business Chile The voice of the Chilean-American chamber of commerce N°269, OCTOBER 2010
California Dreaming: A Strategic Partnership
Special Report Trade Testimonial Power Generation Mining Safety: Call Now, Pay Later Clear Rules for What Lies Beneath? Energy Investment AmCham Global Sponsors
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4 October 2010 business Chile Editorial The California of South America
California – it’s the place where dreams come true, to investing in Chile in the future. new beginnings are made and the sun always shines. This has become a major concern for foreign inves- From its vineyards to its susceptibility to earthquakes tment in Chile, and regulatory uncertainty is never a and entrepreneurial spirit, Chile is in many ways the good thing. Chile badly needs these investments, not California of South America. So it’s not surprising that just as part of its current economic recovery but as President Piñera’s visit there in September was ce- part of a longer term plan for growth which will create lebrated as a meeting of two strategic partners with a better and more prosperous country for all Chileans. much to learn from each other. But investors will be reluctant to risk millions of dollars The Chile-California Strategic Partnership signed in if they fear projects co uld be delayed, modified, or 2008, with the support of AmCham, laid the foundation even cancelled. for this visit, and AmCham was proud to participate in Chile has earned an excellent reputation due to the the trade mission led by President Piñera. guarantees it offers to foreign investors. Now, as Chile The Ministers of Economy, Energy, Agriculture approaches its goal of becoming a developed country, and Culture all took teams of business leaders with it must work hard to maintain these assurances while them and came back with signed agreements that at the same time improving environmental and safety should generate increased business opportunities standards in the energy and mining industries. This is down the road. exactly what California has done well through coope- Energy is a key area where California is in the van- ration between the public and private sectors. guard of new technologies and regulations. As dis- Companies and consumers in the West Coast state cussed in the Spotlight, California’s experience with have shared the cost of stricter regulations in areas nuclear power and renewable energy could help Chile like carbon emissions, which will also have to happen meet its energy needs without risking shortages in the to some degree in Chile. But California has shown that future or polluting the environment. world-class environmental standards and an attractive After its electricity crisis of 2000-2001, California environment for business can coexist. has managed to find a balance between attracting At AmCham we congratulate President Piñera and new investments and environmental protection. This his team on a productive visit to California and are is not an easy task as Chile has discovered as it tries committed to working hard to maximize the benefits to reconcile its need for low-cost energy supplies with of this trip for trade and entrepreneurship. Both Chile
environmental concerns, especially regarding coal- and California have much to gain from this strategic fired generation projects. partnership in areas ranging from energy to culture In the last few years, a number of major investments and agriculture. in power generation projects have run into approval But for Chile to realize its dream of becoming a problems; some in the early stages of their develop- developed country in the next decade, it must main- ment, others when the project is well advanced. Many tain its outstanding reputation for foreign investment. of these problems, though not all, have been related to At AmCham we believe this can be achieved through environmental objections. But the result gives the im- public-private cooperation and with the support of pression of an uneven playing field, which may cause partners like California. From Napa Valley to the Casa- investors to think twice before making a commitment blanca Valley, the West really is the Best!
BOARD OF DIRECTORS EXECUTIVE COMMITTEE PRESIDENT DIRECTORS Luis H. Siles, IBM de Chile AmCham Mision Statement Ricardo García, Seguros Interamericana ALICO Andres Bianchi, Bci CHAIR TRADE & INTERNATIONAL To promote free trade and investment Pamela Camus, American Airlines BUSINESS COMMITTEE between Chile an the United States, and to be VICEPRESINDENT; CO CHAIR CORPORATE AFFAIRS an effective voice for the membership while Charles Kimber, Celulosa Arauco y CO CHAIR CORPORATE AFFAIRS COMMITTEE ADVISORY COUNCIL facilitating related services. Constitución S. A. Fernando Concha, Citigroup Chile CO CHAIR FINANCE AND ADR COMMITTEE Rubén Covarrubias, Rector, TREASURER; CHAIR EDITORIAL COMMITEE Universidad Mayor Gonzalo Iglesias, Coca-Cola de Chile S.A. Kathleen Barclay, Asesorías KCB Alfredo Ergas, Enersis Javier Irarrazabal, The Walt Disney Company CO CHAIR FINANCE AND ADR COMMITTEE SECRETARY; CHAIR LEGAL COMMITEE Chile Michael Grasty, Grasty Quintana Majlis & Cía. CHAIR LABOR AND HUMAN CAPITAL COMMITTEE Mauricio Ramos, VTR Global Com PAST PRESIDENT Mitch Larsen, Embajada de los E.E.U.U. Karen Poniachik, Mateo Budinich, Insape EX OFFICIO Directora de Empresas GENERAL MANAGER Luis Marcelo Moncau, Microsoft Chile Jaime Bazán, AmCham Chile Enrique Ostalé, D&S
www.businesschile.cl business Chile October 2010 5 TRADE TESTIMONIAL Call Now, Pay Later The Chilean wireless services provider Tiaxa is hoping to attract venture capital from California to export its innovative micro-financing idea for mobile transactions to new markets in developing countries.
By Aaron Nelsen he Chilean wireless services users is the future of mobile phone te- “We want to take this idea to the provider Tiaxa is hoping to chnology. The company already has a world,” Valdés said. “We’ve already attract venture capital from contract with Spanish firm Telefónica, been very successful in Latin America, California to export its inno- which owns Movistar, covering its 135 but we want to take it to other emerging T vative micro-financing idea for million prepaid users in Latin America, markets and for that we need capital.” mobile transactions to new markets in but Tiaxa has its sights set a little higher. To meet its ambitious expansion developing countries. Including Chile, Tiaxa currently ope- goals, Tiaxa is looking to investors in Ever been in a bind and desperately rates in five countries in the region the United States to raise between needed to place a call or send a text, through its agreement with Telefónica US$15 million and US$20 million in but your prepaid phone had insufficient and hopes to be up and running in eight venture capital. funds? If you aren’t familiar with this si- more by April 2011. Valdés recently traveled to California’s tuation, what usually happens next is Silicon Valley with President Sebastián a feverish dash to the nearest corner Piñera, Economy Minister, Juan Andrés store to top up. Fontaine, and a dozen other up and But for Latin American clients of coming businesses as part of a trade mobile phone operator Movistar, the mission designed to showcase Chilean next call is as easy as dialing. innovation and entrepreneurship. “We’ll spot the next phone call or “Silicon Valley is unique in that it com- the next ringtone and, the next time the bines venture money, academics and user tops up, we’ll recover that money,” so much knowledge about how to grow said Felipe Valdés, founder of Tiaxa, a a company outside its regional market,” Chile-based company which provides Valdés said. “It’s extremely valuable to billing and charging systems for wire- be connected in Silicon Valley – in the less operators. tech business it’s almost a must.” Tiaxa has patented a new system The Fontaine commission’s tour of that lets prepaid users with zero balan- Berkeley and Stanford was eye-ope- ce do a few more things before running ning, Valdés said. In addition to Tiaxa, out. Chilean professionals from the IT, bio- One of the services Tiaxa provides tech, cleantech and conservation sec- mobile operators is to stop clients with tors put on their best faces to lure in- no credit from making calls, but now it vestment to Chile. The group met with lends money to these subscribers so renowned professors, researchers and they can keep talking. fellow entrepreneurs, and each team Valdés and Olav Carlsen, chief finan- had 20 minutes to make an impression cial officer of Tiaxa, believe the ability Felipe Valdés, on around a dozen venture capitalists. to extend credit to millions of prepaid CEO of Tiaxa. “[The trip] was a great surprise
6 October 2010 business Chile and exceeded my expectations,” said sactions and we saw that many of them but with our service nothing happens.” Valdés. “The government is doing failed because of insufficient funds,” Tiaxa also gives operators the flexi- a great job through their Start-Up Valdés said. “Then we came up with bility to offer new and innovative plans Chile program to help us think globa- the idea of financing transactions for including services like texting, email lly, access seasoned tech talent and the user, and we underwrite the loans and photos. These plans represent address the world market.” with third parties, possibly banks or the greatest revenue growth for mobile Tiaxa was founded in 2000 with other institutions.” phone operators today, but it’s hard for US$6 million in venture capital, and To make this possible Tiaxa uses them to charge for different services, went through several business model made-in-Chile technology connected so Tiaxa’s software does it for them. permutations before finally settling on to the operator’s system that notices “We allow the operator to offer com- its current model. when a user runs out of money and cre- plex billing schemes for new data servi- Tiaxa processes about a billion dits their account in seconds. ces,” said Valdés. “But where we really transactions per month for its clients. The technology also decides how add value is with the prepaid user.” Putting that into perspective, around much or how little to lend based on the With 3.5 billion prepaid users world- 30 million credit card transactions are customer’s profile. However, there is a wide who download ringtones, surf the processed in Chile every month – Tiaxa catch. Internet or upload photos to Facebook processes that number in a single day. “When [customers] don’t recharge using their mobile phones, Tiaxa sees But where credit card transactions we don’t recover,” Carlsen said. “So itself on the cusp of something poten- are, on average, between US$30 and we have to be very careful who we tially very big. US$40, Tiaxa’s transactions average lend money to because we are losing But as the company grows its pre- no more than 10 cents. While this might a high percentage of customers every sence in Latin America, the question is seem like pocket change, keeping track month.” whether it can pool enough resources of each transaction is just as complex. Tiaxa isn’t the only company to offer to take its business to emerging mar- Navigating the sheer volume of data this type of service, Movistar’s compe- kets in Asia and Africa. is a daunting task, but Valdés, a Prince- titor Entel offers a similar service called “Mobile phone technology has ton-educated aerospace engineer, has PrestaLuka, but Tiaxa’s micro-finance become enormously important in the a penchant for number crunching. So, it software is the most innovative, accor- developing world,” Carlsen said. “We was about two years ago amid the flow ding to Carlsen. are at the convergence of this techno- of numbers that he glimpsed the future “You’re talking on the phone and you logy and micro-finance.”bUSiness chile of the company. run out of money,” Carlsen explained. “We were processing billions of tran- “In the real world you would be cut off, Aaron Nelsen is a freelance journalist based in Santiago.
