Strengthen The Economy, Find Out The Indonesia & Switzerland’s New Bilateral Investment Treaty

Strengthen The Economy, Find Out The Indonesia & Switzerland’s New Bilateral Investment Treaty

  • InCorp Editorial Team
  • 14 April 2023
  • 5 minute reading time

Indonesia and Switzerland share a unique relationship as they collaborate across fields and areas. The two contribute to the economy of one and the other dynamically and work together to overcome prominent hardships, especially the COVID-19 pandemic.

To support the initiatives of economic resurgence, a new bilateral investment treaty was passed in March 2022 between the Indonesia Ministry of Investment and SwissCham Indonesia. The strong tie of the new bilateral investment treaty is evident as the two countries agreed to launch negotiations on a Comprehensive Economic Partnership Agreement.

The initiative stated that Switzerland named Indonesia one of the seven priority countries for economic development and cooperation. Therefore, the new bilateral investment treaty must be approved. Indonesia has a national embassy set up in Bern, Switzerland.

To substantiate further, Switzerland also has an embassy set up in the heart of Indonesia, Jakarta. Concerning the economy, in 2021, Switzerland was the 10th largest foreign investor in Indonesia, with investments over the value of USD 590 million that were spread over 281 projects.

The nature of these investments varied greatly, which was arranged in the new bilateral investment treaty. Some came from food and beverage entities, others from chemical and pharmaceutical, forestry, and fisheries.

As of March 2022, approximately 150 Swiss companies are actively operating in Indonesia. This is exceptionally beneficial for Indonesia as it creates an astounding 50,000 jobs, according to SwissCham Indonesia chairman Chris Bendl.

The New Bilateral Investment Treaty’s Primary Goal

Besides the agreement in the new bilateral investment treaty, Swiss companies are in prime and optimal conditions to help Indonesia develop its various sectors to be solid and competitive. These companies are optimistic about Indonesia’s potential economy.

With apt business decisions and the new perspective offered, Indonesia would be able to make strides and realize the goals of transformation. The primary purpose of the treaty set up between the two countries is to promote and protect investments.

Kurtz Kunz, Ambassador of Switzerland to Indonesia, Timor Leste, and ASEAN, further elaborated that the new investment treaty is developed to avoid double taxations charged to business entities.

Increase in Job Creation

A prominent concern for business entities looking to operate in Indonesia is the scarcity of skilled labor force who have obtained relevant qualifications. This scarcity, unfortunately, occurs across various sectors, leading to frustration for many businesses. The new bilateral investment treaty tries to take care of that situation.

Businesses affiliated with SwissCham have been working closely with various institutions in Indonesia, such as Politeknik Negeri Jember, Politeknik Industri Logam Morowali, and Akademi Komunitas Industri Manufaktur Bantaeng. The collaboration is not only for expanding the availability of human resources but ensuring that they are of good quality.

Henry Chia, Vice Chairman of SwissCham, also revealed that the countries, especially Indonesia, have greatly benefited from the bilateral arrangements implemented 70 years ago. He also emphasizes that there is a need for constant collaboration between various stakeholders, including the government, to ensure that the workforce produced by the country is of quality and would be ready to join the crew.

Establishing The Right Human Resources

With the Law of Job Creation in effect, companies are given more flexibility to obtain talents or labor force to meet their business needs. However, it is crucial to find the right strategy for human resource management to find suitable people to join your business. Here are some insights to add.
Clear Company Objectives

Understanding and identifying the aims, objectives, and missions is essential, not limited to long-term plans. The goals laid out shall be further categorized into short-term and long-term projects. The next step is to ensure the methods have been communicated to the relevant persons within the company. This would make reaching the goals more manageable and effective.

Evaluation of HR Capacity

To ensure that the goals are promptly met, it is vital to understand the employees working within a company. The company would better allocate resources to experts in particular areas. It would also help assess the skill sets that employees may have.

Measuring Capacity Against Targets

By doing so, you would be able to see the barriers hindering the realization of the targets. It would also help you plan strategies that would help effectively overcome the issues and achieve the targets as required.

Assessing Future Requirements

A forecast regarding the company’s human resources department would help decide matters regarding skills still required by the current employees, expertise that is not yet sufficiently utilized, and further company growth.

Identifying Necessary Tools

To further ensure that human resources within a company are of the best quality, there is a need to identify how the tools utilized by the employees impact their ability to conduct various tasks. By doing this, employees would be able to focus better on their duties and create positive growth for the company.

Evaluation Process

A review conducted on the management process would allow companies to identify the areas in dire need of improvements and those already functioning well. This would also positively impact the business process and allow for greater efficiency once addressed.

To allow for proper human resources management, InCorp (formerly Cekindo) provides recruitment and HR establishment services. Furthermore, InCorp also extends other services on employment too.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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According to the Indonesia’s Manpower Law employers can hire the Indonesian talents either under a temporary or a permanent contract.

  • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
  • Increase the competence of the workers by giving or encouraging job training
  • Follow the procedures of termination (Terminating an employee in Indonesia can be a long, tedious, and expensive process.)
  • Observe the working hours, holidays, and overtime regulations
  • Give mandatory employee benefits including social security and health insurance
  • Withhold only the right amount of income tax on behalf of the employees
  • Follow the wages and other benefits outlined by the law
  • Process the work permits for foreign employees

Minimum wage (may vary based on region), 12-day annual leave (minimum), BPJS coverage, holiday allowance (usually distributed before Christmas or Eid al-Fitr).

In addition to the agreed-upon salary, employers also typically offer some other compensations such as the overtime pay, paid annual leave, festive holiday leave, and insurances.