Switzerland’s export promotion agency will struggle to keep up with demand from small firms unless it gets more funding, its outgoing president has told swissinfo.ch.
Ever more small and medium sized enterprises (SMEs) are seeking help from the Osec Business Network Switzerland to tap into foreign markets, but the agency receives less cash than its foreign competitors.
Rolf Jeker, who handed over the presidency to former Justice Minister Ruth Metzler on Friday, complained that Osec’s annual SFr17 million budget ($19.8 million) for boosting Swiss exports paled in comparison with the SFr68 million given to its Finnish counterpart.
“SMEs are the backbone of our economy and small companies are increasingly exporting and going to foreign markets,” Jeker told swissinfo.ch.
“Merely subsidising our exporters would break the back of our economy because it would stifle innovation and competitiveness. But there is a limit, and we have fallen below that limit.”
Jeker lamented the fact that Osec routinely received extra one-off handouts from the state in times of economic crisis, but that its core budget has remained static for a number of years.
The agency was awarded a SFr10 million cash injection for 2009 and 2010 to promote exports in niche areas such as alternative energy. A further SFr25 million was then granted to boost the cleantech, medtech and architecture sectors.
“Every time we hit a crisis they give us more money, but if I am to be honest not much ever comes out of it,” he said. “It would be better to give us an extra SFr5 million a year in good times and bad.”
Osec has had its critics over the years, most notably during the past decade when its autocratic and opaque organisation was blasted by politicians.
The attack ousted former chief executive Balz Hösly in 2004 and the agency went through a period of reorganisation under the presidency of Jeker, who took up his post in the same year.
Jeker claims that Osec has long seen an end to the inappropriate allocation of funds that soured relationships with the corporate and political worlds. Gone too is the heavy-handed monopolistic style that stepped on the toes of private sector consultants.
Osec now fosters links with private sector partners by farming out mandates to its extensive global “pool of experts” network, said Jeker.
“We used to be a player and a referee at the same time in the export promotion business,” he told swissinfo.ch. “We are now giving work to the very people who once complained that we were threatening their jobs.”
Osec was given the thumbs up by a recent parliamentary report on its activities and has been awarded further mandates, including the promotion of imports and of Switzerland as an attractive location for foreign firms.
Private sector drive
Peter Neuhaus, spokesman of the SME Association, also gave Osec good marks for its recent performance. “It is a professionally run organisation that offers real benefits to SMEs,” he told swissinfo.ch. “Osec has put its problems firmly in the past.”
Marcelo Olarreaga, an economics professor at the University of Geneva, said that Osec had also compared favourably with international peers in a 2006 report on export promotion agencies he co-authored for the Centre for Economic Policy Research in London.
Following a stagnant period in the 1980s when export promotion agencies had a bad name for being too bureaucratic, their numbers have tripled in the last two decades, the report found.
“Osec compares very well to other international export agencies and can be seen as what is described as an optimal agency,” he told swissinfo.ch. “We know that strong, centralised agencies with executive board members from the private sector, but which are publically funded, tend to work better at promoting exports.”
Ironically, Jeker’s successor to the presidency is a politician by trade. Metzler cut her teeth as head of finance at canton Appenzell Inner Rhodes before becoming a member of the federal government where she headed the justice ministry from 1999 to 2003.
Osec denied that Metzler had been put into place to leverage her political experience in the quest for increased funding. Osec’s annual budget of SFr17 million for export promotion and a further SFr12 million, split between fostering imports and championing “location Switzerland”, is set for the next four years.
Speaking at a press conference in Zurich on Friday, Metzler said she saw her future role as “creating bridge between the corporate and political worlds”.
Formed by an Act of parliament in 1927 as the Office for Trade Promotion, Osec is responsible for helping boost Swiss exports, the activities of Swiss companies abroad and for promoting Switzerland as a business location for foreign firms.
Osec is Europe’s second oldest trade promotion agency, following the example of Finland that set up its organisation in 1919.
In 2001, Osec changed its name to Business Network Switzerland and focused its activities on small and medium sized enterprises.
At the same time, Osec set up a series of business hubs in selected countries to provide Swiss companies with a one-stop office for advice and networking. There are now 22 such hubs in key markets.
Osec has also developed a growing “pool of experts” network around the world, some 450 local independent advisors with expertise in doing business in different countries.
Osec receives its mandate from the State Secretariat for Economic Affairs (Seco), that also oversees its work.
The Swiss government awards annual funding of SFr17 million for facilitating exports, SFr6 million for boosting import and a further SFr6 million from the government and cantons to promote Switzerland as a business location.end of infobox