business Chile October 2010 7 Social Policy Mothers at Work A report by an independent commission, convened by President Sebastián Piñera, looks at how the cost of motherhood is shared by families, employers and the state in different countries around the world. By Ruth Bradley
t all started during last year’s election and Sebastián Piñera, Chile’s president election campaign led public opinion to campaign. No-one is sure who set the since March, did what presidents often expect, she warns. ball rolling but, by the end of the cam- do when assailed by doubts about the Her main concern, she says, is that, at paign, both Senator Eduardo Frei, wisdom of their promises: he set up a present, the costs of maternity weigh too I the nominee of the center-left Con- commission - the Presidential Commis- heavily on the mother and her employer, certación coalition, and Marco Enríquez- sion for Women, Work and Maternity - rather than being shared by the father Ominami, an independent candidate, to study the issue. and his employer. That, of course, puts a were promising women six months’ paid Some changes are needed, says María damper on women’s job prospects or, at postnatal leave while, more cautiously, Gracia Cariola, a lawyer and general ma- least, provides employers with an incenti- the center-right’s Sebastián Piñera was nager of a family investment company, ve to pay them less. talking about “up to six months.” who chaired the Commission. But those A study by Politeia, a Santiago-based That was surprising. By internatio- changes are not necessarily the ones the consultancy firm, for an earlier government nal standards, Chilean women - with six commission estimated that the additio- weeks’ prenatal and 12 weeks’ postnatal nal labor costs of employing a woman of leave, all on full pay - are pretty well-off. childbearing age - including factors such And, while doctors applauded the candi- as hiring a replacement during maternity dates’ promises, employers and some leave and paying for childcare - reaches women - fearful of their job pros- between 5.4% and 12.5% of her wage. pects - groaned. And that is the average over a period of Once the campaign 20 years; in the year when a woman has a euphoria faded, more baby, the figure is much higher. serious thinking The present system is also extremely began regressive, points out Osvaldo Larraña- ga, an economist at the Santiago office of the UN Development Programme and a member of the Commission. During maternity leave, a woman’s salary is paid by the state and, despite an upper limit on the amount, the government’s CASEN socioeconomic survey shows that 52% of total expenditure goes to women in the richest fifth of the popu- lation - where labor force participation is higher and salaries are better - and a mere 5% to the poorest fifth. Devising ways to share the costs of motherhood more equitably was, in fact, one of the key objectives of the 14-strong Commission which, as well as lawyers and economists, included doctors and a sociologist. Over a period of three months, it listened to almost 30 presentations by
8 October 2010 business Chile “There is no clear link between the participation of women in the workforce organizations from the public and private sectors, including some of Chile’s princi- and the cost of ple business associations. maternity leave Its report, presented in August, is now to businesses.” on the government’s desk and the Minis- try for Women (SERNAM), together with the Labor Ministry and the Ministry for the President’s Office, is working to convert its proposals into a bill that Cariola hopes Osvaldo Larrañaga, will be presented to Congress before the UN Development end of the year. Programme
How much maternity leave?
Doctors tend to be adamant that women cannot have enough materni- ty leave. Apart from the advantages of breastfeeding, they point to studies su- ggesting that an early return to full-time ployees from four to six months. Howe- support) and a survey by the Department work can have negative consequences ver, in the private sector, the additional of Labor in 2000 found that, between for a baby’s intellectual and emotional two months are optional and must be 1999 and 2000, 3.5 million people entitled development. negotiated with the employer (who can to leave for family or medical reasons, in- But, according to Cariola, the Com- set the two month’s salary which the cluding the birth of a child, did not take it mission mostly felt that six months’ company must pay against taxes). and, in 80% of cases, said they had been postnatal leave would be excessive. One Moreover, even European countries, unable to afford it. consideration, she says, was that it would with their usually generous long periods On maternity leave, the Commission have put Chile on a par with European of maternity leave, often don’t pay mo- did, however, make two recommenda- countries which got there only gradually thers’ full salaries. The UK, for example, tions. One - often discussed - is to allow and are, in any case, richer. uses a sliding scale that gradually decrea- women to stay at work longer before Chile, along with Cuba and Venezuela, ses over time and others impose relatively having a baby and use the ‘saved’ prena- already has one of the longest maternity low caps. tal leave to extend their postnatal leave. leaves in Latin America. A study earlier And, then, there is the United States. They would, under the terms of its this year by Trabajando.com, an online “Chilean women just don’t realize how proposal, be given two weeks leeway. job placement service, found that Chile’s good they have it,” observes one Ame- Many women would have liked more but 126 days (including prenatal and post- rican woman who has had babies both even two weeks was an issue, with doc- natal leave) compares favorably with 84 back home and in Chile. tors worrying about their legal responsi- days in Mexico and Colombia, 90 days In the U.S., new parents are guaran- bility if they gave authorization and then in Peru and Argentina, and Spain’s 112 teed 12 weeks of leave, providing they something went wrong with pregnancy. days. work in a company with at least 50 em- To avoid that hurdle, the mother would, Only Brazil has a longer period. ployees and have done so for at least a under the Commission’s recommenda- Under a reform in 2008, it increased year. But that leave is unpaid (although tions, have to sign a form taking full res- maternity leave for public-sector em- some states and employers offer financial ponsibility for the decision.
business Chile October 2010 9 Social Policy
More importantly, the Commission also creasing, is among the lowest in Latin proposed the introduction of a system of America, raising the obvious question parental leave, also financed by the state, of whether this is related to maternity which could be taken by either the mother leave and its costs to businesses. Ac- or father once the former’s postnatal leave cording to Larrañaga, there is no clear ends. Opinions were divided as to how evidence of a relationship; longer ma- long parental leave should last and, even- ternity leave, although off-putting for tually, the Commission put forward two employers, encourages women to proposals: six weeks if its use is voluntary seek work, he points out. or four weeks if compulsory. Cariola also denies a link. “Low Parents would also be able to use this workforce participation has more to leave in half-days. That would permit a do with a country’s stage of develo- gradual return to work, something that pment,” she says. In very poor coun- would make parental leave more attrac- tries, women’s participation tends to tive to companies, says Cariola. In many be high, simply because families need cases, they don’t actually replace an all the money they can get, and then, employee out on maternity leave, she re- “The Commission mostly as countries become more prospe- ports, but divide the work among other rous, tends to drop before starting to felt six months’ postnatal employees, making it easier for a mother increase again. to make a gradual return. leave would be excessive.” It is difficult for companies to re- place senior employees for 18 weeks Using rights reasonably - “you can’t just go to Manpower and María Gracia Cariola, hire a temporary chief accountant,” The participation of Chilean women Commission for Women, complained one employer. But what in the workforce, although recently in- Work and Maternity tends to worry businesses much more is what happens between when a have been tantamount to “condoning return to work after postnatal leave. mother returns to work and her baby illegality.” The Commission also con- It’s an anachronism originally inten- reaching its first birthday. sidered reducing the pay that mothers ded to protect a family’s income while That is the period in which mothers receive when off work to care for sick a child is small but since superseded can take leave on full pay to care for a babies from 100% of their salary to, by other forms of social protection, sick baby if a doctor deems it neces- say, 80%, or putting it on a sliding argues Larrañaga. But, like another sary. And doctors do so with a ven- scale but eventually rejected that idea anachronism - redundancy pay tied to geance, typically for gastric reflux, a as penalizing mothers with really sick years of service - it is seen in Chile as complaint that prevents a baby from children. an acquired right or, in other words, a keeping its milk down. And the root of the problem is el- political hot potato from which, barring “It’s because they don’t really be- sewhere. It lies in the legal protection some suggestions for fine-tuning, the lieve that three months postnatal from dismissal that women enjoy from Commission steered clear. leave is enough,” observes Larrañaga. the moment they become pregnant However, whatever the results when There are, he adds, no epidemiologi- through to one year after the end of its recommendations are eventually cal statistics anywhere in the world their postnatal leave or, in other words, shaped into a bill presented to Con- consistent with the rate at which Chi- a total of two years. gress, the Commission has unders- lean babies seem to get sick. In 2009, Employers sometimes tell horror sto- cored two key points: it is not only according to the government’s Health ries of women who are unsatisfactory women who should pay the economic Superintendency, women returning to employees but prolific mothers and costs of having babies and election work after their postnatal leave took with whom they have, therefore, been candidates often make promises that an average of 109 days off in the next stuck for as much as a decade. The may not actually have been quite so nine months. length of this immunity from dismissal sensible. bUSiness chile This was, in fact, a key argument is, indeed, unusual and, as the Com- for extending maternity leave to six mission noted, there are few countries Ruth Bradley is the Santiago correspondent of The months, notes Larrañaga, but would in which it extends beyond a mother’s Economist.
