"A policy of openness is essential for Switzerland as a business location"

Parliament has instructed the Federal Council to draft federal law on the review of foreign investments. Eric Scheidegger, Head of SECO's Economic Policy Directorate and Deputy Director, provides an update on this initiative.

The federal law’s consultation period on the review of foreign investments ended at the beginning of September. The procedure follows the adoption by parliament of the motion "Protection of the Swiss economy through Investment Controls". The draft bill presented by the Federal Council provides that the State Secretariat for Economic Affairs (SECO) will be responsible for implementing this investment control while ensuring that Swiss companies have sufficient capital and knowledge inflows. Foreign capital plays a key role in creating value and jobs in Switzerland.

In what situation should foreign investors’ acquisition of Swiss companies be examined?

Eric Scheidegger: The Federal Council's draft bill, submitted for consultation, aims to prevent risks to public order or security that could arise from foreign investments. It distinguishes between state-owned and state-linked investors, who would in all cases be subject to review. We foresee an alternative approach for investments from private entities, where the review would be limited to critical sectors, such as energy, military equipment, or telecommunications.

It should be noted that the Federal Council has always been opposed to the introduction of a new control mechanism. In response to a 2019 motion on the takeover of companies by foreign investors, the Federal Council noted that there are existing regulations that are sufficient protection against unwanted investments.

How many transactions would be reviewed per year?

Scheidegger: According to a five-year assessment, the law would affect between 23 and 45 transactions per year. One reason for these variations is that the draft law only provides for review in the event of a foreign investor taking control of a Swiss company. Also, the draft bill includes a threshold concentrating on major investments. The objective is really to focus on problematic investments and to ensure that the administrative burden is limited, both for the department in charge of the controls and for the investors concerned.

Would SMEs be impacted by this new system?

Scheidegger: The draft bill provides for a threshold effect so that companies with less than 50 employees or with an annual turnover of under CHF 10 million will not be affected by the checks if a foreign investor arrives.

What are the next steps for this project?

Scheidegger: The consultation procedure ended on September 9. The different stakeholders, such as cantons, employers' associations or economic umbrella organizations, have shared their positions, which now need to be analyzed. The Federal Council will study the results of these consultations, and SECO will then consider whether any of the points in the draft law need to be adapted. The draft law could then be presented in the second half of next year.

How are neighbouring countries' legislations dealing with this issue?

Scheidegger: More than half of the Organization for Economic Cooperation and Development (OECD) member countries now include some form of foreign investment control in their legislation. However, the focus can be very different: French law, for example, is concerned with protecting strategic sectors. It should be noted that certain laws of OECD member countries are misappropriated to implement a form of protectionism or to favor certain leading companies.

What information is available on the contribution of foreign investment to value creation and employment in Switzerland?

Scheidegger: An open-door policy towards foreign investors is crucial for Switzerland as a business location. According to the latest available figures, the amount of direct foreign investments in Switzerland will reach almost CHF 1,200 billion by 2020, and CHF 1,350 billion for direct Swiss investments abroad. Further relevant figures: in Switzerland, there are about 530,000 jobs dependent on foreign subsidiaries, which means that one in ten jobs depends on foreign investments. This is why Switzerland must remain open to direct investments from abroad in the future. They represent an influx of capital, but also of knowledge and skills, and make a crucial contribution to the creation of value and jobs in Switzerland.

What can companies do to learn more about this topic?

Scheidegger: The Fedlex federal law publication platform includes a file on the consultation procedures which contains all relevant information (in French) on this subject, including the various positions taken.



Eric Scheidegger, Head of the Economic Policy Directorate and Deputy Director of the State Secretariat for Economic Affairs (SECO)

Ambassador Eric Scheidegger is Head of the Economic Policy Directorate and Deputy Director of the State Secretariat for Economic Affairs (SECO). He holds a doctorate in economics from the University of Basel. He joined SECO in 2002, after having been an economic advisor to Federal Councillor Pascal Couchepin and a member of the editorial staff of the NZZ newspaper.

Last modification 02.11.2022

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