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Economic Perspectives In Chile


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Chile: Highlights & Perspectives 2,010

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Economic Perspectives In Chile

  1. 1. Chilean Economic Development Agency(CORFO)<br />Promoting Innovation in the Chilean Economy<br />
  2. 2. Lines of Work<br />Investment<br />Innovation<br />Quality &<br /> Productivity<br /> Finance <br />1<br />2<br />3<br />4<br />CORFO, the Chilean Economic Development Agency, founded in 1939, is a government organization that deals with the economic development of the country, through investment attraction and the promotion of competitiveness of domestic companies.<br />Staff: 495<br />15 regional offices along Chile<br />Representation in the US, Canada, Spain, <br /> Italy, Germany, Sweden and New Zealand.<br />Endowment: US$ 4,1billion<br />Annual Operation Budget (2008): US$ 1,2 billion<br />
  3. 3. CORFO’s pioneering spirit has played a significant roll in expanding the country’s economic development by promoting investment, innovation, business and cluster development, coupled with a focus on quality and productivity. <br />CORFO oversees a variety of programs aimed at generating the economic development of Chile, through the promotion of inward investment and the advocacy of competitiveness for domestic companies. <br />
  4. 4. Contents<br />Chile at a Glance<br />Chile & New Zealand<br />Why Invest in Chile?<br />Investment Opportunities<br />Dairy Industry in Chile<br />Incentives for Investors<br />
  5. 5. Chile at a Glance<br />
  6. 6. “Increased productivity also involves innovation and the incorporation of new products and technology into our exports. <br />I want a country that exports not only copper but software for the mining industry; that exports not only fruit but food packaging and conservation techniques; not only salmon but vaccines to prevent fish diseases.<br />The public sector will increase its spending on research and development by 50%. Our goal is for our country to spend more than 1% of GDP on research and development by its Bicentennial in 2010.”<br />President Michelle Bachelet<br />
  7. 7.
  8. 8. Why Invest in Chile?<br />
  9. 9. Why Invest in Chile?<br />Latin America’s most competitive, peaceful, and stable economy <br />A transparent and low-risk business climate <br />World-class telecommunications infrastructure <br />Outstanding access to Latin American markets <br />Extensive network of Free Trade Agreements with Asia, Latin America, the EU, and the US <br />Competitive human resources <br />An ‘e-ready’ society <br />Exceptional quality of life <br />Competitive business costs <br />Government support<br />
  10. 10. Chile’s Business Environment<br /><ul><li>The most stable and competitive economy in Latin America
  11. 11. Ranked 1st in the region by WEF in World Competitiveness Index 2006
  12. 12. Ranked as Best Place to do Business in the region by EIU in 2006, 4th among emerging countries and 19th in global ranking
  13. 13. Lowest country risk in the region (Moody´s, Fitch and S&P)
  14. 14. Puerto Varas the best quality of life in Chile
  15. 15. Strong, transparent institutions and regulatory framework are an example for the region
  16. 16. Ranked best in the region by Transparency International in its Corruption Index, tied with U.S. in 20th place in global rankings
  17. 17. Ranked 1st in the region by World Bank in terms of “Ease of Doing Business”, and 28th worldwide
  18. 18. Positioned as a gateway to the world
  19. 19. Free trade agreements covering over 90% of the world GDP
  20. 20. Low tax burden and extensive network of double taxation treaties</li></ul>“<br />
  21. 21. Main International Indexes<br />The World Economic Forum ranks Chile as Latin America’s most<br />competitive economy. Chile continues to enjoy a favourable<br />business environment position within a selective group of 125<br />economies worldwide. <br />
  22. 22. Chile is a Gateway to the World<br />Web of trade agreements provides <br />access to more than 90% of OECD economies<br />Web of double taxation agreements <br />covers most of OECD economies<br />Spain Norway Rusia<br />Portugal Denmark Poland<br />UK Sweden Croatia<br />France Finland Hungary<br />Netherlands Czech Republic<br />Switzerland Belgi|um<br />Ireland<br />Italy<br />Iceland<br />Switzerland<br />Lichtenstein<br />Norway<br />Canada<br />USA<br />Russia<br />South<br />Korea<br />Canada<br />USA<br />European<br />Union<br />South<br />Korea<br />Thailand<br />Japan<br />Mexico<br />China<br />Mexico<br />El Salvador<br />Costa Rica<br />Guatemala<br />Nicaragua<br />Honduras<br />Brunei<br />India<br />Malaysia<br />China<br />Cuba<br />South<br />Africa<br />Panama<br />Uruguay<br />Paraguay<br />Angentina<br />Brazil<br />Singapore<br />Argentina<br />Brazil <br />Paraguay<br />Venezuela<br />Colombia<br />Ecuador Peru<br />Australia<br />New Zeland<br />New Zealand<br />Australia<br />In negotation<br />In negotation<br />Source: Direcon<br />