business Chile October 2010 11 COVER STORY
Clear Rules for Energy Investment
Chile is known as one of the most investor friendly countries in Latin America, but its reputation is threatened by legal uncertainty surrounding new electricity generation projects. Restoring investor confidence will require a clear energy policy and an independent environmental approval process. by Julian Dowling oving a billion dollar thermoelectric project is not of their impact on local residents, air pollution and wildlife. Presi- just a matter of moving a few generators. Costly dent Piñera made a campaign promise to oppose projects that engineering and environmental studies that can threaten nature reserves, and environmental NGOs opposed to take years to complete must be done for each Barrancones held him to it. M site, so building a project in a different location In theory, Barrancones would have been far enough away – means redoing most of these from scratch. 25km - from the Punta de Choros nature reserve not to have had This is the undesirable alternative facing the Franco-Belgian a significant environmental impact, and GDF Suez did everything utility GDF Suez after receiving a call from President Sebastian by the book. Piñera informing the company it could no longer build its 540 “We want to be clear that the project complied with all en- megawatt coal-fired generation project in Barrancones, near the vironmental norms and regulations including World Bank and northern city of Coquimbo. EU standards,” said Hatton. “The project never endangered the GDF Suez’s management, which has invested US$15 million protected area.” in the Barrancones project, was surprised by the decision. The problem is that coal-fired projects cannot be built just “We are studying what to do because a project of these cha- anywhere. “It’s not easy to find sites for these types of projects racteristics cannot be moved so easily,” said Peter Hatton, Busi- because they need port facilities,” said Hatton. ness Developer Manager of GDF Suez Energy Andino. Just a few days before President Piñera’s call, GDF Suez’s Confusing signals project was approved by Coquimbo’s Regional Commission for the Environment (COREMA), which voted 15-4 in favor. Presi- If the Barrancones project is cancelled, which seems likely, dent Piñera even agreed the project met all applicable environ- GDF Suez will lose its investment, but the real cost could be paid mental standards. So what was the problem? by Chilean consumers through higher energy prices. Thermoelectric projects are a politically thorny issue because “The President’s attitude has put all coal fired projects in the
12 October 2010 business Chile country on hold because he didn’t act through the proper legal His view that Barrancones is just a bump on the road is shared channels,” said Jaime Solari, CEO of the environmental consul- by Osvaldo Rosales, a trade expert at the United Nations’ San- ting firm, Sociedad de Gestión Ambiental (SGA). tiago-based Economic Commission on Latin America and the Investors are getting “confusing signals” from La Moneda, Caribbean. “We have heard some concerns from investors, but he said. “If a project receives all the necessary approvals, then one incident does not make a trend,” Rosales said. what is the reason to reject it? Investors can’t understand this.” GDF Suez has accepted President Piñera’s decision for Energy security at risk now, but by law the National Commission for the Environment, CONAMA, still has to explain its decision, which could set an But GDF Suez is not the first energy investor to run into legal interesting precedent, said Solari. problems. In mid-2009, AES Gener was forced to suspend “We haven’t seen the end of this yet, we’re waiting to see how construction of its Campiche coal-fired project near Valparaiso this will be justified by the government,” he said. for 12 months after local authorities pulled the rug out, claiming But according to Matías Mori, Executive Vice-President of the the project lacked a municipal permit. government’s Foreign Investment Committee, Chile’s reputation More recently, an appeals court in the northern city of Co- as a safe place to invest has not been harmed. piapó ruled against Brazilian firm MPX Energía’s US$4.7 billion “Barrancones should be put in perspective: it is a special Castilla thermoelectric project, which would be four times as big case in which the President spoke with the investor, which then as Barrancones once constructed. MPX Energía plans to appeal voluntarily decided to walk away,” said Mori. the decision, but the project faces an uphill battle for approval. Chile’s reputation as a stable economy with strong institu- It’s not just coal projects that are in doubt. Chile’s National tions certainly counts in its favor. Most of its energy, telecom- Energy Commission (CNE) recently said that the 2,750MW Hi- munications, transport and mining infrastructure have been built droAysén hydroelectric project in southern Chile, which has by foreign investors attracted by the country’s pro-business le- been the target of the international “Patagonia Without Dams” gislation. environmental campaign, will not start operations until 2019, According to international rankings, Chile is second only to three years later than anticipated. Brazil in terms of direct foreign investment in Latin America. “If Chile needs at least 300MW of new capacity a year to meet you look at the size of Brazil’s market compared to Chile’s, this its growing electricity needs and ensure it joins the ranks of is no minor achievement,” said Mori. developed countries in the next decade, but it might not have There is room to improve, he admits, but Chile’s membership enough energy. How did this happen? in the OECD, which was accepted this year, is a sign it is ready According to Solari, Chile is running out of energy options. “If to join the ranks of developed countries. we don’t want coal, hydro or nuclear plants, then where will our “Chile is known as a serious nation with clear rules and energy come from?” legal guarantees where business can be done in a safe envi- Coal-fired generation has made Chile into Latin America’s ronment,” said Mori. largest emitter of carbon dioxide (CO2) with emissions set to
business Chile October 2010 13
Projected Annual Investment by Economic Sector (US$ Million) COVER STORY SECTO R 2009 2010 2011 2012 2013 TOTAL Mining 3,071 4,163 3,553 2,854 1,133 14,774
Forestry 86 134 149 43 54 466
Industrial 456 484 346 200 156 1,642
Energy 4,194 5,965 7,797 5,472 4,716 28,044
Ports 171 285 599 633 37 1,725 Real estate 2,430 2,435 2,280 1,889 1,689 10,72 Public Works 771 1,693 2,395 1,738 504 7,101 Other 122 138 155 156 131 702
TOTAL 11,301 15,127 17,274 12,985 8,420 65,177
Source: CBC, December 2009
Environmental legislation time evaluating new projects, which led to political interference. “These isolated Chile’s environmental law dates New legislation, approved in January incidents have not from 1994 when the National Commis- 2010, separates these functions. It crea- sion for the Environment (CONAMA) ted a new Environment Ministry, a new affected Chile’s image was created to establish norms and national regulator and a system for eva- abroad,” approve new projects. luating projects, known as the Environ- Matías Mori, The legislation helped to improve en- mental Evaluation Service (SEA), which Foreign Investment vironmental standards but was deeply replaced CONAMA on October 1. Committee flawed, said Ignacio Arteaga, a lawyer Regulatory and policy issues will now who leads the Environmental and Regula- be decided by the Regional Ministerial quadruple by 2030, but instead of forcing tory practice at Santiago law firm Arteaga Secretaries (SEREMIs), while the SEA will existing coal plants to reduce emissions, Gorziglia & Compañía. be responsible exclusively for the environ- the law obliges investors to build new “The original legislation was full of mental approval process. plants in wilderness areas far from cities. holes and contradictions, which left the The new legislation also calls for the “We need new coal facilities that are approval process open to interpretation,” creation of a Biodiversity and Protected much cleaner than the old ones but the Arteaga said. “Projects like Barrancones Areas Service to protect nature reserves legislation only benefits existing plants,” and Campiche are the result of this le- like Punta de Choros, said Arteaga. said an executive at one thermoelectric gislation.” But still pending is a review of Chile’s project developer. Under this system, CONAMA had to land use regulations. Confusion about Most of the potential sites for coal make policy decisions while at the same green areas, particularly outside urban plants along Chile’s coast are saturated with air pollution to the point that firms like GDF Suez are forced into isolated, ecologically sensitive areas, he said. “The only solution for investors is to build in a pristine site.” But building projects in, or near, protected areas can result in the type of environmental opposition that “A project of these led to President Piñera’s decision to characteristics cannot “move” Barrancones. be moved so easily.” Recent EU legislation requires existing coal plants to shut down or install filters to cut their emissions by 2023. Similar le- Peter Hatton, gislation in Chile would reduce pollution GDF Suez and allow new plants to be built nearer to urban centers, said the executive.
business Chile October 2010 15 Aviso mujer 279x289-cs3.pdf 8/9/10 12:36:39
“Yo coordino, dirijo, tomo decisiones. Necesito hablar sin preocuparme de la cuenta a fin de mes” Tu celular ideal está a un botón de distancia.
Solicita la visita de un ejecutivo 800 646 695 www.nextel.cl Aviso mujer 279x289-cs3.pdf 8/9/10 12:36:39
In theory, Barrancones would have been far enough away – 25km - from the Punta de Choros nature reserve not to have had a significant environmental impact, and GDF Suez did everything by the book. areas, has led to legal challenges against Chile Sustentable. because companies don’t respect the some projects such as Campiche. “The companies themselves genera- legal framework,” she said. “They have “There is a problem in Chile with land ted this uncertainty by pressuring the go- swept the real costs under the carpet so planning, we don’t have a policy for the vernment to let them build their projects in society pays for it in the long-term through uses of rural areas,” said Arteaga. protected areas,” she said. pollution.” It’s not just energy investments that President Piñera has contributed to Foreign investors in Chile’s energy have suffered as a result. A proposed legal uncertainty by intervening in the Ba- sector deny this, saying they respect pork processing plant in Casablanca, a rrancones at the last minute, but this was Chile’s laws just as they abide by the wine producing valley near Santiago, was necessary to protect the Punta de Choros laws of any country where they decide to recently approved by CONAMA, but local nature reserve, said Larraín. invest. vineyards claim the project will harm their The law itself is not the problem, but But obeying the law is insufficient to business and are appealing the decision. rather pressure by private business to ensure a project will not face opposition. Part of the problem, argues Arteaga, make the authorities bend the rules so Investing in a strategic environmental plan has been the influence of special interest they can build their projects where costs that involves the local community from groups in the approval process. But the are lowest, argues Larraín. the beginning of a project could help pre- new legislation, which calls for the creation “There is a double standard at work vent legal problems down the road, said “Yo coordino, dirijo, tomo decisiones. of special environmental courts, should Arteaga. make the process more independent. “Companies have to improve the way Necesito hablar sin preocuparme “We need to reduce discretion by Greenhouse Gas Emissions: they negotiate with communities in Chile, making clear rules for authorities to Annual Growth 1990-2007 but we lack experts in these types of ne- follow,” he said. gotiations,” said Arteaga. de la cuenta a fin de mes” Chile 3,67 Arteaga’s firm, for example, works Respecting the law with Mexico-based C3 International Con- OECD 0,93 sultants that specializes in community Tu celular ideal está a un botón de distancia. Latin America 3,08 But companies also have some res- average negotiations, but he predicts demand for ponsibility for the confusion in the envi- this type of service will increase as com- ronmental approval process, said Sara World 1,90 panies realize the value of building a con-
Larraín, executive director of the NGO Source: Energy Ministry sensus with local communities. Such a consensus can help compa- nies protect themselves from environ- mental opposition, argues Arteaga. Some companies, like Endesa, are “La Moneda is sending already making progress in this area. confusing signals to “HidroAysen is a good example of how investors,” companies should relate to local commu- nities,” said Arteaga.
The cost of clean energy
Jaime Solari, Finally, the question comes down to Solicita Sociedad de Gestión how much Chile is willing to pay for energy la visita Ambiental (SGA). and at what cost to the environment. de un Chilean legislation enacted in 2008 ejecutivo requires generators to gradually increa- 800 646 695 se generation from non-conventional re- www.nextel.cl business Chile October 2010 17 Participando de los desafíos de nuestros clientes
Más de 32 años de liderazgo en Leasing Operativo de flotas. Confíe en el número uno, confíe en RELSA.
$)*-&t1&3Át#3"4*- www.relsa.com COVER STORY “Chile is known as a newable energy sources to reach 10% country that respects of their output by 2020, but there are no subsidies in Chile as there are in Europe. the law and has strong “Whether through taxes or higher institutions,” energy bills, consumers will have to pay out of their pocket for renewable energy,” Ignacio Arteaga, said one executive. Participando de los desafíos The wind blows strong in parts of Chile Arteaga, Gorziglia de nuestros clientes and the sun shines year-round, but ex- & Compañía perts say wind and solar power are too inefficient and unpredictable to meet the country’s base load needs. Building a wind farm costs about the rrounding the approval process for heavily in these decisions. same as a coal plant, or about US$2 new coal-fired projects. To reassure investors, the government million per MW, but windmills operate at But, most importantly, foreign inves- should create a clear energy policy that fa- about 30% efficiency versus 90% effi- tors need to be reassured that the rules cilitates investment, but companies must ciency for coal, and they must be backed will not change overnight and that a phone also accept that environmental standards up with alternative supplies from the grid. call from the President will not cancel their in Chile will be as high as in the United That leaves coal, LNG, hydro or nu- project, said SGA’s Jaime Solari. States, Canada or Europe. clear power. A nuclear plant could take 10 As for GDF Suez, despite the Ba- According to Arteaga, “what’s needed years to develop, but as Chile looks to ac- rrancones debacle Hatton says his is a sense of the common good.” This celerate its economic growth in the next firm is considering other alternatives means public and private sectors working decade it will need a lot more energy. to help meet Chile’s energy needs. together in the long term interests of all The new environmental legislation But foreign investors have other op- Chileans. bUSiness chile should help in this regard by elimi- tions when they decide where to put nating some of the uncertainties su- their money and legal certainty weighs Julian Dowling is Editor of bUSiness CHILE
Más de 32 años de liderazgo en Leasing Operativo de flotas. Confíe en el número uno, confíe en RELSA.
