Business & Industry

Jul 1, 2017

THE INVESTORS "EL DORADO"

Land of Pablo Neruda, Gabriela Mistral (the first American woman to win a Nobel Prize for Literature, in 1945) and Isabel Allende, the Republic of Chile is committed to capturing international investments, as a way to overcome its dependence on the price of copper and diversify their economy.

Considered a model of transparency and financial policy in Latin America and with a mature economy, Chile has been developing several "legal mechanisms" with the aim of providing an attractive market to foreign investors who want to install on the territory. For this reason, amendments have been made to the tax system to prevent foreign companies, in addition to the taxes imposed on the capital in the origin and destination of investment, have to pay new taxes in Chile.

Right now, the main challenge to the economy of this South American country goes through overcoming the traditional dependence on copper price that represents 50% of the exports of the country. For the Chilean Government, there is a great need of economic diversification and the development of key areas, which meet in the fields of infrastructure, energy, mining, tourism and the food sector "a set of investment opportunities to explore".

A report from the Agencia de Promoción de la Inversión Extranjera supports this need for diversification of the economy and advocates the need to create companies "upstream and downstream" the mining industry.

This government agency recalls that "Chile is the main copper producer in the world – detaining almost 30% of the world's reserves – nitrate, iodine and lithium, and the sixth-largest silver producer in the world and the need for development of this sector could mean opportunities for those who want him to invest".

Such investment – underlines the Agency – must extend to a set of related areas of support, including equipment and parts, construction, engineering and consulting services among other kind of production support services.

Energy is another area open to whoever wants to invest in Chile. In fact, according to the economic projections, the expected growth for the country involves an increase in electricity demand with consumption expected to grow 5 percent a year until 2020. In this case, this may mean investment opportunities both in production and in the transmission of electrical energy.

The construction sector is another area of investment. Currently Chile has a vast portfolio of investments in public procurement, including roads, airports, hospitals, urban infrastructure, among others.

Investment in agriculture and fishing

The food industry is one of the areas to develop and, for that, the Chilean Government considers crucial to attract foreign investment. Fruit and salmon have been the major trumps of Chile in this sector. The climate (varied) and soil allow further development of cereals such as wheat, oats, corn, rye and barley-derived crops, potatoes and lentils. The wine and garden-fruit sectors are in clear expansion and also show business opportunities. Beef and sheep production should also be considered, especially today when the production quality has vastly improved the result of investments in new technologies in the area.

With a coastline of 6,435 Km and given the diversity of marine resources and fishing opportunities in this area are multiple: shellfish, mainly oysters; preserves, fish meal, etc.

Recently, and in an attempt to respond to the low capacity of innovation, Chile began to develop a program of startups that want to attract high-potential entrepreneurs at the beginning of their projects, making Chile a platform for global market access. The ultimate goal of this Government is to position Chile as a country of "first line" in innovation and entrepreneurship of Latin America.

For all these reasons and for meeting a clear economic statement context in the region of South America and opening to foreign markets, companies and investors should not neglect the business opportunities in the Chilean market.

MODERATE GROWTH

The Chilean economy grew 1,7% in January 2017 as compared to the same month of 2016, getting above market expectations, due to a better performance of trade and services, reported the Central Bank.

Chile, unlike other large economies of Latin America, managed to stay financially stable. However, after years of steady growth, Chile suffered a marked slowdown of the country's economy in 2015, due to international falling of the prices of copper, since it is the first exporter of copper. Due to the fall in demand in major emerging markets, the growth in 2016 was moderate, stabilizing at two per cent. However, the prospects for 2017-2020 are most promising, with an expected growth of about 4%. Even so, the rate remains relatively low compared to the years of "boom" of raw materials.

Having regard to the potential for growth in the Chilean economy, the good business environment in the country and their development needs, there are many reasons for investors to bet on this South American market.

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