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Chile enables your future FOREIGN INVESTMENT COMMITTEE www.foreigninvestment.cl Chile enables your future FOREIGN INVESTMENT COMMITTEE www.foreigninvestment.cl CHILE ENABLES YOUR FUTURE Foreign Investment Committee. All rights reserved. Requests to reproduce part or all of this publication should be sent to [email protected] Second edition, 3,000 copies. May 2009 Printed by Maval Designed by www.vox.cl Printed in Chile CONTENTS Editorial 8 Sustained growth 11 Competitiveness 21 Chile, a reliable partner 28 Business climate 33 Globally connected 37 A guarantee of transparency 47 Proven legal confidentiality 51 Foreign investment in Chile 55 The experience of investors 70 CHILE IN SOUTH AMERICA 90º 80º 70º 60º 50º 40º 10º 10º Caracas VENEZUELA Georgetown Bogotá Paramaribo Cayena COLOMBIA GUYANA SURINAME FRENCH GUIANA 0º Quito 0º ECUADOR PERU 10º 10º Lima BRAZIL La Paz Brasilia BOLIVIA PARAGUAY 20º 20º Asunción CHILE URUGUAY 30º Santiago Buenos Aires Montevideo 30º ARGENTINA CHILEAN ANTARCTIC TERRITORY 100º 90º 80º 70º 60º 40º 110º 90º 60º Chilean 50º 40º Antarctic 53º Territory 120º 70º 40º 130º 30º 140º 80º 20º Publication authorized by Resolution Nº 132 issued on 3 April 2009 150º by the National Directorate of Frontiers and Borders. Under Article 160º 2, Letter g) of DFL Nº 83 issued by the Ministry of Foreign Relations 10º in 1979, the publication and distribution of maps or other printed 170º material and documents that refer or relate to Chiles borders and 50º 180º 0º frontiers do not imply a commitment of any sort on the part of the 1998 Agreement State of Chile. 100º 90º 80º 70º 60º 50º 40º 30º 20º 4 CHILE Geography Chile is located in the southwestern part of South America and includes an Antarctic territory that stretches down to the South Pole. Its most western territory is Easter Island which forms part of Polynesia. Chile's varied topography ranges from the Atacama Desert with its great mineral wealth - principally copper and nitrates - in the north to the agricultural and wine-growing Central Valley, where the capital Santiago is located, and to the woods, lakes and fjords of the south. Area Mainland & islands : 756,096 km2 Antarctic : 1,250,000 km2 Total : 2,006,096 km2 Mainland length : 4,200 km Administrative divisions : 15 regions, 53 provinces and 346 municipal districts Government : The President of the Republic serves as head of state and head of government. Since March 2006, this post has been held by Michelle Bachelet. Social Population : 16.6 millon Population density : 20.4 inhabitants/km2 Official language : Spanish Currency : Peso Literacy rate : 97% Life expectancy : 78 years Economy GDP 2008 : US$ 169 billion GDP per capita (nominal, 2008) : US$10,814 (IMF) GDP per capita (PPP, 2008) : US$14,688 (IMF) Unemployment rate (2008) : 7.8% GDP growth (2008) : 3.2% Exports (2008) : US$66,456 million Imports (2008) : US$57,610 million Fiscal surplus (2008) : 5.2% of GDP 5 SANTIAGO, CAPITAL OF CHILE 6 FOREIGN INVESTMENT COMMITTEE The Foreign Investment Committee is the agency that represents the State of Chile in its dealings with those investors who choose to use the Foreign Investment Statute (DL 600) as the legal mechanism for bringing foreign direct investment (FDI) into Chile. The Foreign Investment Committee is formed by the Ministers of Economy (who acts as president of the Committee), Finance, Foreign Relations and Planning as well as the president of the Central Bank. Other ministers responsible for specific economic sectors are also invited to participate in meetings whenever deemed necessary. Mission To help position Chile as a highly attractive destination for foreign investment and international business through its operational role in administering matters related to the corresponding legal norms, by developing promotional activities of different types and by participating in international negotiations. Strategic objectives 1. To administer DL 600 in order to ensure its correct application and to support international negotiation of the investment chapters of bilateral and/or multilateral agreements, providing advisory services on matters of the Committees concern. 2. To develop all types of initiatives to communicate, promote, coordinate and implement measures to foster the entry of foreign investment. 