$)*-&t1&3Át#3"4*- www.relsa.com The perfect play Av. Vitacura 5093 - 7th & 8th floors - Santiago - Chile • Phone: (56-2) 787 4100 / Fax: (56-2) 206 0540 • contact: [email protected] Special Report Mining Safety: What Lies Beneath? An accident that trapped 33 miners at the San José mine in the Atacama Desert has raised serious questions about safety standards in the Chilean mining industry. bUSiness CHILE asks how dangerous the country’s mines really are and what is being done to make them safer.
by Gideon Long
p the dirt road that leads to just as bad as here,” she says. “This country including construction, ban- the S a n José gold a nd c opp e r was an accident waiting to happen.” king, retail, agriculture and transport.” mine, a group of around 40 The accident, and the enormous The statistics support his claim. miners come walking. Dres- media interest it has generated, has According to Chile’s Department of U sed in dark blue overalls and shone a harsh spotlight on safety stan- Social Security, there were nearly hard hats, they appear ready to start dards at Chile’s mines. It has reminded 234,000 accidents in the workplace their shifts. But these men have no Chileans that mining in this country is last year and, of those, just 1,289 were work to do. Since August 5, when a not just about Codelco, BHP Billiton, in mining compared to nearly 39,000 tunnel collapsed at the mine trapping Anglo American, Barrick and Xstrata – in manufacturing and more than 33 of their colleagues below ground, huge companies with relatively good 26,000 in construction. For every 100 they have been idle. safety records. It is also about the workers in the mining industry, there At the head of the group is Evelyn small and medium-sized companies, were 2.2 accidents, compared to 5.7 Olmos, the president of the local dotted around the Atacama Desert, in construction and 7.2 in agriculture miners’ union. She explains why they where miners often scratch out a living and fishing. are there. in precarious conditions. But those figures tell only half the “We’re living in uncertainty,” she story. Firstly, as Durán acknowled- says. “We’re still under contract to Risky Business ges, mining accidents tend to be more the company that owns this mine and, serious than those in other sectors. while that’s the case, we can’t find Mining is, of course, an inherently When a shop worker or a bank clerk work elsewhere. We need the govern- risky profession and, thankfully, the days suffers an accident, they might sprain ment to intervene.” are long gone when the industry claimed a wrist or twist an ankle. When a miner Olmos, whose union represents hundreds of Chilean lives each year. suffers an accident, he risks ending over half of the 140 miners employed Safety standards have improved, so up dead. at the mine, says the accident was not much so that Miguel Ángel Durán, pre- Secondly, the claim masks huge an isolated incident. Something similar sident of Chile’s Mining Council which discrepancies within the industry. could happen at other Chilean mines groups 15 private multinational compa- Codelco and the multinational com- at any time, she warns. nies and state-owned Codelco, makes panies represented by the Mining “We’ve been talking to unions el- the following remarkable claim: “Taken Council all boast better-than-average sewhere in the region and they say in its entirety, mining has the lowest safety records. But, as Durán accepts, the safety standards at their mines are accident rates of any industry in the “within the industry there is clearly a
20 October 2010 business Chile sharp contrast between safety stan- ver, suggest that Chile still has some United States, and so are the safety dards at big companies and those at way to go before that is the case. standards companies are supposed small and medium-sized firms.” According to the U.S. Mine Safety to adhere to. Even so, the overall downward and Health Administration (MSHA), “The difference lies in how serious trend in mining accidents in Chile is there were 0.06 deaths per million countries are about making emplo- encouraging. According to the Natio- hours worked in U.S. mines last year yers comply with those standards,” nal Geology and Mining Service (Ser- – less than half as many as in Chile. said King, whose union has over a mi- nageomin), the state body tasked with The number of miners killed in the llion active and associate members in regulating the country’s mining indus- United States and in Chile last year Canada and the United States. tr y, the re wa s a n ave r age of 0.41 de ath s was almost identical – 34 in the U.S. King recently visited the San José in Chilean mines for every one million and 35 in Chile. But when you consi- mine as well as several other Chilean hours worked during the 1980s. By der that twice as many people work in mines, and is deeply critical of their the 1990s that figure had dropped to the industry in the U.S. than in Chile, it safety standards. 0.28 and over the past decade to 0.13. is clear that Chilean safety standards “Unfortunately, there’s a culture of During the past 10 years, the indus- lag behind. Between 2000 and 2009, non-regulation, non–enforcement and try has averaged 34 deaths per year, the number of injuries at U.S. mines non-recognition of workers’ rights, lower than in any previous decade. fell by 41%. In Chile, it fell, but not so making it open season for mining com- Like-for-like comparisons with sharply. panies to do whatever they want.” other countries are difficult, butD urán Andrew King, national coordinator But safety is less of a concern at says Chile’s safety standards are for health and safety at the massive Chile’s big mines than at the little ones. better than elsewhere in Latin Ameri- North American trade union, United Sernageomin divides Chile’s mining ca and on a par with those in Australia, Steelworkers, says the equipment, companies into four categories: ca- Canada and the United States. Figu- knowledge and skills at Chilean mines tegory A companies have around 400 res from the U.S. government, howe- are similar to those in Canada and the workers or more; category B between
business Chile October 2010 21
Special Report
“We’ve been fighting to improve safety at this mine for years,”
Evelyn Olmos, San José miners’ union
80 and 400; category C between 12 and 80; and ca- tegory D, less than 12. In 2009, companies in the first group directly employed some 27,000 people and only one of them was killed in a mining accident. At the other end of the spectrum, category D companies employed just over 1,000 people and 13 of them were killed. The contrast could hardly be starker. One significant factor in Chile’s accident rate is the price of copper. When the price is high, miners - some of them with only limited experience - head out into the desert and the foothills of the Andes in search of the mineral. Mines long-since closed because they could no longer turn a profit suddenly find they can. They reopen, often with no better safety standards than those in place on the day they closed. It is no coinci- dence that in 2007 and 2008, at the height of the boom in copper prices, there were more deaths in Chilean mines than in any other year during that decade. In 2007, when the copper price averaged a record US$3.24 per pound, 40 miners died in accidents. In 2008, when copper was US$2.88/lb, the death toll hit 43. In contrast, the safest year in the history of Chilean mining was 1999, when there were just 0.09 deaths for every million hours worked. It would be nice to think that this was due to improvements in safety procedu- res, but the main reason is that in that year the average copper price fell to just 72 cents, it’s lowest level in over 10 years, as a consequence of the Asian crisis. For the industry’s smaller players, whose safety stan- dards tend to be the poorest, there was simply no in- centive to mine copper.
Special Report
“We’re reviewing all regulations in the mining industry,” Laurence Golborne, Mining Minister. (right)
Making mining safer has established a commission to look “It’s clear that inspection is an area of into safety standards at Chilean wor- particular concern.” So, what is being done to improve kplaces, not just in mining but across She said the commission is talking safety at Chile’s mines? the economy. The commission has 90 to workers and employers across the In the wake of the San José acci- days to come up with proposals to im- country to get their thoughts on how dent, the government announced what prove safety and is due to report its safety can be improved, but will also it described as “a complete overhaul” findings on November 22. look abroad. It has already held talks of Sernageomin. This includes more “The commission is examining three with officials from the International than doubling the number of mine ins- basic areas: inspection, standards and Labor Organization (ILO), and will talk pectors from 18 to 45 by the end of prevention,” said Maria Elena Gaete, to experts from the European Union next year, and increasing its budget the commission’s executive secretary. and the United States. from US$24.7 million to US$57.6 mi- llion. The government said this should ensure that, on average, mines in Chile “Chile lags behind are inspected every eight months, an improvement on the current situation. developed nations “This accident happened becau- in terms of safety se maybe measures were not taken standards” properly,” Mining Minster Laurence Golborne told bUSiness CHILE in an interview at the San José mine. “We’re reviewing all regulations in the mining Maria Elena Gaete, industry including the inspection of President Piñera’s safety measures, particularly in small Commission on Safety and medium-sized mines.” in the Workplace In addition to reorganizing Serna- geomin, President Sebastian Piñera
business Chile October 2010 25
Special Report
“Chile still lags behind developed nations in terms of safety standards, but not by much,” Gaete said. “In mining, the reason the accident rate is so low is precisely because so many people in the industry are employed by foreign multinationals that have the very highest safety standards.” But union official Andrew King questions the commission’s validity. “It’s an expert panel that excludes worker representatives, so it’s hard to see how it will have any credibility or make any progress in terms of protec- becomes,” said Durán. “Accident levels kers out of the front line, this kind of ting workers’ lives,” said King. fall and your business also improves.” technology helps save lives. The Mining Council’s Durán sug- Advances in technology can help One area where improvement is gests a change of culture is needed, too. One good example is the intro- needed is in the training of subcontrac- and that Chile’s mining companies duction of remote-controlled trucks ted workers who have become an in- should realize that a safe mine is a at some Chilean mines. These mons- creasingly large part of the workforce, successful mine. Not only do com- ter machines, developed by Japanese especially when demand for copper panies have a moral responsibility to company Komatsu, rumble along dirt is high. In 2007, for example, when protect their workers, they also have a tracks carrying tons of mineral. But business was booming, many mining business incentive, he said. they have no drivers – they are ope- companies hired extra workers, some “The more that you spend on safety rated remotely by technicians sitting of whom with only limited experien- and training, the better your workforce safely in their offices. By taking wor- ce. Unsurprisingly, they were often
av coke hidratacion 215x13.pdf 1 9/29/10 4:09 PM
C
M
Y
CM
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CMY
K Mortality Rate in Chile’s Mining Sector 1980-2009 0,6
the ones who got into trouble. During 0,51 0,5 0,49 that year, of the 1,912 workers involved in 0,46 0,48 mining accidents in Chile, more than half 0,43 0,42 0,41 0,41 – 1,040 – were subcontractors. 0,4 0,38 “Safety standards for full-time emplo- 0,35 0,34 0,33 yees in Chilean mines are good, but that’s 0,31 0,30 not always the case when it comes to ser- 0,3 vice providers,” said Durán. 0,25 0,21 0,21 Increasingly, however, mining com- 0,2 0,18 0,16 panies are demanding the same safety 0,15 0,14 0,13 0,13 0,13 standards from subcontractors as from 0,12 0,11 0,12 0,10 0,10 their own workers. “The gap is closing,” 0,1 0,09
added Durán. worked) hours million per (Deaths Rate Mortality
0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Canary in the coal mine Year
Mining in Chile remains a dangerous were trapped there for more than two frantically reviewing their safety stan- business. In the first eight months of this months will not be added to this la- dards and trying to improve them,” union year, 31 miners died in accidents caused mentable death toll. leader Olmos said. “It’s just a shame that by cave-ins, electrocution, explosions, But, even so, the accident will have it took something as dramatic as this to asphyxiation and falls from heights. major repercussions for the Chilean make them do it.” bUSiness chile
Fortunately, everything went ac- mining industry. Never have the eyes Editor’s Note: At the time this issue went to press, the rescue operation at the San José mine was successfully completed. This story has had a happy ending for the families involved but safety in Chilean cording to plan at the San José mine of the world been upon the sector in mines remains a concern for the industry in general. and the rescue effort was successful such a way. Gideon Long is a freelance journalist based in Santiago. so the names of the 33 miners who “Companies are frightened, they’re He also works for the BBC.
