«Open economic system is the key for the economic growth»

Korea Economic Daily - 12.02.2018 

Korea Economic Daily: This is your first visit to Korea 

Alain Berset: I’ve found that the image of South Korea that I had in mind exactly matches to the actual image of this country. South Korea is innovative and energetic. You can feel the energy even in a day. I believe that Korea would get more popularity and become a tourist destination after the PyeongChang Olympic Games. 

What did you discuss with the South Korea President Moon Jae-in? 

We discussed reinforcement of the two countries’ cooperation in the fields of economy and science as well as the security situation of the Korean Peninsula. Switzerland is working together (as a member of Neutral Nations Supervisory Commission) for the talks between South and North Korea and supports every effort for the talks. It is very symbolic that the two Koreas make a united team and participate in a game together. I am proud that Switzerland is able to play the women’s ice hockey game with the united Korean team.

In 2006, Korea concluded FTA with EFTA which includes Switzerland.

We clearly see a potential for further developing our already excellent relations with South Korea. I in particular think of our trade relations which certainly could be reinforced, for example by updating of the free-trade agreement which EFTA countries have concluded with the Republic of Korea. 

What areas are you particularly interested in developing for the bilateral relationship between Switzerland and South Korea?

There is great potential is our bilateral cooperation in the field of research and innovation. Both Switzerland and Korea are world champions in innovation. Joint research projects would be mutually beneficial. 

Switzerland has emerged as the Silicon Valley of the 3D-robotics industry not only by hosting Google’s largest campus outside California and the Swiss office of Disney but also by offering favourable conditions for start-ups. What brought them to Switzerland? 

The reasons are a market oriented and open economic system (e.g. more than 30 free trade agreements), a flexible and sound labour market, remarkable capacity to innovate thanks to high

quality education, sound public finances, well-developed infrastructure (rail, road, energy, water, internet, etc.) and high quality of life. 

Innovation growth and smart cities are priorities in the South Korean national agenda. 

The federal government is invested in optimising the framework in a sustainable way, for example in developing e-government, facilitating business financing, improving access to markets, encouraging education, research and innovation. Switzerland has an innovation promotion agency that provides funding, advice and networks to start-ups and helps to improve the competitiveness of Swiss companies. 

International order of trades seems to be restructured on the basis of protectionism. 

Nevertheless, we have to maintain the open market. Openness is the key factor for Switzerland’s economic growth. We have to keep our openness and also provide our own citizens with good social circumstances and opportunities for work. We have to find the equilibrium point. Korea also has a competitive economy and may take advantage from the open market. 

Last year, Swiss economic growth rate was 0.9%, lower than expected. 

Economy is recovering from the slowdown after the discontinuation of the minimum exchange rate against the euro in January 2015. Economic growth was softer than expected in particular in the second half of 2016 and first half of 2017, mostly due to the services sector. But recently the economy resumed stronger growth. GDP growth is substantial and more broad-based across industries. A lively recovery is expected over the next few quarters given the global upswing. 

How do you forecast Switzerland's three largest exports areas, pharmaceuticals, machinery and watches?

According to the latest data and to the actual particularly favourable international and monetary environment, we expect all three sectors to experience above-average growth levels in the coming years. The current strong international economic growth is boosting the foreign demand for Swiss goods. The Swiss franc has depreciated during the second half of 2017, thus increasing the relative competitiveness of Swiss goods. 

The term "Swissness" is successfully used as a marketing tool to promote Swiss products and business.

Swissness is associated with high quality, exclusivity and confidence. This is rooted in our companies’ ongoing quest for innovation and excellence. In order to preserve the value of the 'Swiss' brand in the long term and to avoid misuse, the new 'Swissness' legislation, which came into force on 1 January 2017, strengthens protection for the 'Made in Switzerland' designation and the Swiss cross. 

US Treasury Secretary Steven Mnuchin recently said, "Dominant digital currency bitcoin should not be allowed to become the Swiss bank account of the modern era used to hide illicit activities".

Switzerland has adopted all of the relevant standards of the OECD and other international bodies in the area of tax. Consequently, Switzerland can no longer be regarded as a tax haven. Regarding the challenges of blockchain technology, Switzerland has recognised the problem. Our Finance Department is working on examining the legal framework and identifying the possible need for regulatory action with a Blockchain/ICO working group specially created for this purpose. The objective of this work is nothing less than to maintain the integrity of our financial centre. 

You are often featured as ‘the youngest’ in the stages of your political career.

I didn’t really choose to become a politician. As a child it was never my dream to become a politician, I wanted to be a train driver. My involvement in politics just came about through circumstance. When I was young, I was involved in numerous local clubs, mostly sport and music. Politics was a natural progression from being socially active through clubs. In the Council of States, I was fortunate to rub shoulders with more seasoned colleagues, which allowed me to learn the ropes very quickly. 

Switzerland is one of the very few countries worldwide having a semi-direct democratic system and fared very well with it. However, the decision making process is rather complex and time-consuming.

The system of direct democracy allows us to decide collectively how we wish to live. It is a great privilege. But it’s not self evident. We are currently at the heart of global phenomena happening all around us, such as globalisation and the digital revolution. Our decision-making process and our bicameral parliament could be considered as acting as a brake by some. In reality, they are an invaluable strength and pillar of stability both for the country and the economy. Since the birth of the federal state in 1848, Switzerland has experienced an unbroken period of governmental continuity. This stability and security attracts businesses and is a vital to the country’s prosperity. 

The federal women's right to vote was only introduced by 1971.

During the last years, Switzerland has made steady progress in various areas of gender equality. For example, a bill requires women to make up at least 30% of the members on the board of directors and 20% on the management board of listed companies by 2030. In order to eliminate the average gender pay gap in the private as well as the public sector, Switzerland launched a self-analysis tool for companies with at least 50 employees to check their pay practices.