SWITZERLAND'S PERSPECTIVE ON INDONESIA
Relations between Switzerland and Indonesia are strong and dynamic.
Relations between Switzerland and Indonesia are strong and dynamic. They cover a broad array of political affairs, economic cooperation, human rights, trade, tourism, humanitarian assistance, and culture.
The Swiss Agency for Development and Cooperation (SDC) implemented development projects in Indonesia between 1976 and 1996. After SDC's gradual phase-out, Switzerland set up an economic cooperation and development program through SECO. In 2009, Indonesia became a priority country for SECO.
Since then, SECO has implemented three cooperation programs focusing on economic governance, private sector competitiveness, climate change mitigation, trade, public service delivery, and sustainable urbanization. Although official development assistance (ODA) plays a marginal role relative to GDP, Indonesia still greatly appreciates Switzerland's high-quality, impartial technical service.
In 2017, Switzerland opened its first Swiss Business Hub in Indonesia that is responsible for implementing Swiss export strategies in Indonesia and promoting Switzerland as a business location. When adequate, the SECO program will create synergies between Swiss private investments in Indonesia and economic cooperation activities.
In addition, Switzerland, together with its partners in the European Free Trade Association (EFTA) and Indonesia, are about to conclude a Comprehensive Economic Partnership Agreement (CEPA), which includes a Memorandum of Understanding (MoU) and a specific chapter on economic cooperation. Through well-targeted activities, SECO's program will also contribute to the implementation of the CEPA.
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As part of the Cooperation Programme 2021-2024, a particular focus will be placed on facilitating the transfer of knowledge from Switzerland to Indonesia. This applies particularly to sectors in which Switzerland has proven expertise and where demand by the Indonesian side is highest, including skills and employment, tourism, and sustainability.
Switzerland and Indonesia are also multilateral partners. In July 2016, Switzerland became a Sectoral Dialogue Partner of the Association of Southeast Asian Nations (ASEAN), strengthening Switzerland's political and economic relations with Indonesia and the Asia Pacific region. Indonesia's development has positive regional spill-over effects, which is also in Switzerland's interest. Switzerland aims to enhance its Cooperation Programme 2021-2024 will further enrich the Sectoral Dialogue Partnership by developing and supporting relevant initiatives in Indonesia and other ASEAN member states.
SECO’s contribution to Indonesia’s development agenda
SECO’s primary goal is to assist Indonesia in overcoming its remaining development challenges and become more competitive, resilient, equitable, resource-efficient, and thereby a reliable political and economic partner for Switzerland.
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SECO’s Cooperation Programme for 2021–2024 focuses on sectors where SECO has proven expertise, where it can bring in Swiss experience, and where it has built a strong partnership with Indonesia. Therefore, SECO will focus its future support on the following two thematic priorities fostering effective public institutions, particularly in urban areas, through efficient use of resources and strengthening private sector competitiveness, particularly SMEs.
Fostering effective public institutions, particularly in urban areas, through efficient use of resources
The program will be guided by the government’s vision of “collecting more and spending better” concerning macro-economic reforms. Building on past achievements, SECO will continue to support economic and financial policy reforms that lead to broader resource mobilization, more reliable management of public finances, and ultimately transparent and efficient use of public resources. Furthermore, SECO will improve the sustainable and inclusive use of said resources more transparent, effective, and targeted by addressing existing shortfalls in the budget management process.
Special attention will be placed on assisting the Indonesian government in defining sound macro-economic responses to the economic crisis caused by COVID-19. The program will also contribute to further improving the regulation and supervision of the Indonesian financial and capital markets with a stronger focus on stability and resilience.
Strengthening private sector competitiveness, in particular, SMEs
The second thematic priority of the program aims to improve the performance and competitiveness of the private sector with a particular focus on SMEs. While SMEs account for more than 90% of all firms in Indonesia, they suffer from low productivity. Reducing persisting constraints will help improve productivity, accelerate growth, improve social and environmental sustainability, address gender inequalities in labor participation, and create high-quality jobs. With the Indonesian government’s focus on in-country value addition, more skilled labor force, and increased export drive, SECO’s engagement in those areas remain relevant.
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