28 October 2010 business Chile
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California Dreaming: A Strategic Partnership
n September 24, President Sebastian Piñera visited The California trip went to the heart of the Piñera government’s California at the invitation of Governor Arnold Schwar- goals, focusing on some of Chile’s key challenges including zenegger. The President’s visit was the highlight of a education, the environment, renewable energy and agriculture. weeklong business mission to California that included Agreements were signed in all these areas (see Box 5) on this O delegations led by the Ministers of Economy, Energy, visit, witnessed by Governor Schwarzenegger who received Culture and Agriculture (see Boxes 1-4). The mission, structured President Piñera at a luncheon at the home of UCLA Chancellor, within the framework of the Chile-California Strategic Partners- Gene Block. hip Agreement, was one of the largest Chilean business delega- In his speech, Governor Schwarzenegger recognized the tions to date and the first for President Piñera. historical closeness of the Chile-California relationship from the AmCham played an important role in organizing the trip, as times of the California gold rush, through the Kennedy years, the well as in arranging a breakfast meeting with over 250 business Alliance for Progress, student exchanges and the signing of the leaders in Los Angeles where President Piñera was the keynote Chile-California Partnership Agreement in 2008. speaker. AmCham President Ricardo García led the Chamber’s The Governor pointed to shared geographic, environmental delegation that included directors Kathleen Barclay, Javier Ira- and economic fundamentals, as well as to the success of the rrázaval and CEO Jaime Bazán. U.S.-Chile Free Trade Agreement. Under the FTA, California’s President Piñera delivered a powerful message about his exports to Chile have grown over 400% since 2004. Clearly the government’s commitment to eliminating poverty and lifting Chile-California partnership has been, and will continue to be, a Chile into the ranks of the developed world, underpinned by driver of growth in both economies. strong values including respect for the environment and human Wherever they went in California, the Chilean delegation re- rights. He aims to achieve these goals by accelerating econo- ceived an enthusiastic and warm reception. Chile has long been mic growth to over 6% per year on a sustained basis – a target recognized for its economic success, but especially noteworthy that requires a renewed commitment to innovation, efficiency on this visit was the respect it has earned by pulling together so and creativity with an emphasis on developing Chile’s human effectively after one of the strongest earthquakes on record and capital. coordinating the rescue of 33 trapped miners in the San José
30 October 2010 business Chile California Dreaming: Economy: Daring to Dream Bigger Innovation, productivity and creativity - these are the key areas Chile needs to improve in its quest to become a developed country. The Economy Minis- ter, Juan Andrés Fontaine, led a delegation of 14 of A Strategic the country’s most promising entrepreneurs to Silicon Valley in September to show that Chile is ready to meet these challenges. The three-day mission began with a tour of Google’s headquarters including a private meeting with a senior executive focused on identifying and developing entre- preneurial talent. The Chilean delegation also exchan- Partnership ged ideas with experts in entrepreneurship at Berkeley and Stanford and presented their projects to leading mine near Copiapo. Support for Chile is especially strong in venture capitalists in Silicon Valley - one of the toug- California where earthquakes and the mining industry’s cha- hest tests a young company can face. llenges are well understood. The Minister signed agreements with Google Plex, Chile is also admired as a beautiful and fertile land – much Stanford Technology Ventures and launched the Start- like California. This sentiment was nowhere more obvious Up Chile program that is bringing young entrepreneurs than at the world premier of the Il Postino (The Postman) to Chile. AmCham, in partnership with Austral Capital opera in Los Angeles, which was attended by members of and the U.S. Department of Commerce, also organized the Chilean mission. The opera, which is based on a book a meeting with a dozen of Silicon Valley’s leading ven- by Chilean author Antonio Skarmeta, depicts Chile as a land ture capitalists to discuss how to promote a dynamic where dreams can come true. climate for Chilean entrepreneurs. But dreams only come true with hard work and focus. The message is clear: Chile’s human capital needs To make Chile’s California dreams come true, the country’s to globalize and become integrated with the best global entrepreneurs, business leaders, and artists will need to run talent and financing to create world-class companies faster and reach further. Chile has successfully globalized its that will accelerate the country’s development. exports, but its people also need to globalize themselves. This mission was a step in this direction and the President Piñera and his team have set an outstanding entrepreneurs who went have come back energized to example on this trip. Now it’s up to all of us in the private meet this challenge (see Trade on page 6). AmCham, sector to rise to the challenge and continue the momentum. Austral Capital, and the U.S. Department of Commer- It will take resources, effort and determination to make of ce will bring a group of U.S. venture capitalists to Chile the Chile-California partnership sustainable in the long term. in early 2011 to build on the momentum generated by We, at AmCham, are committed to doing our part towards this trip. Meanwhile, Chile’s Economy Ministry, leading realizing Chile’s California dreams, beginning with a trade universities and entrepreneurs need to work hard to mission to Chile in January for leading venture capitalists ensure Chile achieves its goal of entering the ranks of from the United States. developed economies.
business Chile October 2010 31 Spotlight
Energy: Solving Chile’s Power Puzzle For Energy Minister, Ricardo Raineri, José where GE demonstrated executives from Chile’s energy sector and the high safety standards of AmCham’s President, Ricardo García, nuclear reactors, zero carbon the California trip was a busy four days of emissions, and capacity to meetings with local authorities and com- generate large quantities of 40% of the time and must be backed up panies to learn from their experiences energy near urban areas. Given these be- with supplies from the grid while covering and gain insight into how Chile can meet nefits, reactors could be built near Chilean a large territory that cannot be used for its future energy challenges. cities to complement hydroelectric power any other purpose. For Chile to reach its goal of becoming generation, but Chile needs skilled engi- But wind is not the only clean energy a developed country by 2018, it will need neers and plant operators. It also needs to resource Chile has in abundance. It also to exploit its renewable energy sources accelerate research and discussion about has plenty of solar and geothermal poten- while improving environmental protection. regulations and norms, as well as state tial. In this respect, the Minister signed an To fuel its growth, however, Chile needs to participation in a possible nuclear power agreement to promote the development double its installed capacity by 2020 with project. of Chile’s geothermal resources, including hardly any fossil fuels of its own, and with California is also a world leader in re- training and joint research projects. The long distances to export markets which newable energy. Minister Raineri’s dele- Chilean delegation also met with autho- make the carbon footprint of Chilean pro- gation visited a wind farm in Palm Springs rities in California’s capital Sacramento to ducts larger than the competition’s. managed by U.S. firm AES Corp. The learn about clean energy regulations and But there is a solution. Nuclear energy farm covers hundreds of hectares and air pollution norms. has been debated for years in Chile, but has installed capacity close to 500MW, The main conclusion of the visit is that California showed the Chilean delegation making it one of the largest in the coun- Chile has much to learn in terms of nu- that safe nuclear power is feasible in a try. But the Chilean delegation conclu- clear power and renewable energy, and land prone to earthquakes. ded that wind power is not the answer to California’s energy authorities and the pri- The Chilean delegation visited Gene- Chile’s energy needs. The Palm Springs vate sector are willing to work with us. It’s ral Electric’s nuclear training facility in San turbines, for example, generate less than an opportunity we should not let pass.
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32 October 2010 business Chile Culture: Lights, Camera, Action! Why film inC hile? This is the question Chile’s Culture as well as its inverse sea- Minister, Luciano Cruz Coke, tried to answer over three sons, economic and politi- days of intense meetings with leading film and television cal stability, archi tecture producers in Los Angeles and Hollywood. and people are there for all Leading a team from Chile’s entertainment industry to see, but it’s not enough. including executives, producers, directors, writers and We need to develop a stra- actors, the Minister sold Chile as a land of opportunity tegy that allows us, in 10 or for producing films, television and commercials, promi- 20 years, not just to com- sing that his country has what it takes to compete as a pete with countries like Co- production location. lombia, Mexico and Brazil If the rest of us are able to deliver on this promise so that in the region, but also with Hollywood producers speak highly of Chile, the amount of Australia, New Zealand and Canada. All these countries foreign investment that could flow as a result is staggering have been able to create value by offering film produ- - US$100 million, US$500 million, US$1 billion? cers advantages when deciding where to invest their It all depends on us. money. Bridges between Chile and Hollywood will not be built Minister Cruz Coke did not just go sightseeing in by offering state subsidies to foreign firms. Instead, we California – he worked hard and laid the foundation for should strengthen the public-private partnership that future success. Now everyone in the industry, including was forged on this mission by Minister Cruz Coke and those who went with him and those who stayed behind, his team. To attract Hollywood productions, must work hard to reap the fruits of this visit. we all need to work together in terms of infrastruc- Chile could, and should, be an important actor in the ture, services, legislation, languages, technical training, world entertainment industry. We could be the hot new tax incentives and so on. location Hollywood chooses to set its next blockbuster. The variety and beauty of Chile’s natural landscape But that, of course, is up to us.
En el marco de la Responsabilidad Social Empresarial de la Compañía, nace en el año 2006 la Fundación PepsiCo Argentina. Para el año 2007 se suman al desafío Chile y Uruguay.
Nuestra Misión es promover el desarrollo de la comunidad mediante el apoyo de Programas de Educación, Salud, Nutrición y Bienestar. A partir de un esquema integral de relaciones con la comunidad se busca construir un vínculo duradero en el tiempo y con un compromiso absoluto, destinados a fomentar el trabajo en red con instituciones de la comunidad, junto a ONG’s especializadas en el aporte social.
Junto a Unicef realizamos la validación y el monitoreo del Programa de estimulación temprana “Juguemos con nuestros hijos”, junto a la Universidad Católica de Chile, en el marco del programa ActivaRSE.
A través de la alianza con Acción RSE, desarrollamos el Proyecto Nutrirse, Empresas por un Chile sano y activo.
