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Switzerland to Promote Indonesia’s Economic Recovery Through SMEs


Indonesia-Switzeland collaboration has been started since 1951, which has pushed the issues of development, poverty, and climate change to foster a climate-resilient economy. Indonesia is a priority country for Switzerland’s economic development cooperation. Under the responsibility of the Swiss State Secretariat for Economic Affairs (SECO), Switzerland’s Cooperation Program with Indonesia strives to achieve inclusive growth and poverty reduction. Switzerland sees Indonesia as a country that has good economic growth but still has people living in poverty—up to 25 million and 50 million—at risk of falling back into poverty due to COVID-19.

Through the Swiss State Secretariat for Economic Affairs (SECO), Switzerland’s Cooperation Program with Indonesia makes Indonesia a priority country for development. Switzeland assists Indonesia in the Medium-Term Development Plan for Indonesia’s post-Covid-19 economic recovery and transformation. Indonesia’s medium-term economic development is focused on the SME sector. Switzeland, through SECO, helps Indonesia overcome the challenges of diversified development and become a more competitive, resilient, fair, and resource-efficient economy. Switzeland is helping Indonesia improve the policy framework to spur investment in developing a sustainable value chain. SECO seeks to reduce barriers to SME financing and encourage women’s entrepreneurship by leveraging fintech and digital platforms to boost the productivity and growth of Indonesian SMEs.

The President of the Swiss Confederation, H.E. Madame Doris Leuthard, stated that it would help fund and support Indonesia’s Sustaining Competitive and Responsible Enterprises (SCORE) program because the Swiss government saw the positive potential of SCORE to help improve the workforce and working conditions in Indonesia. Indonesia has SMEs and many UKM players who need empowerment and financial assistance to increase productivity and product development at the national and international levels.

The launch of economic development cooperation was inaugurated through the virtual Indonesia-Swiss Development Cooperation program for the 2021–2024 period on February 25, 2021. This collaboration has a focus on strengthening public institutions through resource utilization and strengthening the competitiveness of the private sector, especially SMEs. Furthermore, the Ministry of Cooperatives and SMEs, together with the Swiss Indonesia Chamber of Commerce (SwissCham Indonesia), are collaborating to increase the capacity of Indonesian SMEs to penetrate special export markets to Europe via Switzerland. In this agreement, the Deputy Head of Mission of the Embassy of Switzerland in Indonesia, Michael Cotties, stated that Indonesian SME products have the potential to enter the European market.
The development of Indonesia-Switzeland cooperation is increasing to reach a number of fundamental development sectors in Indonesia. Switzeland is a donor country for Indonesia, which provides assistance either through financing, empowerment, or encouraging technology transfer to support cooperation programs between the two countries. Therefore, it is not surprising that Swiss investment in Indonesia is increasing along with the development of comprehensive cooperation. 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$469.5 million, spread across 199 projects. According to the Indonesian Embassy in Bern, Switzerland, Indonesia recorded a trade balance surplus of US$ 15.34 million, or IDR 10.37 trillion, in 2021.

This proves that the Indonesia-Switzerland collaboration is driving significant economic growth amid the COVID-19 pandemic. Therefore, Switzerland is an important trading and economic partner for Indonesia and vice versa, so this referendum shows Indonesia and Switzerland’s efforts to ensure open and fair trade are the pillars of a trade agreement. Therefore, Indonesia ratified the Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement (IE-CEPA) to ensure open trade. Indonesia-Switzerland is committed to increasing trade for economic recovery, increasing investment, and supporting industrialization in Indonesia. IE-CEPA is one of the trade routes for Indonesian SME products to reach the European market more quickly. The Indonesia-Switzerland development cooperation model, based on Indonesia’s priorities, can be used as a model for more effective development cooperation. Therefore, Switzerland is a country that cooperates with Indonesia, which continues to drive surpluses for Indonesia and Switzerland itself.
The Swiss government continues to support economic recovery policies and economic potential that can accelerate economic growth and development in Indonesia. UKM is one of the sectors that plays a big role in Indonesia’s current economic growth. UKM is an environmentally friendly product because it does not require a large industry to process it. Therefore, this is in line with Switzerland’s goal of suppressing global climate change and fostering a climate-resilient economy.

Economic development is a key point in Switzerland’s vision for international cooperation in 2021–2024, fostering the skills needed in various labor markets in developing countries. Switzerland helps partner countries such as Indonesia achieve a reliable economic framework. Therefore, Switzerland helps Indonesia fund the development of Indonesian SMEs because SMEs are a fundamental sector of the Indonesian economy. Indonesia has very good SME skills but very limited marketing and branding capabilities to reach the global market.

Source: Modern Diplomacy

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