3. To maintain an up-to-date and accurate statistical register of foreign investment through DL 600. Executive Vice-presidency The Foreign Investment Committee is headed and managed by an Executive Vice-President who is appointed by the President of the Republic. The Executive Vice-Presidency provides general information and guidance to any investor about Chile, its economic and social environment, legal framework and policies on FDI. When requested, it provides information on how to begin the process of setting up a businesses in Chile as well as the procedures and regulations to which any investor must adhere, whether signing a DL 600 contract or not, at the national, regional and sector-specific levels. In order to promote Chile as an attractive place to invest, the Executive Vice-Presidency coordinates business missions abroad, organizes seminars and conferences and publishes regular reports about Chile's business climate and about investment opportunities, both in print and electronic form. In developing these promotional activities, it works with other ministries and State agencies as well as with the local and foreign private sector. 7 EDITORIAL O ver the past quarter of a century, Foreign Direct Investment (FDI) has played a decisive role in Chile's economic growth and development. Since 1990, overseas companies from at least sixty countries have invested US$95 billion in sectors that range from mining, utilities and infrastructure to services, finance, agribusiness and tourism. These capital flows have held steady in recent years and have not only helped to position Chile in the global marketplace and incorporate it into important international chains of production, trade and finance, but have also made it more competitive, thanks to the resources, technological development and specialized know-how that FDI contributes. Chile's successful track record in attracting FDI means that we have the satisfaction of seeing over 4,000 overseas companies now operating in our country, creating new jobs and economic opportunities. The position that Chile has achieved as a highly attractive location for foreign investment is mainly the result of four factors: its political and economic stability, its wide network of international trade agreements, the legal security and stability it offers, and its high-standard transport and communications services. In its quest for development, Chile has opted for a free-market model, anchored in prudent fiscal and monetary policies and accompanied by active social policies. This has delivered important progress in terms of reductions in poverty and infant mortality, increased life expectancy and an overall improvement in our citizens' quality of life. Over the past twenty-five years, Chile has also shown sustained growth, thanks to responsible and disciplined macroeconomic management. Between 1990 and 2008, Chile grew at an average annual rate of 5.8%, making it one of the world's most dynamic economies. There is no doubt that the combination of these factors has served to heighten the interest of overseas companies in investing in Chile and, among foreign investors, have given it 8 a reputation as a safe and reliable country. This is a particular advantage during crisis as was seen in 1999 - in the wake of the Asian crisis - and in 2008 with its international economic uncertainty. In both cases, FDI in Chile reached record levels, consolidating the country's position as a safe place to which to commit foreign capital. In 2008, the Foreign Investment Committee approved 97 applications for foreign investment worth a total of US$10.5 billion, the second highest figure since 1990. Similarly, materialized investment -or, in other words, that actually entering the country- reached US$5.2 billion, a level not seen since 1999. We are also witnessing an important diversification of the sectors targeted by foreign investors. Although Chile is primarily a mining country, other sectors such as electricity, gas and water, services, infrastructure, agribusiness, forestry and tourism have become increasingly important. Moreover, in contrast to the 1990s when much FDI took the form of mergers and acquisitions, the trend now is towards the development of new productive projects, underlining confidence in Chile. This book seeks to facilitate foreign investors' access to information about our country and we hope that, for many investors, it will serve as a first step in greater acquaintance and closer ties with our country. Liliana Macchiavello Martini Executive Vice-President Foreign Investment Committee 9 PORT OF VALPARAISO SUSTAINED GROWTH The Chilean economy is widely renowned for its Annual average growth reached 7.2% between 1990 track record of sustained growth. Between 1990 and 1998. This strong performance was temporarily and 2008, it expanded at an average annual rate interrupted in 1999 when activity contracted by of 5.8% and, according to the International Monetary 0.7%, following the Asian financial crisis and a sharp Fund (IMF), was among the world's thirty most drop in the price of copper, Chile's main export. dynamic economy. The Central Bank of Chile However, the contraction was short-lived and, in estimates that, in 2008, GDP at current prices 2000,