Desde el año 2008, a través de la alianza con FAO se han apoyado actividades como el “Día Mundial de la Alimentación”, el “Proyecto Huertas Urbanas”, y la “Carrera por los alimentos”. Spotlight Agriculture: Planting Seeds for the Future A team of executives and leaders from Chile’s agro-food seasons are reversed, its production complements Chile’s. sector accompanied the Minister of Agriculture, José Antonio During the visit, Minister Galilea signed an MOU with the Galilea, on the trade mission to California. secretary of the California Department of Food and Agricultu- It’s no coincidence that Minister Galilea’s trip began re to deepen cooperation in the agricultural and agribusiness in the Sacramento valley at the University of California sectors. Davis, where he attended a seminar titled "Sciences for Given the importance of California’s wine industry in particular Successful Agricultural Business.” UC Davis is one of the for Chile, the delegation visited wineries in Napa Valley including world’s leading universities in agricultural research, and the Quintessa winery owned by Chilean businessman Agustín many of the academics responsible for Chile’s agricultural Hunneus. Around 6% of total wine imports in the United States revolution in the last 30 years have taught there. Today, come from Chile and Chilean viticulturists have also helped Chile is used as a case study in many of the courses taught Napa wineries fight plagues and diseases that affect grape pro- at UC Davis, and the exchange of knowledge continues to duction and quality. be important for both parties. Napa’s sister city in Chile, Casablanca, participated in the The United States is the most important market for Chile’s mission along with the National Agricultural Association (SNA), agriculture and forestry exports. According to the Ministry of Fo- Wines of Chile, the Fruit Exporters Association (ASOEX), Chile’s reign Affairs, a third of Chile’s total agro-forestry exports, some Organic Producers Association, Chile Oliva, the National Seed US$3.5 billion, go to the United States, representing more than Producers Association (ANPROS) and Chile’s Pork and Poultry half of Chile’s total exports to that country but only 3% of total Producers Association (APA/ASPROCER). U.S. imports. This means there are opportunities to grow in this This strong participation made the mission a success. As Go- market, particularly in terms of value-added gourmet and orga- vernor Schwarzenegger said, these trips are important not just nic products. for making contacts but also for strengthening ties to improve Within the U.S., California is a very important market for Chile, trade relations in the long term. The seeds of Chile’s success in not just because it has a similar climate but, since its growing this market have been planted. Chile-California Agreements
Education: Chile’s Universidad Adolfo Ibáñez (UAI) and the UCLA Anderson School of Management launched an innovative dual degree executive MBA program called the Global Executive MBA for the Ameri- cas. The 15 month part-time program starts in April 2011 with course modu- les held in Miami, Los Angeles, São Paulo and Santiago.
Environment: Chile’s Universidad Católica, the University of Califor- nia Santa Barbara California and the Wildlife Conservation Society signed an MOU to promote marine conser- vation. The agreement is aimed at creating innovative public-private models to protect marine areas as well as offering training and educa- Energy: Chile’s Energy Minister Ricardo nia Air Resources Board to develop re- tional exchanges for Chilean marine Raineri signed an MOU with the Califor- newable energy sources, improve energy biologists. nia Energy Commission and the Califor- efficiency and reduce carbon emissions.
business Chile October 2010 35 AMCHAM News AmCham Breakfast with Ambassador Noriega On September 7, AmCham held Committees a breakfast for its directors and ex Corporate Communications & U.S. Assistant Secretary of State Sustainability Committee for Western Hemisphere Affairs On September 1, AmCham’s Corporate under President George W. Bush, Communications & Sustainability Com- Ambassador Roger Noriega. Am- mittee held a meeting with guest speaker bassador Noriega, now a fellow Verena Radulovic, director of the U.S. En- at the conservative thinktank The vironmental Protection Agency’s Climate American Enterprise Institute, Leaders program. She spoke about public spoke about the main issues in and private initiatives in the U.S. including Chile-U.S. relations such as trade, AmCham directors with Roger Noriega, the the Climate Leaders program, an EPA in- security and regional affairs. American Enterprise Institute. dustry-government partnership that works with companies to develop climate change strategies, and the international Energy AmCham Presentation Kit Star program that labels appliances accor- AmCham’s Research De- ding to their energy efficiency. partment has created an up- dated version of its member’s kit that includes a presentation about Chile’s business climate with statistics and information about the Chilean and U.S. economies. For more infor- mation contact Nora Balza- rotti: nora.balzarotti@amcha- mchile.cl
Mary Brett Rogers-Springs, U.S. Embassy; Charles Kimber, president of AmCham’s Corporate Communications Committee and Verena Radulovic, Special Offers for AmCham Member U.S. Environmental Protection Agency. AmCham has renewed its agreement with Inbusiness, AmCham’s Corporate Communications a languages firm that offers & Sustainability committee held a meeting English and Spanish classes on September 29 with guest speaker Luis at special rates for AmCham Hernán Bustos, from the Chilean public members. Companies can relations firm, B20. Bustos discussed the choose private or group clas- results of his firm’s online branding study, ses for up to six people. For which found that less than 20% of the more information visit www. companies surveyed use social networks inbusiness.cl Antonio Campusano, CEO of InBusiness with like Facebook and Web 2.0 applications. Jaime Bazán, AmCham.
Avis Rent a Car and AmCham have signed an agreement offering Amcham members and their employees a 15% discount off promotional rates Luis Hernán Bustos, on prepaid car rentals anywhe- B2O and Jaime Bazán, AmCham Hernan Fuica, CEO of Avis Chile and re in the United States. Jaime Bazán, AmCham.
36 October 2010 business Chile AMCHAM News Breakfast with Ambassador Noriega Good Corporate New MEMBERS Exportadora San Rafael Citizen Award Fruit Exports Francisco Posada / Executive President At the end of October, the panel of judges for the 2010 Good Corporate Rhein Chile Citizen Award, organized by AmCham, Office products will meet to review this year’s nomina- Gonzalo Miranda / CEO ted projects. The winners will be an- nounced on November 5 at the Inter- Judges of the Good Corporate Citizen Award HighService continental Hotel. with First Lady, Cecilia Morel. The panel will compare 36 programs Electrical services from 29 companies focusing on issues ment, community development and in- Higo Salamanca / CEO ranging from education to culture and novation. The Grand Prize will be given the environment. The programs will be to the program that best meets those Guevara & Cía. evaluated in three categories: environ- criteria defined by the panel. Legal services Daniel Guevara / General Director CEO Lunch On September 27, AmCham held its monthly CEO lunch in the Hotel W where members and AmCham directors met with state copper mining firm Codelco’s new president, Gerardo Jofré. The Ricardo García, AmCham; Gerardo executive discussed how Codelco’s board is functioning after last Jofré, Codelco and year’s change in corporate governance, as well as the company’s James Hughes, plans and future projects. Hotel W. $ DESDE
www.chevrolet.cl 800 800 115 38 October 2010 business Chile AMCHAM members News UCLA and Adolfo Ibáñez Launch Global Executive MBA The Universidad Adolfo Ibáñez (UAI) and America program for executives who need the UCLA Anderson School of Management to operate with a view of global markets, and have launched an innovative dual degree a broader understanding of the full diversity executive MBA program. Created for senior of opportunities in the Americas,” said Judy executives with corporate responsibilities for Olian, dean of UCLA Anderson School of Ma- Latin America or the Americas, the program nagement. offers executive MBA students the in-depth She emphasized that Chile’s economic knowledge, skills and global network needed success and its reputation for high quality to confront regional and global business cha- business education programs was a decisive llenges. factor in deciding where to choose a partner. Starting in April 2011, the 15 month part- “The launch of the Global Executive time program will consist of six two-week MBA for the Americas program is a stra- course modules held in Miami, Los Angeles, tegic and timely response to the stronger Judy Olian, UCLA Anderson School of São Paulo and Santiago. role that Latin America has played over the Management; Alfonso Gómez, UAI’s Business School (front); President Sebastián Piñera and “Our UCLA-UAI Global Executive MBA past decade,” said Alfonso Gómez, Dean of California Governor Arnold Schwarzenegger (back). for the Americas program is the only trans- UAI’s Business School. Halter Financial Group Partners with AltaDirección The U.S.-based Halter Financial Group has signed an agree- ment with the Chilean financial consultancy AltaDirección which will allow medium-sized firms in the Southern Cone, to obtain financing more easily in U.S. capital markets. Pierre Galoppi, Halter’s Business Development Manager for Latin America and the Caribbean, highlighted Chile’s economic stability and strong institutions as well as its Free Trade Agre- ement with the U.S. as reasons for choosing a Chilean partner. “All these conditions make Chile an interesting place, not just to do business in Chile but as a platform for the Southern Exequiel Pérez, Pebal; Professor Aldo Cipriano, DICTUC; Magdalena Cone,” said Galoppi. Matte, Minister of Housing and Urban Affairs; and Professor Alfredo Serpell, Daniel Guevara, Halter’s representative in Chile, said the part- DICTUC. nership “will promote opportunities for growth and financing in the North American market.” Halter specializes in assisting DICTUC Housing Quality Certification Program companies in going public through the reverse merger process, which also reduces the time and cost associated with listing on The Pontificia Universidad Católica de Chile’s engineering a U.S. stock market. firm DICTUC, and its subsidiary Sistemas de Productividad y Gestión (SPG), launched the DICTUC Housing Quality Cer- tification program at a ceremony attended by the Minister of Housing and Urban Affairs, Magdalena Matte. “This certification will allow people who are buying apartments to feel secure that they won’t suffer the same damage some suffered in the earthquake,” said Matte. The certification is needed because, although the structural plans for a building may be good, the construction is some- times faulty, said Matte. DICTUC’s president, Aldo Cipriano, said the initiative is part of the technology and knowledge Daniel Guevara, Halter Financial Group; Álvaro Flores, transfer program at UC’s Engineering School designed to con- AltaDirección; Pierre Galoppi, Halter Financial Group and Cristian tribute to society. Cerna, AltaDirección.
business Chile October 2010 39 AMCHAM members News
Talcahuano Mayor, Gastón Saavedra; Anglo American, Felipe Purcell; Fondo Esperanza President, Luciano Magnet and the assistant director of the Grumetes School, Jaime Ortega. Hotel Radisson La Dehesa Opens for Business
Anglo American Helps Small Business Located on the east side of Santiago, Owners Recover the brand new Radisson Petra La Dehesa Mining firm Anglo American and those entrepreneurs affected by the Hotel opened its doors in October. The non-profit foundation Fondo Esperan- earthquake. It’s impressive to see that avant-garde hotel, which cost US$18 za signed an agreement called “Toge- they still have the strength and drive to million to build, was developed by the In- ther We Will Start Again” (“Juntos Vol- succeed, they just need some help,” versiones La Dehesa fund. The hotel was vemos a Emprender”) at a ceremony said Luciano Magnet, president of supposed to open earlier this year, but in the port city of Talcahuano, which Fondo Esperanza. Anglo American architects delayed the opening in order to will allow 2,000 entrepreneurs in the has already built six modular schools reinforce the foundations after February’s earthquake-hit Bío Bío Region to res- in the region as part of its reconstruc- earthquake. The chain also plans to open tart their businesses. tion program, allowing 4,500 students a new hotel in Concepción by the end of “It’s especially important to support to return to school. 2001 or early 2012.
BancoEstado Launches SME Financing Program Chile’s Finance Ministry and state-owned Finance Minister Felipe Larrain said the with revenues in dollars can also have their BancoEstado have launched a new loan initiative will help stimulate Chile’s economy debt in dollars to improve their access to program, which offers Small and Medium recovery and reduce the exchange rate financing,” said Larrain.BancoEstado’s Enterprises (SMEs) lines of credit in U.S. do- risk for companies that receive income in president, Segismundo Schulin-Zeuthen, llars up to US$200 million for a maximum of U.S. dollars. “This new program for SMEs invited “all those producers with income in eight years. The program is available at all is the first such program launched by Ban- dollars to approach our bank to see how BancoEstado’s branches nationwide. coestado… the idea is that companies their needs can be met.” Executive Appointments Andrea Giannella, Massimo Marco Antonio director of Tambosco, Muñoz, head of Strategy, assistant general Deloitte’s office in Organization & manager of Puerto Montt People Advisory Enersis at KPMG Chile Andrea Giannella Enersis has named Marco Antonio has been appointed Massimo Tambosco Muñoz is the new director of KPMG as its new assistant director of Deloitte’s Chile’s Strategy, general manager. Puerto Montt Organization & Tambosco has a office. Muñoz is an People Advisory. degree in Business accountant from the She is a psychologist Administration from the Universidad Austral from the University of Belgrano, Argentina, Università Commerciale Luigi Bocconi de Milán. de Chile with postgraduate studies from the with postgraduate studies in Corporate In addition to developing executive programs at Universidad de Santiago and Universidad de Communications from the University of the Kellogg School of Management in Chicago Chile. He has worked for various accountancy California. and the Harvard Business School, he has worked firms and he has taught at the Universidad for Endesa, Enel, Ferrero Mexico, and Roca Italy. Austral de Chile and the Universidad de Chile.