  23. 23. A “Foreign Investor-Friendly” Environment<br />Strong regulatory framework and dominance of the rule of law<br />New Intellectual Property Law:<br />The law includes the possibility of patenting microorganisms and genes <br />Clinical Trials subject to approval by the National Health Authority<br />Biosafety and bio-prospecting regulations Currently being developed<br />IP in Chile managed by the Intellectual Property Department<br />Industrial Property Law incorporates commitments under the WTO’s TRIPs agreement:<br />Regulates industrial rights related to innovations <br />Protection of trade secrets submitted to health agencies <br />Foreigners protected by:<br />Universal Copyright Convention <br />Berne Convention <br />Rome Convention <br />Inter-American Copyright Convention<br />International Commercial Arbitration Law (UNCINTRAL)<br />
  24. 24. Highly Skilled Workforce<br /> 608,043 (7% annual growth)<br />Source: Ministry of Education (, 2006<br />
  25. 25. Offshoring<br />The 2006 A.T. Kerney survey placed Chile 7th in global country ranking attracting investments. <br />Chile&apos;s strength lies in the costs of doing business, particularly in terms of financial and tax expenses.<br />
  26. 26. Our Long Term Agenda<br /><ul><li>To turn Chile into the “nearshore platform of choice” within Latin America
  27. 27. Best academic center for professionals within the region
  28. 28. Most attractive place for offshoring professionals to live and work
  29. 29. A highly cosmopolitan, vibrant offshoring hub
  30. 30. A strong web of partnerships between global and Chilean firms
  31. 31. To generate 100,000 offshoring jobs within 5 years
  32. 32. To reach US$ 5,000 million in offshoring exports by 2012</li></li></ul><li>Investment Opportunities<br />
  33. 33. Going Beyond Natural Resources (Chile’s Macro-regions)<br /><ul><li> Chile’s diverse climate and topography explain the richness and range of natural resources, which are distributed throughout the entire country.</li></li></ul><li>Chains<br />Clusters<br />Mining<br />Fruticulture<br />Wine<br />Salmon & Mussels<br />Tourism<br />Chile’s Cluster Segmentation<br />Phase 1:<br /><ul><li>Offshoring Cluster
  34. 34. Aquaculture Cluster
  35. 35. Mining Cluster
  36. 36. Tourism Cluster</li></ul>Phase 2: <br /><ul><li> Processed Foods Cluster
  37. 37. Fruticulture Cluster
  38. 38. Financial Services Cluster
  39. 39. Swine-Poultry Cluster</li></ul>Pérez, Carlota (Sussex), 2007<br />
  40. 40. Cluster Development: Towards value creation<br />Source: Based on Carlota Pérez <br />presentation at CORFO in 2005<br />
  41. 41. Technology Investment Attraction Program : “Priority on Value Creation”<br />This Investment Attraction Program offers a range of incentives to help companies successfully establish in Chile.<br />Value<br />Low <br />High<br />NIVEL I:<br />Basic using <br />capacities<br />NIVEL II:<br />Capacity to manage <br />and use existing <br />NIVEL IV:<br />Design and <br />Development capacity<br />NIVEL III:<br />Development capacity<br />to adapt and integrate <br />NIVEL V:<br />R&D based <br />companies<br />of acquired technology<br />High levels of <br />applied knowledge in engineering<br />Technology development and transfer to the country<br />technologies<br />for specific purposes<br />solutions incrementally in products and processes<br />
  42. 42. Food Industry<br />Today, Chile is ranked 17 out of more than 200 countries in the value of its exported food. <br />Chile is at an excellent position to move forward and establish itself as one of the ten principle food providers worldwide, within the next 5 years.<br />There are only four countries in the world whose GDP consists of more than 10% of foodstuffs, which is the case in Chile. Chile is surpassed by only Belgium and New Zealand.<br />Investment Opportunities in Food Industry<br /><ul><li>Precision agriculture
  43. 43. Traceability
  44. 44. Seed development
  45. 45. Functional foods
  46. 46. Bioenergy
  47. 47. Process automation
  48. 48. Grassland management and fertilization
  49. 49. Development of diets and food products</li></li></ul><li>1.700<br />Fresh Fruit Exports (1977-2003)<br />million dollars<br />100<br />1977 2003<br />Fruit Industry<br />Chilean agriculture has enjoyed a record growth in diversification, production, and investment, with a threefold value increase in its exports.<br />Agricultural production reached over US$ 2.4 billion in 2003, with fruit production accounting for 61%. <br />Between 1974 and 1986, fresh fruit production grew by 1200%. <br />Today, Chilean fruit is exported to over 70 countries, with the United States as the main destination for its fresh fruit. <br />Chile’s strategic positioning in the Southern Hemisphere allows it to provide fresh fruit during the US and European winter season. <br /> Chile is a worldwide exporter of 11 agricultural products, including: <br /><ul><li>Grapes (1st worldwide)
  50. 50. Blueberries (1st)
  51. 51. Avocados (2nd)
  52. 52. Prunes (2nd)
  53. 53. Raspberries (2nd)</li></li></ul><li>Meat Industry<br /><ul><li>The meat industry is projected to grow almost 600% between 2003 and 2010.
