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ChileA LONG-TERM PARTNER
JORGE PIZARRO CRISTIEXECUTIVE VICE-PRESIDENTFOREIGN INVESTMENT COMMITTEE
A long term
partner
Mature business environment
FDI in Chile: A solid track
recordA land of
opportunities
A new FDI attraction
policy
TOPICS
1. A LONG-TERM PARTNER
Chile is the best evaluated economy in Latin America and, indeed, one of the
best evaluated among emerging economies worldwide. Its sustained
economic growth and social progress have been highlighted by different
international organizations and, in 2010, it became the first South American country to join the Organisation for
Economic Co-operation and Development (OECD).
BEST EVALUATED ECONOMY IN LATAM
EconomyGDP 2014 (PPP) US$264 billion (IMF)
GDP per capita (PPP, 2014) US$23,165 (IMF) 1 st place in Latin America
Interest rate (monetary policy) 3.0% (Feb 2014)
Unemployment rate 6.1% (Dec 2014-Feb 2015)
Public foreign debt (2013) US$24.4 billion
Exports (2014) US$76.6 billion
Imports (2014) US$72.3 billion
SNAPSHOT OF THE CHILEAN ECONOMY
Source: Economist Intelligence Unit.
Chile’s Sovereign Ratings
Fitch Ratings A+
Standard & Poor’s AA-
Moody’s Aa3
DBRS AA-
Overall Risk Ranking 2014(Selected economies)
BrazilColombia
MexicoPeru
ChinaItaly
IrelandSpain
FranceUnited Kingdom
JapanChileUSA
GermanyFinland
DenmarkLuxembourg
NorwayHong Kong
0 5 10 15 20 25 30 35 40 45 50
47/C
44/C
44/C
43/C
43/C
36/B
27/B
26/B
24/B
23/B
22/B
20/A
20/A
20/A
16/A
15/A
15/A
14/A
13/A
A LOW-RISK COUNTRY
*Selected economies.
Colombia
Peru
Mexico
Brazil
Italy
Spain
Chile
China
France
Australia
Canada
United Kingdom
Japan
Germany
United States
Switzerland
66
65
61
35
49
35
33
28
23
22
15
9
6
5
3
1
Global Competitiveness Index 2014-2015(33rd out of 144 economies)*
CHILE LEADS LATIN AMERICA
• Over the past 30 years, Chile’s financial system has undergone significant development, with an increase in the number of participants, the variety of products and market depth.
• Chile’s banking system is largely privately-owned (except for BancoEstado), with a significant presence of foreign-owned subsidiaries.
• Currently, there are 23 banks in Chile: 18 are considered “established in Chile", 4 are subsidiaries of foreign banks and one is state-owned.
• All banks are subject to supervision by the Superintendency of Banks and Financial Institutions (SBIF) and are governed by the General Banking Act and by regulations issued by the SBIF.
• According to the OECD (in its latest economic review of Chile - October 2013), the financial system remains healthy and reflects strong financial supervision.
HEALTHY FINANCIAL SYSTEM
*Selected economies. Source: Transparency International.
A TRANSPARENT COUNTRY
Corruption Perceptions Index 2014(21st out of 174 economies)*
ArgentinaMexico
ColombiaPeru
BrazilSpain
FranceAustria
ChileUSA
United KingdomGermany
NorwaySwedenFinland
New ZealandDenmark
1071039485
6937
262321171412
54321
1 Norway2 Australia3 Switzerland4 Netherlands5 United States6 Germany
14 United Kingdom15 Korea (Republic of)17 Japan20 France26 Italy27 Spain40 United Arab Emirates41 Chile41 Portugal49 Argentina50 Uruguay71 Mexico79 Brazil82 Peru98 Colombia98 Ecuador
Source: UNDP.
HUMAN DEVELOPMENT INDEX 2014 41ST OUT OF 187 ECONOMIES
Source: The Institute for Economics and Peace (IEP).
2014 GLOBAL PEACE INDEX 30TH OUT OF 162 COUNTRIES
Mexico
Peru
China
USA
Brazil
France
UK
Italy
Chile
Uruguay
Spain
Singapore
Germany
Australia
Japan
Canada
New Zealand
Iceland
0 500 1000 1500 2000 2500 3000
138
119
108
101
91
48
47
34
30
29
26
25
17
15
8
7
4
1
WHAT THEY SAY ABOUT CHILE
“Chile has been a model of democracy in Latin America. It's been able to consistently transition from center-left
governments to center-right governments, but always respectful of democratic traditions.”
President of the USA, Barack ObamaJune 30, 2014
2. MATURE BUSINESS ENVIRONMENT
Thanks to its political and economic stability, openness to trade, legal security and excellent growth prospects,
Chile has maintained an attractive and dynamic
business climate for investors.
THE BEST BUSINESS ENVIRONMENT IN LATAM
Argentina
Japan
Spain
France
UK
Netherlands
Chile
Germany
USA
Australia
Hong Kong
Switzerland
Singapore
0 1 2 3 4 5 6 7 8 9 10
70
27
25
24
22
16
13
12
7
5
3
2
1
BUSINESS ENVIRONMENT RANKINGGLOBAL RANKING, 2014-2018 (13th out of 82 economies)
Source: Economist Intelligence Unit. Selected economies.
63% of world
population
85% of
global GDP
93.8% of Chile’s
export markets
• 14 Free Trade Agreements
• 3 Economic Partnership Agreements
• 6 Economic Complementation Agreements
• 2 Agreements under negotiation
Agreements in force
Agreements signed but not yet in force
24 FREE TRADE AGREEMENTS WITH 62 COUNTRIES
INVESTMENT PROTECTION
Chile has investment protection agreements and clauses with countries that
represent
76.4%
of global GDP.