40 October 2010 business Chile business Chile October 2010 41 AMCHAM People Breakfast with Minister Felipe Kast On September 28 AmCham hosted a breakfast at Santiago’s CasaPiedra convention center with Chile’s Minister of Planning and Social Affairs (Mideplan), Felipe Kast. The Minister discussed the government’s plan to reduce poverty by making social programs more efficient, improving access to quality education and creating jobs. For a full report on the breakfast, see page 45.
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1 Ricardo García, AmCham, and Felipe Kast, Minister of Planning and Social Affairs 2 Jay Ewald, Wintec Holdings, and Gonzalo Iglesias, Coca Cola Chile 3 Mauricio Ramos, VTR, and Jaime Bazán, AmCham 4 Michael Grasty, Grasty, Quintana, Majlis y Cía; Gerardo Scheel, Boyden Chile and Roberto Peralta, Peralta Gutiérrez y Asociados 5 Jorge Concha, Coaniquem; René Focke, Ultramar and Francisco Ríos, High Service 6 Rodrigo Fernández, Errefe Producciones; Alejandro Rodríguez, ACHS and Murillo Brandao, Petrobras 7 David Edwards, U.S. Embassy; Lucía Pacheco, Par Comunicaciones and Pablo Burchard, Mutual de Seguridad.
42 October 2010 business Chile 4 5
6 7 Economic Snapshot A Time for Fiscal Discipline By Cecilia Cifuentes, Libertad y Desarrollo In the last five years, Chile’s public expenditure grew Central Bank has raised the projection for Chile’s GDP 67% compared to a 24% real increase in GDP. This ex- growth in 2010 to between 5.0% and 5.5% - fiscal res- pansionary fiscal policy was possible due to the copper traint would help contain inflationary pressures and mi- price bonanza, which filled the coffers of the Social and tigate the need for higher interest rates. Economic Stabilization Fund with dollars, and changes The second reason is to do with the real exchan- in the regulatory framework. Part of this increase was ge rate, which has shown a downward trend in 2010. justified by the financial crisis of 2009, but in general Although total exports are growing, the competitiveness fiscal policy failed to meet the objective of being anti- of some export sectors has been seriously harmed, cyclical while maintaining a high real exchange rate and which could create problems especially if the copper low interest rates. Put simply, the government won the price begins to lose its buoyancy. Studies have shown lottery and celebrated with a party, but a quieter party that the level of public spending affects the real exchan- than it could have had. ge rate, especially in an open economy with low coun- There are two important things to note about this try risk like Chile’s. Therefore, a more disciplined fiscal situation. The first is related to the in- policy would favor the development efficiency of higher public spending as of the export sector and encourage shown by the decrease in productivity import substitution. in the last five years. To be fair, it’s not The third reason is that fiscal spen- easy to spend such a large amount of ding in recent years has veered far money efficiently. The second, which from Chile’s structural fiscal balance is the focus of this column, has to do policy, which has been widely praised with the macroeconomic impact of for its economic benefits. In practice, public spending on prices, the exchan- this policy means spending only the ge rate, interest rates and inflation. amount of fiscal income leftover in any Since increased public spending given year after subtracting the net tends to be invested in non-tradable income the government would have goods, this puts downward pressu- received if GDP, copper and molybde- re on the real exchange rate and/or num had been at their long-term trend upwards pressure on interest rates, values. Unfortunately, Chile has been which are both disincentives for eco- spending more than this for some nomic growth in the medium term. The cost of higher years. public spending is that it generates a negative impact To return to a structural fiscal balance in the next on exports and investment. This effect could be coun- five years, public spending must grow less than half the tered through efficiency if productivity is increased average rate of the previous five years - we are talking through investment in public goods. However, as men- about a real annual rate of around 4%. The 5.5% in- tioned above, the efficiency of Chile’s state apparatus crease in the proposed 2011 budget versus projected leaves much to be desired and that is where reforms by 2010 public expenditure is slightly above this, but still this or any other government should be focused going within an acceptable range. forward. Even considering the impact of the earthquake on A more disciplined fiscal policy is highly desirable for public spending, the 2011 budget shows that the gover- several macroeconomic reasons. The first is that fiscal nment is prepared to tighten its belt. If it can maintain policy should be anti-cyclical to keep macroeconomic this policy for the next five years, Chile should reap the variables stable. Today, private spending, including benefits of a fiscal policy oriented more towards quality
consumption and investment, is growing faster than than quantity. bUSiness chile estimated a few months ago, which is likely to conti- Cecilia Cifuentes is an Economist in the Economic and Social Program of the nue into next year. In a scenario of strong growth - the Santiago-think-tank Libertad y Desarrollo. Her e-mail is: [email protected]
44 October 2010 business Chile BREAKFAST Towards a Fairer Society
By Julian Dowling ven as Chile continues its steady progress towards developed country status, it is losing the fight against poverty. The 2009 Casen survey by E the Ministry of Planning and Coope- ration (Mideplan) shows that poverty rose in Chile to 15.1 percent in 2009 from 13.7 per- cent in 2006, the first increase in 23 years. What does this mean on the street? The statistics are depressing; some 2.5 million Chileans live in poverty, and nearly a third of those on less than US$60 a month. Women and children suffer the most: 40% of all poor Chileans are 17 or younger with one in four infants born into poverty. “It’s bad, there’s no denying it, we live in a country with too much social injustice,” Mi- deplan Minister Felipe Kast told an AmCham breakfast in September. At 33 years old, Kast is one of the youn- gest members of President Piñera’s cabinet, but his air of authority belies his age. The son of a German immigrant, Felipe has followed in his father’s footsteps - Miguel Kast was Minister of Mideplan from 1978 to 1980 under General Augusto Pinochet and one of the famous “Chicago Boys.” But Felipe, who completed postgradua- te studies in sociology and economics in Havana, Cuba, before obtaining a PhD in Public Policy from Harvard, has focused on policies to overcome poverty. The Chile of today is much changed since his father held the Mideplan portfolio, but it still faces many of the same challenges in
business Chile October 2010 45 BREAKFAST
terms of poverty and social develop- bastian Piñera in August to replace ment, said Kast. Mideplan, is designed to address this “Unfortunately, there is still a strong problem by grouping all social ser- correlation between your socioecono- vices under one ministry and taking mic background and the future suc- responsibility not just for designing cess of your children,” said Kast. programs, but also for monitoring But the new government has a and evaluating them. “window of opportunity” to change “This is not just a facelift, we are that by improving social programs We have an making deep changes to the way and making sure they benefit those social programs are developed in this who need them most. country,” said Kast. “We have an opportunity now to opportunity Since social development involves build a fairer society where your ori- many sectors, Kast will preside over gins do not determine your future,” a new Inter-ministerial Social Develo- said Kast. to buid a pment Committee with the Ministers Poverty, argues Kast, is closely of Education, Health, Housing, Labor linked to employment, and redu- "fairer and Finance. cing poverty means creating new To improve efficiency, the Ministry jobs. President Piñera aims to create will have an Undersecretary of Social 200,000 jobs a year over the next four society Services responsible for coordina- years and is on track to achieving this tion between all services, and an Un- goal in 2010. dersecretary of Social Evaluation to Of course, the private sector has where your design and evaluate programs. an important role to play. “Employ- The Ministry will also present an ment is key to defeating poverty… we annual social policy report to the Pre- need more public-private partners- origins do sident, following the example of New hips to make a fairer society.” Zealand’s Ministry of Social Develop- Education is also important. Kast ment, said Kast. admitted that Chile’s education not One of Mideplan’s innovations is a system favors the status quo since standardized “report card” for social poor students are unlikely to score determine programs that awards marks in cate- in the top percentile on the PSU gories like administrative efficiency. university entrance exam. But the These reports are currently for inter- government’s new Schools of Ex- your future. nal use only but will be made public in cellence (Liceos de Excelencia) are the near future, promised Kast. designed to reward gifted students Chile has taken the important step regardless of their socioeconomic si- of recognizing that it needs to impro- tuation. ve the efficiency of its social services, “We need a level playing field where but the Minister admits there is room excellence is rewarded no matter what to do things better especially in terms your background,” said Kast. in charge of managing and, most im- of improving access to opportunities. Creating a fairer society with equal portantly, evaluating them. Employment is the answer in the opportunities also means integrating “There was no integrated social long-term, but lifting the 634,000 Chi- Chile’s minorities including the Mapu- framework and Mideplan’s budget leans in extreme poverty over the po- ches and the handicapped, said Kast. was insufficient,” said Kast. “Pro- verty line would cost about US$170 Social programs to assist these grams that don’t work have to die million, which is less than Mideplan’s groups have existed for years but the naturally and free up funds for new annual budget, said Kast. problem, according to Kast, is that a programs.” “It won’t be easy but we have enough lot of money has been wasted since The new Ministry of" Social Deve- resources, we just have to get down to there was no coordinating institution lopment, created by President Se- work,” he concluded. bUSiness chile
46 October 2010 business Chile www.businesschile.cl AACcLA meeting Latin American Chambers Honor Ex-President Uribe By Kathleen C. Barclay
The Association of American Cham- sidential elections. There are significant bers of Commerce in Latin America and hopes that Brazil can play a leadership the Caribbean held its 43rd annual mee- role on the world stage and that the new ting in Washington, DC on October 4-6 to government will meet key challenges, review progress in the region and prepare particularly those related to maintaining for future challenges. AmCham director fiscal discipline. Kathleen Barclay and Nora Balzarotti, the No meeting in Washington would be Chamber’s Head of Research, represen- complete without a discussion of the up- ted AmCham Chile. coming mid-term congressional elections Representatives of the 23 AmCham in the U.S. and what that might mean delegations discussed the region’s main for the region. AACCLA members were issues with Washington thought leaders joined by Dan Meyer of the Duberstein including former Senator Mel Martinez, Group and Nicholas Thompson of the Ta- Thomas “Mack” McClarty who worked rrance Group for this conversation. as Chief of Staff to President Clinton, and The consensus was that a strong result Moises Naim of the Carnegie Endowment in favor of increased representation for for International Peace, as well as with the Republican Party in both houses of leading government officials including Congress would most likely result in Re- the State Department’s Arturo Valenzuela publican control of the House of Repre- and Walter Bastian from the Commerce U.S. Chamber President and CEO, sentatives and sufficient numbers to have Department. Tom Donohue, with Colombia’s former more control over the legislative agenda The highlight of the conference was a President, Álvaro Uribe. in the Senate. luncheon in honor of former Colombian The implications of this for Latin Ameri- President Alvaro Uribe. Ex-President launderers, which have vested interests in ca are not yet clear. The new Republicans Uribe joined David Rockefeller, ex-Presi- maintaining the existing regime. that are expected to come to Washington dent Ricardo Lagos, Thomas McClarty There was also frustration expressed in January do not have a unified vision on and others in receiving the “Eagle of the regarding the lack of progress on key international affairs and trade. Rather they America,” AACCLA’s highest award, for trade issues including the Colombian and will be elected based on their domestic his leadership in promoting free trade in Panamanian FTAs, as well as the trucking focus on the economy, the size of U.S. the region. The U.S. Chamber President dispute involving Mexico. Most recently, government and the need for fiscal disci- and CEO, Tom Donohue, gave a speech the lack of enforcement of U.S. FTA labor pline. There is concern that some of these in honor of AACCLA’s newest Eagle. and environmental conditions in Gua- new members will view trade as a limit on A key topic was the deteriorating se- temala and Peru, respectively, has also sovereignty for the U.S. curity situation around the continent with arisen as a point of contention. Only time will tell if Congress will particular focus on Mexico and Venezue- On a more positive note, many coun- make the connection between increa- la. Regarding Venezuela, while there was tres in the region are experiencing strong sed integration with the region and some optimism after the victory of oppo- growth having come through the recent more jobs for U.S. citizens. AACCLA, sition candidates in recent elections, a global economic turbulence in relatively the U.S. Chamber and AmCham Chile word of caution was expressed in terms good shape and with strong democratic will be working to make sure that con- of expecting any changes through the de- institutions. Chile, Colombia, Peru and nection is crystal clear. bUSiness chile mocratic process – particularly given the Brazil were mentioned in this category. external parties including Iran, Russian There was particular interest in Brazil Kathleen C. Barclay is past chair of AACCLA, a past president of AmCham Chile and chair of bUSiness arms dealers, drug traffickers and money which recently held its first round of pre- CHILE’s Editorial Committee.