  54. 54. The production of poultry has been the most dynamic in the last 5 years. The poultry industry has seen a 71% increase in growth.
  55. 55. Tariff and quota free beef exports to the US began January 1st, 2007. The EU has enjoyed a tariff of 0% since 2003 with an annual amount that has seen an increase of 100 tons per year (over the original amount of 1,000 tons). </li></ul>Chile’s favorable sanitary conditions are a great advantage for the raising of animals and the exportation of meat as Chile is considered free of health risks, as the Foot & Mouth Disease and BSE or “mad cow disease”. <br />Beef production is an activity with potential for greater development and productivity, both in terms of primary production (cattle-raising and feeding) and in the industrial phase (slaughtering and meat processing).<br />The production of meat, exceeds 1,200 tons, of which 46% corresponds to poultry, 34% to pork, and 18% to beef. <br />
  56. 56. Dairy Industry<br />The Chilean milk industry has reported significant advances in the last 30 years and the future prospective are very bright and encouraging. <br />The dairy industry doubled its production in the ‘90s and has continued this upward trend at a rate of over 7% annually. <br />According to estimates, Chile could increase its current production threefold by 2010 with the implementation of adequate technology. <br />The natural conditionals in Chile are ideal for the development of the Dairy industry as a first-class product and a new member of Chile’s top exports. <br /><ul><li>The dairy industry is projected to grow 364% between 2003 and 2010.
  57. 57. Cheese exports to the US grew 400% in 2004 as a result of the FTA.
  58. 58. Chile is a member of the commercial organization Dairy Global Alliance along with five other countries: Argentina, Brazil, Uruguay, New Zealand and Australia. </li></li></ul><li>Chile<br />1°<br />96 pts.<br />81 pts.<br />8°<br />Mexico<br />72 pts.<br />Brazil<br />13°<br />70 pts.<br />Argentina<br />16°<br />43 pts.<br />Peru<br />43°<br />Mining Industry<br />Chile produces more than 36% of the world´s copper production from mines and a third of molibdenine production. <br />With respect to non-metals mining, it is the only world producer of natural saltpeter, and supplies more than 50% of the world´s iodine production as well as more than 45% of lithium carbonate.<br />In 2004, 16 thousand 780 million dolars of mining exports represented more than half of Chile´s exports.<br />In 2005, copper exports reached a record of 18.307 million dollars, 21% more than in 2004.<br />The mining industry directly contributes around 8% of Chile´s GDP.<br />Fraser Report:<br />Ranking of regulatory –<br />mining potential among <br />64 mining districts<br />
  59. 59. Renewable Energy Industry<br />CORFO offers instruments to finance studies:<br />3 Contests to present NCRE projects (2005-2007)<br />More than 100 projects have been approved <br />If implemented, there is a potential to produce over 800 MW.<br />Estimated investment of over US$ 1.2 million<br />Subsidies estimated at US$ 4.500.000 <br />Economic study on the impact of “Ley Corta I y II”:<br />Improves the internal rate of retunr by an average of 2%<br />Great opportunities for small hidraulic, biogas and eolic projects.<br />
  60. 60. Forestry Exports (1994-2004)<br />3.500<br />X million dollars<br />1.500<br />1994 2004<br />Forestry Industry<br />The forestry sector accounts for 3.8% of the country’s GDP.<br />Chile is ranked 17th in the world’s forestry exports.<br />Cellulose (or wood pulp) is the main forestry product and Chile is the world’s 5th-largest exporter and the 7th worldwide producer.<br />Exports of products with greater added value have increased over 20% per year during the last five years.<br />
  61. 61. 1.200<br />million dollars<br />100<br />1990 2005<br />Salmon Exports (1990-2005)<br />Aquaculture Industry<br />Chile is currently the world’s second largest farmed salmon producer, after Norway, with exports worth over $1.4 billion USD.<br />Today’s salmon cluster is made up of some 200 companies—including equipment, food, vaccine suppliers, transport companies, quality control and certification centers, training centers, and other professional services. <br />Though streamlined, there are still some shortcomings in the industry. Technology is vital in the continued development and meeting the growing product demand in the increasingly selective North American and Asian markets. <br /><ul><li>Salmon production accounts for 95% of the aquaculture industry
  62. 62. The value of Chile’s salmon exports has grown 1,000% in the last fifteen years.
