Switzerland has one of the most competitive economies in the world thanks above all to its highly developed service sector that is 74% of the Swiss gross domestic product (GDP), which is the 2nd highest per capita in the world; CHF 77,943./- CHF (2015). Every year Switzerland spends close to 3% of its GDP, more than CHF 18.5 Billion, on research and development. Over three-quarters of this funding comes from the private sector. Poor in commodities but rich in a highly qualified workforce, Switzerland maintains intensive trade relations with the rest of the world.
In 2016, Switzerland's global exports were CHF 210 Billion; 3.7% more than were in 2015. Last year Swiss imports (CHF 173 Billion) also rose by 4.3%. The European Union (EU) is Switzerland's main trading partner. Most Swiss firms (over 99%) are small and medium-sized enterprises (SMEs), with less than 250 employees, and employ 2/3rd of the total work force. The Swiss tax system reflects the country's federal structure. Businesses and private individuals pay tax at all three levels of government (federal, cantonal and communal). The Federal Treasury collects around 30% of all tax revenue, the cantons 40% and the communes the remaining 30%. Private individuals and businesses pay direct taxes, which make up roughly 70% of total tax revenue. Indirect taxes make up around 30% of all tax revenue in Switzerland. The main indirect tax is the value-added tax (VAT), which is levied at federal level. Currently set at 8% of generated turnover, it is the lowest VAT rate in Europe. Switzerland's economic policy is based on its Swiss philosophy. The Government plays an active role focusing on productivity in domestic sectors by increasing labor productivity growth, enhancing resilience of the economy, and mitigating (any) side effects of economic growth. As well by improving framework conditions: market oriented and open economic system. (eg more than 30 free trade agreements), flexible and sound labor market (eg labor market participation rate 88% (males) / 75% (females) compared to the EU 78% / 63%), remarkable capacity to innovate thanks to high quality education (eg #2 in patent applications per capita), sound public finances (eg debt-to-GDP ratio of 35% compared to 90% of the Eurozone), well-developed infrastructure rail, road, energy, water, internet, etc.), and high quality of life (eg No. 1 IMD ranking).
Swiss-Pak Trade Cooperation:
Total trade volume is CHF 481.42 Million (2016). From 2015 through 2016, bilateral exports between Switzerland and Pakistan increased by 15.1% and 16.8% respectively. In percentage change compared to 2015, last year's main Swiss exports to Pakistan (CHF 358.82 Million) were: pharmaceuticals (+20.7%), machines (-3.4%), chemicals (+28.2%), watches (+12.3%), and other goods (+24.3%). From Pakistan (exports worth CHF 123.10 Million): textiles (+19.8%), agricultural products (+3.1%), and other goods (+15.3%). At present, 21 Swiss companies are directly and successfully operating in Pakistan namely (in alphabetical order): ABB (power transmission and distribution), Archroma (specialty chemicals), Bühler (agri-equipment), Clariant (specialty chemicals), Fracht (international freight forwarders), Gate Gourmet (airline catering and provisioning services), Givaudan (food flavors), Habib Bank AG Zürich (financial services), Habib Metropolitan Bank (banking services), Mövenpick (hospitality), Nestlé (agro-foods), Nexus (telecom / I.T. solutions), Novartis (pharmaceuticals), Parazelsus (pharmaceuticals (distribution)), Phillip Morris (consumer goods), Polygal (agricultural raw materials), Roche (pharmaceuticals and diagnostics), SGS (inspection & certification services), SICPA (security inks), Sika (construction chemicals), and Syngenta (agriculture). In the past ten years, Switzerland through these Swiss companies, has invested over CHF 1.5 Billion and thus is among top five foreign direct investors in Pakistan. As many as 80 Pakistani companies are also representing Swiss principals (textile machines, watches, food products...) in the local market. Crédit Suisse AG and Banque Cantonale de Genève (BCGE) are among some of the leading Swiss financial institutions who actively collaborate with their Pakistani partner institutions. Central Depository Company in Pakistan also works in close confines with Zürich-based International Securities Services Association.
The Swiss Business Council (SBC), founded in 2008 with the Chief Patronage of the Swiss Embassy and Patronage of the Consulate General in Karachi, plays an important role to further promote the trade relations in the country. In 2014 SBC signed a Memorandum of Understanding (MoU) to cooperate with Switzerland Global Enterprise (S-GE), equivalent to Pakistan's Board of Investment and Trade Development Authority, to enhance business ties (export and investment) between Switzerland and Pakistan. Since the MoU was signed, SBC and S-GE have organized several fact finding missions for Swiss SMEs (related to engineering, science and technology, infrastructure, organic foods, telecommunications...) who visited their potential local business partners situated throughout Pakistan. Earlier last month a high-profile Pakistani delegation organized by SBC visited Switzerland. Presence of Pakistani Ambassador to Switzerland H.E. Dr. Aman Rashid and Swiss Consul General in Karachi Philippe Crevoisier in all the scheduled events was highly appreciated by the Swiss companies, present each time in good number, who showed keen interest in Pakistan's emerging market demand. One of the highlight of the trip was meeting with the Head of the Bilateral Economic Relations Division at the State Secretariat for Economic Affairs (SECO) of the Swiss Federal Department of Economic Affairs Ambassador Livia Leu (below photograph).