business Chile October 2010 47 InteRview Mining TVN’s Potential By Julian Dowling auro Valdés’ didn’t use to watch much television. The interesting thing about TVN, which has made it a As Vice-President of Corporate and External public channel unique in the world, is that it has found this Affairs at BHP Billiton’s Base Metals division, he balance. This is obvious in our programming which is very didn’t have much time to lounge in front of the diverse including news programs, entertainment and culture TV set. But since he accepted the post of new in different genres and formats. In public TV, we are the lea- M Executive Director of TVN, Chile’s largest public ders in news, culture and popular entertainment. We are the broadcaster, Valdés has found himself glued to the screen. channel with the largest network in the region and the only Valdés, who has 12 years’ experience in corporate commu- one with an International Signal. We also have the biggest nications, knows how to get a message across to the public. market share. Achieving a balance between our mission and Now, at the helm of TVN, Valdés faces increasing competition our business is a permanent challenge which sets us apart in the sector – Time Warner’s recent purchase of Chilevisión from the competition. is an example – as well as the opportunity provided by digital Given our important market share, we are also a top television to reach a wider audience with more diverse progra- choice for advertisers, which see us as a solid, trusted and mming. Valdés spoke to bUSiness CHILE about his new role, diverse medium to promote their brands. TVN is present in the challenges ahead and his plans for the state broadcaster. various platforms, which also expands our financing pos- sibilities, and in the future we want to strengthen our capa- Why did you accept the position of Executive Director city to create and export television productions that com- at TVN? pete in the international market. We have already done this I was drawn to the challenge of leading this television with soap operas, like Dónde está Elisa (Where is Elisa?), broadcaster which is very important for all Chileans. It is a which has been very successful, and we will keep doing tremendous challenge with a lot of significance for me per- it. The theoretical tension between our mission and our sonally. Mass communications and public broadcasting as business actually results in greater creativity and a better represented by TVN, are a very powerful motor for social quality product. change. With the arrival of digital television, where do you see How has your relationship with TVN’s board been so the opportunities or challenges for TVN? far? Digital television offers the possibility of increasing the Excellent. There are different points of view on the Board variety of platforms to better fulfill our mission statement. and that makes for a rich and interesting discussion about It will allow us to create content for a more segmented the role TVN should play in the current scenario and in the audience. The big challenge is how to create more con- future. The Board, including its composition and the way it tent while maintaining high quality standards and how to works, are key elements in the institutional framework that finance these new alternatives.W e are planning a strategic supports TVN’s mission as a public broadcaster. study which will help us defineT VN’s role in the new digital scenario. You used to work in the mining sector. What lessons can you bring to public television? You have said television should represent the country Mining is an industry that demands a long-term view, “in all its diversity.” What changes does TVN need to discipline, patience and precision, but there is still room to make to achieve this? dream big. Television probably has more room in this res- More than changes, we need to do what we’re already pect, but it also needs discipline and patience. From my doing even more. We have to offer more varied programming own experience, I bring the ability to work hard to achieve to reflect the Chile of today and show the different realities goals, appreciation for the value of teamwork and the search coexisting in the country. We are focused on maintaining qua- for quality and perfection in daily tasks. lity standards that put us at the vanguard of the industry and allow us to prepare for a scenario of higher competition. As a state-owned company TVN has a social mission but it How can the participation of Chile’s regions in public is also a business. Is it possible to balance these two aims? broadcasting be strengthened?
48 October 2010 business Chile We are developing a plan for the regions, which inclu- des the construction of regional offices especially created to make TV. This will allow us to improve and professio- nalize our work in the regions. The plan considers an in- vestment of 6 billion pesos (US$12.5 million), which is big for TVN, but we are happy to do this considering the need for progress in integrating all Chileans by producing local content for the regions and at a national level. This is TVN’s competitive advantage.
You mentioned stopping the “revolving door” in TVN. Why is this important? In the last few weeks we have seen that TVN is a source of professionals for the local TV industry. Faced with more ag- gressive competition, we need to ensure that we protect our assets, especially in terms of knowledge and information.
Speaking of competition, Time Warner recently bought Chilevisión, which was previously owned by President Piñera. What impact will Time Warner’s arrival have? With this deal, Chilevisión should eventually produce te- levision up to Time Warner’s quality standards and the role of the channel will be linked to the Universidad de Chile. Time Warner is a creator of quality content and so it is welcome in our country, we are all in favor of better stan- dards. For us it is a motivation to persevere in our search for better content to inform, entertain and educate in new and attractive ways.
What are the most important challenges for TVN going forward? The biggest challenge is to keep accompanying Chi- leans in their lives and identifying the information and en- tertainment needs of our audience in a changing society; to keep connecting the country and its people through the TV screen; and to lead the industry with innovative and quality products. The arrival of the digital television era is a great cha- llenge and opportunity in this sense. TVN is the biggest producer of content for Chilean TV and that gives us an advantage. But we have to know how to take advantage of it by producing creative shows on our own and in coopera- tion with third parties. bUSiness chile
Julian Dowling is the Editor of bUSiness CHILE
business Chile October 2010 49 Life in the Slow Lane Energy Independence for Dummies By Santiago Eneldo have been worrying long and hard about Chile’s growing energy needs and the manner in which they will be met. Just recently the President “requested” a company not to build a coal fired power station in an environmentally sensitiveI area – even though the project had all the necessary approvals. The company listened to the President and calmly walked away... But what sort of a message is this sending to investors? Especially foreign investors. And what does this do for Chile’s meals.” I then burn off some pounds while she watches her longer term energy needs? Will investors stay away? Has this favorite reality show with the wide-screen TV plugged into one project paid a heavy price so that others (like Hidroaysen the generator. We are now self-reliant, extremely fit and have and Alto de Maipo) can go ahead with greater government candles by our beds; very romantic... support? My solar panel is up and running; well not actually I have travelled Chile from North to South and there is “running”... but it is “operating” from above the garage roof absolutely no denying the extraordinary natural beauty we are and accumulates energy during the day (well most days!) and privileged to “have on loan.” I am also aware that a substantial then charges my electric car at night while I am fast asleep. I part of the country’s growing energy demand is due to mining have another panel at the office to recharge the car so I can expansion and urban growth. Yes, we need to sell copper at get home. Maximum speed is 35km per hour which seems to US$3.50 a pound, but why do I have to pay the direct costs irritate other drivers on the road, but I just drive calmly along (higher energy prices) and indirect costs (environmental harming no one. destruction)? The final thing we are doing is recycling waste; as in Well, I can’t do much about the mines, especially as dung. We have persuaded most of our neighbors to redirect we await the rescue of 33 heroes from the San José mine. their dung to our swimming pool which is now covered and However, perhaps I can do my little bit for the environment produces methane directly for home heating. I cannot say and domestic consumption. I have a very practical project the system is odor free yet, but we are working on this minor which I am putting into action and, if followed by others, could problem... save us billions. Now, can’t wait for the nuclear reactor to arrive but, sadly, Produce your own energy! Become energy independent! I this will take up the rest of the garden. The final problem is have been in contact with Iran and I am currently negotiating what to do with Mrs E’s Hummer, which takes up a lot of a small Nuclear Plant for my home. I have all the permits and space in front of the house. Perhaps we could convert it into I have not received a call from the President (ours, not Iran’s) a maid’s bedroom... – yet. I will only require 2% of the output and will be selling So that’s it; problem solved. We are independent, relatively the excess to my neighbours at “cost.” Very clean energy. clean energy producers (dung methane still not perfected) Safety? Not an issue. The Iranians assure me the plant is safe and soon to be providing even cleaner nuclear energy for the and comes with a six-month guarantee. entire neighborhood. Radioactive waste? We own a small, As I await the plant’s arrival, we have converted our home very deep, disused, useless mine... to Bicycle power. We have two exercise bikes which we use for an hour in the morning and an hour in the evening. While I remain, a leader in Innovation and Implementation; what I peddle and power a small generator, Mrs Eneldo has time about you? to take a shower, shave and dry her hair... She then pops on the bike and while I have my shower and wash our clothes at Santiago Eneldo the same time. In the evening, I peddle and provide power (Energy bonds available on demand) for the microwave while Mrs E heats up some “ready-to-eat [email protected]
50 October 2010 business Chile
boyden 21.5x28 Amcham.indd 1 28/9/10 18:17:48 business Chile October 2010 51
boyden 21.5x28 Amcham.indd 1 28/9/10 18:17:48 Business Chile AmCham 215x28 hombre joven.pdf 1 8/30/10 10:41 AM
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