Jakarta. Swiss exporters are not worried about Indonesia’s new tariff-cutting trade deal with the European Union or EU, saying that the treaty can spur what they call a “healthy competition”. 

Indonesia and the EU have just agreed to remove over 98 percent of their tariff lines under the much-anticipated comprehensive economic partnership agreement (CEPA). They reached a “substantive conclusion” last week. The document will have to go through some law-making processes before it can fully kick in by early 2027. Swiss business lobby Economiesuisse is aware of the latest developments. Economiesuisse’s chairman Christoph Mäder also commented on whether the import tax-eliminating pact could make Indonesia-bound Swiss products less competitive, although Switzerland already has a similar treaty as a member of a different bloc called the EFTA.

“Look, we are in a competition with the EU countries and economies all over the place. As liberal market believers, we believe in competition,” Mäder told reporters in Jakarta on Tuesday evening. 

“Competition will further stimulate trade relationships. Yes, it’s a competition, but that’s healthy."

Indonesia reported that its trade with Switzerland had doubled from $1.5 billion in January-July 2024 to $3.1 billion the following year. As more business activities take place, the higher Indonesia’s surplus. Jakarta’s positive trade balance soared from $558.7 million to $2 billion over the said period. 

Jakarta already has a CEPA-level agreement with EFTA -- short for European Free Trade Association, which encompasses Iceland, Liechtenstein, Norway, and Switzerland. As the name suggests, CEPA is a trade agreement that is more comprehensive in nature, and promises greater tariff eliminations. Similar to the treaty struck with the EU, Indonesia scrapped 80 percent of its tariffs for EFTA businesses, but promised to raise it to 90 percent next year and eventually 98 percent by 2033 under the deal that entered into force in the second half of 2021. The trade deal sees EFTA economies removing over 99 percent of their duties on industrial products.

Bernardino M Vega, a senior member of the Indonesian business group Kadin, told the press that day that Switzerland would remain a key partner despite the EU deal. “I doubt the [EU pact] made a difference [in how we see Switzerland as a potential market],” the entrepreneur said.

Trading in a Post-US Tariff World

Mäder also gave his comment on the US President Donald Trump’s punitive tariffs that had left the world reeling. Trump has slapped a 19 percent import tax on Indonesian goods, while giving much higher duties of 39 percent on Swiss products. Despite global concerns over Washington’s trade blitz, the Swiss entrepreneur said that the policy provided greater impetus to trade more with Indonesia.

“Discussions around the US tariffs and the [recent] developments of the global economy have shown the world how we need to diversify supply chains and work with partners all over the world. Indonesia-Switzerland’s relations will become much more important in the future,” Mäder said.

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