Only half the size of the UAE, Switzerland counts the country as its most important trading partner in the region, with jewellery and watches leading the way in exports, thanks to a strong tradition of innovation.
“On the whole, the biggest export article for Switzerland is pharmaceutical products, comprising 40 per cent of our export. The Second is machinery, at 20 to 25 per cent and then watches, at 10 per cent,” says Walter Deplazes, Consul General of Switzerland. “The biggest export [to the UAE] is jewellery and watches, the most important article for trade between the two countries. Then we have machinery
and pharmaceuticals.”
The main imports from the UAE include precious stones and metals, as well as jewellery. Switzerland has a regular balance of trade surplus with the UAE. Apart from these traditional categories, recent years have seen specialised Swiss firms tap potential in areas such as public transport, renewable energy, insulation expertise, water supply and health care.
Recent developments indicate that trade and tourism between the two countries is thriving. Switzerland was among the top 10 countries investing in Dubai in the first half of 2012, during which the emirate attracted Dh16.5 billion in foreign direct investment (FDI). The top 10 countries accounted for 83 projects, or 72 per cent of the total, their combined investment of Dh15.5 billion accounting for 94 per cent of the FDI.
“The number of visas issued this year for UAE residents to visit Switzerland has already reached 14,000, compared to 12,000 in 2011,” says Deplazes, adding that a visit by high-level tourism officials to the UAE this month will do more to strengthen tourism ties.
The UAE’s recent ratification of the Swiss-UAE treaty for the avoidance of double taxation on income is likely to attract more business. The treaty was signed by both the UAE and Swiss governments in October 2011, but ratification by the Swiss parliament is pending. According to the treaty, the UAE is the go-to jurisdiction for investment from the Middle East into Switzerland, and from Switzerland into the region.
UAE investments into Switzerland underline the treaty. For instance, a consortium of UAE investors from Abu Dhabi and Dubai acquired the Swiss company SR Technics, one of the world’s largest independent technical solutions providers for international airlines, between 2006 and 2009. The UAE has similar partnerships with other European countries, according to which these countries reduce their taxes on the income of UAE residents.
Energy matters
A number of treaties further economic cooperation. These include a 1990 agreement on the mutual promotion and protection of investments. Ratification of a free trade agreement between the European Free Trade Association (EFTA) countries and the Gulf Cooperation Council (GCC) is still pending.
The UAE is important in Switzerland’s quest for renewable energy. “In Switzerland we generate some 40 per cent of our electricity through nuclear power. The government has decided to phase out all nuclear plants by 2034. Then we have to replace this 40 per cent with other sources of energy,” says Deplazes.
“One of the main ones is going to be photo-voltaic or solar energy. As you know, the UAE and especially Dubai is very advanced with regards to solar energy,” he adds.
Both countries are looking forward to the Emirati-Swiss Friendship Forum, slated for November 11 and 12. Solar energy will be one of the topics up for discussion. “The first event took place in November 2010 in Abu Dhabi,” says Deplazes.
“The second event was held in Lausanne in June last year. This year, it will take place in Abu Dhabi and in Dubai. This year we have partnered with Dewa, so it is about generation of energy, water treatments and such topics.”
The Swiss Business Council, which is in its 16th year, organises various events, which bring together the 2,000-odd Swiss nationals, in the UAE and their friends from other nationalities. “They organise the Spring Fest, the Christmas Fest and all occasions when the community comes together.”
Deplazes says trade season is a busy time for them. “Switzerland has a pavilion at every trade show. Whether it is Gitex or Big 5, there are activities that include dinners and receptions in the evening,” he says.
Diplomatic relations
Historically, trade contact between the two countries has always thrived. The late Shaikh Zayed Bin Sultan Al Nahyan, the first president of the UAE, was also so fond of Switzerland that the UAE-Swiss Friendship Society organised an exhibition last year at the Beau-Rivage Hotel in Lausanne.
“There was contact when the country was not the UAE but part of the Trucial States. Since 1973, we have had diplomatic relations with the UAE. In the next year, we will have the 40th jubilee of the diplomatic relationship between the two countries,” says Deplazes.
“This strengthened with the opening of a UAE embassy in Bern in the autumn of 2011 and the signing of a visa exemption agreement covering diplomatic and special passports.”
Deplazes is outspoken about the secret to Switzerland’s success. “We always talk about chocolate, cheese and watches from Switzerland. But don’t forget that in Switzerland we have no raw material whatsoever, apart from water.
“What is the success of Switzerland? It was a very poor country until after the First World War. But it is very rich in one thing — innovation. That is the reason we are placed number one in several rankings. Since you don’t have raw material, you have to use your brain in order to turn your disadvantage into an advantage.”
He says the Swiss are avid consumers of their own wares, including cheese, chocolate and luxury products.
“There is a lot of consumption in Switzerland. Switzerland has not been as affected by the economic crisis because domestic consumption is very strong. We are a country of eight million inhabitants and, of course, they cannot drive an economy as strong as the Swiss economy by themselves. We need exports. But thanks to this domestic consumption, we have not suffered as much during the crisis.”
For those travelling from the UAE to Switzerland, he has simple advice: “I would recommend that in a small territory you discover all of Switzerland. There are languages — German, French, Italian and Romansch. Try to discover all the different regions and the culinary culture. I don’t think you have so much diversity in such a small country elsewhere.”
