industry to take advantage of. In sustaining the positive growth of the tourism industry, ASEAN must start working as a collective to facilitate and improve tourism influx into the region. Knowledge transfer in this area with Switzerland would be able to catapult the quality of tourism in this region to world class standards.
For now, a viable starting point for ASEAN-Switzerland business ventures is the Swiss Business Hub ASEAN headquartered in Singapore. It is the official international trade and investment promotion agency of the Swiss state with offices in Malaysia and Vietnam and serves as the first point of contact in Switzerland for anything related to internationalisation. The hub’s services include consulting, support, market analysis and the establishment of communications with local partners, among others.
Swiss firms are already being exposed to opportunities in Vietnam, Singapore and Indonesia via the Swiss Business Hub. Most recently, the hub has been promoting the Fintech Challenge Vietnam – giving Swiss fintech companies a chance to break into this encouraging market.
Although the relations between ASEAN and Switzerland has only just been formalised, the potential gain from the relationship is promising – and could put a smile on the faces of investors in the long run.