• Australia• Belgium• Brazil• Canada• Colombia• Korea
• Croatia
• Denmark• Ecuador• Spain• France• Ireland
• Malaysia• Mexico
• Norway• New
Zealand• Paraguay
• Peru• Poland• Portugal
• United Kingdom• Russia• Sweden
• Switzerland• Thailand
Chile has DTAAs with 25 countries.
DOUBLE TAXATION AVOIDANCE AGREEMENTS
“Foreign investment plays a key role in boosting and diversifying our economy and creating value.”
President Michelle BacheletJuly 30, 2014
WHAT THEY SAY ABOUT CHILE
3. FDI IN CHILE: A SOLID TRACK RECORD
Source: World Investment Report, UNCTAD, 2014.
Developed economies
Developing and transition economies
20. Italy19. Colombia18. Indonesia
17. Chile 16. Netherlands
15. Germany14. India
13. Luxembourg12. Ireland
11. United Kingdom10. Mexico
9. Spain8. Australia
7. Canada6. Singapore
5. Brazil4. Hong Kong
3. Russia2. China
1. United States
1717182024272830
36373839
50626464
7779
124188
TOP 20 FDI HOST ECONOMIES, 2013 US$ billion
1905191119171923192819341940194619521958196319691975198119871993199820042010
7.27.58.8
13.2
16.6
13.415.5
23.3
28.5
19.3
22.0
Source: Central Bank of Chile.
FDI IN CHILE, 2004-2014 US$ billion
Source: Central Bank of Chile
United States16.7%
Netherlands14.8%
Spain10.4%
Canada5.1%
United Kingdom4.3%
Japan3.8%
Bermuda2.9%
Brazil2.7%
Luxembourg2.2%
Bahamas1.8%
Colombia1.7%
Belgium1.3%
Germany1.2%
Others8.2%
Not assigned23.0%
Mining44.9%
Services17.6%
Electricity, gas & water10.2%
Manufacturing4.7%
Transport & Communica-tion3.4%
Commerce1.2%
Construction1.0%
Agriculture & fishing0.2%
Not assigned16.9%
By country By sector
FDI INFLOWS IN CHILE2009-2013, US$100.8 billion
WHAT THEY SAY ABOUT CHILE
“(I’m expecting) a brilliant future for the Chilean economy.” Prime Minister of Japan, Shenzo Abe
August 1, 2014
4. A LAND OF OPPORTUNITIESInvestment opportunities
ENERGY
ENERGY: CHALLENGE AND OPPORTUNITIES
5. A NEW FDI ATTRACTION POLICY
That adds value to our exports.
That energizes highly concentrated markets.
That generates quality jobs and permits development of our human capital.
That points to long-term sustainable growth.
With high quality standards and best practices.
That permits good productive linkage with local suppliers.
Seeking innovative and technological development.
In different regions and key economic sectors.
WE ARE LOOKING FOR MORE AND BETTER FDI
• This year, the government presented to Congress a bill to create a new institutional framework for the promotion and attraction of foreign direct investment (FDI) in Chile.
• The new framework will comprise a Committee of Ministers to advise the President of the Republic on policy design and a Foreign Investment Promotion Agency in line with OECD standards charged with policy implementation.
• It includes the creation of a new agency that will focus on promoting foreign investment in those sectors that are strategic or need to attract investment of this type. Its powers will allow it to serve as the body that coordinates efforts to attract investment in Chile and will include establishing a foreign investment promotion and attraction strategy, tying in investment attraction with country’s productive development strategy.
• The bill recognizes foreign investors’ guarantee of access to the formal foreign exchange market and of the right to repatriate capital and earnings whilst safeguarding the Central Bank’s powers in this field. It also guarantees foreign investors freedom from arbitrary discrimination.
A NEW INSTITUTIONAL FRAMEWORK
• In addition, the bill modernizes and updates the procedure for obtaining exemption from sales tax (VAT) on capital goods imported by foreign investors for projects under DL 600. This modification seeks to promote the development of large investment projects in Chile which, because of their nature, take a long time and to prevent them from incurring high financial costs in their prior and initial stages.
• In order to permit the players’ adaptation to the change of foreign investment regime and in line with the Advisory Commission’s proposals, the bill stipulates that, for a maximum period of four years, foreign investors will be able to request authorization for their planned investments under the terms of Article N° 3 of DL 600, with the rights and obligations envisaged in this law but with a total locked-in tax rate of 44.45%.
• In addition, the bill regulates the effects of contracts signed under DL 600 so as to ensure the full application of the rights and obligations acquired by foreign investors under this legal regime.
A NEW INSTITUTIONAL FRAMEWORK
Information services
• Information about Chile’s business climate.
• Portfolio of public and private investment projects.
• Reports and other publications.
• FDI statistics.
• Material in Spanish, English and Chinese.
• Participation in forums.
Investment facilitation services
• Legal advice for the signing of a foreign investment contract.
• Assistance in preparing schedule of meetings.
• Processing of investors’ queries and applications.
• Assistance to contact public and private sectorial institutions.
SERVICES, ACTIVITIES AND TOOLS
Head of the FDI Attraction UnitVicente Mira| [email protected]
EnergyJorge Yáñez | [email protected]
Mining and InfrastructureNicolás Muñoz | [email protected]
Tourism and TIMartin Pathan | [email protected]
Food Industry and BiotechnologyVanessa Séverin | [email protected]
Small and medium enterprisesSalvatore Di Giovanni | [email protected]
CONTACTS
Chile will move from a passive policy of RECEIVING FDI…
to an active policy of ATTRACTING FDI.
“Trust, believe and invest in Chile.”
President Michelle Bachelet