  63. 63. According to estimates, the salmon industry supplier market, excluding food production, is worth $400 million USD.</li></li></ul><li>Strategic view: some key features on the Salmon Industry<br />IDB (2003): the largest natural cluster in the world. <br />It is estimated that over 500 companies are involved in the cluster.<br />Scattered production has fostered merging of companies. Currently two groups represents 29% of production.<br />62% ownership to locals, and 38% foreign investors.<br />If concessions are fully used, production could grow 39%. <br />72% production costs represented by feeding.<br />Fish meal, oil, and pigments represent 95% of feeding costs.<br />Improvements in food conversion rates and substitution of animal by vegetable proteins: the strategy against high prices.<br />At the cutting edge of development, R&D is the only way to secure long-term competitiveness.<br />Public-Private R&D projects (1990-2007: US$158 million):<br />1990-2005: US$24 million <br />2006-2007: US$134 million<br />
  64. 64. Investment Opportunities: Value-creation <br />Losses related to diseases:<br />Endemic pathogens. <br />Over US$ 600 millions last per year<br />Development of new vaccines.<br />Diets:<br />Elaboration of new diets based on vegetable proteins v/s fish meal and oils.<br />New functional foods, pigments and vitamins.<br />Genetics: <br />Improving fish genetics to increase smolt production, disease management and controls, and conversion rates.<br />Environment:<br />Management and technology development to avoid eutrification, sediment contamination and industrial wastes.<br />Environmental analytics to develop technology and provide services for monitoring and chemical analysis, on fish as well as the environment.<br />Improvement of water supplies (natural and potable).<br />Logistics: <br />Transportation (wellboats), infrastructure, connectivity and security problems.<br />
  65. 65. CORFO’s Financial Incentives<br />
  66. 66. Regional Investment Incentives<br /><ul><li>Appliesfor Pre-InvestmentStudies
  67. 67. This incentive applies to all regions in Chile except for metropolitan Santiago.
  68. 68. To be eligible, your project must fulfill the following criteria:
  69. 69. New Investment Projects must involve a minimum investment of US $400,000. Expansion Investment Projects must involve a minimum investment of US $250,000.
  70. 70. Financial support: CORFO offers matching funds for studies required for evaluating the feasibility of your investment project.
  71. 71. Maximum: up to 50% of the total cost, 2% of total investment, with a ceiling of US $60,000.</li></li></ul><li>Area-specific Incentives<br /><ul><li>Grants and Tax Incentives:
  72. 72. D.F.L. 15
  73. 73. D.L. 889
  74. 74. Arica Plan
  75. 75. Tocopilla Law
  76. 76. Austral Plan
  77. 77. Navarino and Tierra del Fuego Laws
  78. 78. Special Economic Zones:
  79. 79. Arica an Parinacota
  80. 80. Valparaiso
  81. 81. Arauco, Lota and Coronel
  82. 82. Austral Zone and Palena Province</li></li></ul><li>High Technology Investment Program<br /><ul><li>Launched in 2000 by CORFO, to attract and facilitate technology-intensive foreign investments.
  83. 83. The Program encourages foreign investment by offering a range of services to help companies set up successful ventures in Chile.
  84. 84. To date, the program has assisted over 50 companies in establishing offshore operations in Chile, ranging from international services (contact centers and shared service centers) to world class biotech companies. </li></li></ul><li>Applying for Financial Incentives<br />Whether your investment project is located in Santiago or elsewhere in Chile, you can apply for financial incentives to support project development. <br />To be eligible for financial incentives, a project muse fulfill at least the following criteria:<br />The project must be proposed by a foreign company or institution.<br />The project must involve research activities and technological development, adding value to the economy. Projects must consider minimum investment of US $500,000.<br />Applications must be made before the project location is decided.<br />
  85. 85. Application Process<br />
  86. 86. Pre-investment Phase<br />All incentives are rendered in the form of refunds <br />
  87. 87. Investment Phase<br />
  88. 88. CORFO’s Innovation Incentives<br /><ul><li>CORFO funds joint activities of technological centers and businesses in areas of strategic impact and public interest.
  89. 89. It enables Chilean companies to innovate, both in products and processes; to use top quality technological equipment and gather the world’s most advanced information through research abroad and the hiring of international experts.
  90. 90. Furthermore, CORFO promotes the start up of new ventures providing grants to seed capital projects and business incubators.</li></li></ul><li>CORFO’s Innovation Incentives<br />CORFO’s main Innovation Incentives are:<br />
  91. 91. Contact Us<br />Head Office<br />
  92. 92. Contact Us<br />Investment Representatives Abroad<br />
  93. 93. THANK YOU!<br />For further information please visit our website at:<br /><br />