Authorities told to remember "forgotten sector"

Procter and Gamble has its European headquarters in Geneva Keystone

Foreign companies are happy doing business in Switzerland but the Swiss authorities should not take them for granted, a study on their role has warned.

This content was published on February 2, 2006 - 17:37

It argues that Switzerland is challenged to understand their needs and ensure attractive conditions on a long-term basis.

Produced jointly by the Swiss-American Chamber of Commerce and The Boston Consulting Group in Zurich, it comes up with a number of suggestions to improve Switzerland's competitive edge over alternative locations in Europe.

Entitled "Foreign Companies in Switzerland – The Forgotten Sector", the study dispels the myth that foreign companies only come to Switzerland for fiscal reasons.

"I believe it's a forgotten sector because when you hear the general opinion about foreign companies [it is that] they are a nuisance and free riders which only come here for tax advantages," Martin Naville, CEO of the Swiss-American Chamber told swissinfo.

Off the mark

He said this point of view was way off the mark and didn't paint the true picture.

The study shows, for example, that about ten per cent of total Swiss GDP or over SFr40 billion ($31 billion) is generated directly or indirectly by foreign companies.

This is more than the entire Swiss engineering industry - the country's largest exporter.

Foreign companies are even more important for growth, with nearly a quarter of all economic growth in Switzerland in the last eight years generated by foreign companies.

Naville added that foreign companies were not represented either politically or through an association.


Suggestions in the study include recognition by the authorities that these firms are major contributors to the Swiss economy and its growth. But there are plenty of other ideas.

"Companies look at their location every three to five years, so we need to maintain the tax advantages that we currently have compared with other locations."

"Even more we need to work on... making it easier to deal with government and especially across cantons, which currently is extremely cumbersome."

"We also need to simplify Value Added Tax and other things that baffle foreign companies," Naville said.

The study also found there was "definite room for improvement" in the issuing of work permits and visa.

Foreign companies were also looking for more international flights to and from Switzerland, more international school and day care possibilities, and improvements to the housing situation.

The study is part of a project that will publish additional reports in 2007 and 2008 on further understanding Switzerland's competitive position in Europe and developing specific ideas to improve the Swiss position in the race to win foreign companies.

swissinfo, Robert Brookes

Key facts

More than 6,500 foreign companies are currently operating in Switzerland.
In 2003, foreign companies employed 210,000 people in Switzerland - about 7% of total employment.
Productivity of foreign companies in Switzerland is about 20% above the Swiss average.
The United States Amgen biotechnology company last month chose Ireland rather than Switzerland for a new production plant.

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In brief

A recent study from the Organisation for Economic Cooperation and Development suggested that Switzerland is currently losing its tax advantage over its European peers.

Foreign companies benefit Switzerland by providing employment within the country, investing in it, paying taxes (including their staff) and making a positive impact on Switzerland's trade balance.

The authors of the study say that two-thirds of the more than 100 foreign companies surveyed make decisions about their locations at least every ten years.

Keeping its competitive edge over other European countries is therefore "critical" for Switzerland in the mid- and long-term, they argue.

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