Direct Foreign Investment in Switzerland

Switzerland, a fundamentally prosperous and stable modern

economy with a per capita GDP roughly 10% above that of the big West European economies, is experiencing shortterm difficulties. After recovering slowly in 199495 from recession, the Swiss economy remains weak, mainly because of the strong Swiss franc and weak growth in Swiss export market, especially in other European countries. Over the near term, growth may average barely 1%, with more than onehalf of this increase resulting from growth in inventories. Weak domestic consumer demand is the principal culprit; stagnation in real disposable income is combining with a reluctance to reduce saving rates in the face of an uncertain employment outlook (Switzerland, 1996b).

Switzerland's leading sectors, including financial services, biotechnology, pharmaceuticals, and specialpurpose machines, will therefore be more reliant on export markets at the same time they are being squeezed by the strong franc. Consequently, growth in machinery and equipment investment, for example, is expected to taper off. On the other side, import growth has been fueled by the strong franc; there are growing indications that Swiss manufacturers are substituting imported inputs for domestic ones (Switzerland, 1996b).

Considering Switzerland's status as a rocksolid financial center, investment in Switzerland is still an excellent opportunity. Switze

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zerland: Trade regulations..., 1996). Other certifying requirements apply to drugs (prescription and overthecounter), which must receive approval from the intercantonal drug commission. Imported products must also be labeled in all three official languages (German, French, Italian) (Switzerland: Trade regulations..., 1996). 4. Telecommunications. Until recently, the Swiss PTT maintained a full monopoly over the telecommunications industry and market. A 1992 law continues to give the PTT a dominant role in basic (voice) services and network technical aspects of broadcasting, but a separate federal office (BAKOM) now certifies equipment. The telephone set market has been deregulated, but all equipment connected to the public networks, which remain under PTT monopoly, must be tested and certified. Preference therefore exists for equipment procured from companies domiciled in Switzerland. 5. Import Licenses. Import licenses are required only for a limited number of products, and generally fall into two categories: measures for the protection of the country's agriculture and measures of state control (Switzerland: Trade regulations..., 1996). Under protection of the country's agriculture, Switzerland imposes quantitative
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Approximate Word count = 1751
Approximate Pages = 7 (250 words per page)

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