2012 01 KPMG Doing Business in Chile

2012
A complete guide
to investing in
one of the worlds
most dynamic
economies
Chile
doing business in
Contents
Top 10 reasons to invest in Chile ............ 4
Chile country comparison ....................... 6
Prochile ................................................. ..8
Promoting Chiles strengths .................. 10
Foreign Investment Committee ............ 12
Economic outlook ................................. 14
Setting up a business ........................... 16
Taxation ................................................ 20
Mining ................................................... 24
Energy ................................................... 28
Water resources .................................... 30
Wine ...................................................... 32
Sector Descriptions ........................ 36, 41
Chiles Top 65 Companies .................... 38
Fisheries ................................................ 42
Agriculture ............................................. 44
Capital markets ..................................... 46
Banking ................................................. 48
Insurance .............................................. 50
Real estate ............................................ 52
Retail ..................................................... 54
Construction ......................................... 56
Telecoms ............................................... 58
Information technology ......................... 60
Media .................................................... 62
Tourism ................................................. 64
Hotels .................................................... 66
Astronomy .......................................... ..68
Isabel Allende: Memoire ....................... 72
Practical Information ............................. 74
This publication was jointly produced by
Mediaside SARL with various Chilean
investment promotion agencies, including
ProChile, CORFO and the Chilean Foreign
Investment Committee. The publishers
thank the OECD for their input.
Unless otherwise specifed, all currencies
are in US dollars.
Publishers: Mediaside SARL and
the Chilean government
Editorial director
Christopher Fodor
Editors in chief
Felix de Vincente and Matias Mori
Editorial coordinator
Robert Goldsmith
Art director
Rohit Juneja
Advertising sales
Dany Laloum, Raquel Vidal
Mediaside SARL
77 rue du Faubourg St Denis
75010 Paris
Tel +33 1 4483 9337
contact@mediaside.biz
www.mediaside.biz
ProChile
Teatinos 180, Santiago, Chile
Contact:
Felix de Vicente, Director
T : +56 2 827 5100
www.prochile.cl
Chilean Foreign Investment Committee
Ahumada 11,
Santiago, Chile
Contact:
Matias Mori, Executive Vice President
T: +56 2 698 4254
F: +56 2 698 9476
www.investchile.com
Copyright 2011
Mediaside SARL and the Chilean
Investment Authorities (ProChile, Chilean
Foreign Investment Committee).
All efforts have been made to insure
accuracy of information provided. The
publishers are not held responsible for
mistakes. The opinions expressed in
the articles, including the sponsored
statements, are those of the authors
and interviewees and do not necessarily
represent the opinion of ProChile, CORFO,
Chilean Foreign Investment Committee or
the OECD.
_EDF_1109010_LAOS_210X297_IEA_MAGAZINE_SR_EUROPE.indd 1 03/10/11 17:27
Doing Business In Chile, 2012 Edition
Talented Human Resources
A highly educated and skilled workforce is one of Chiles main assets.
Chile has 61 universities, 43 professional training institutes (giving four-year courses) and
11 technical training centers (giving two-year courses).
It is home to three of Latin Americas 10 best business schools, according to a 2010
ranking by AmricaEconomia magazine. Two Chilean universities are classed among the
10 best in Latin America.
6
Highly Competitive
Chile is Latin Americas most competitive economy.
It is ranked 28th among 139 countries worldwide and frst in Latin America in the Global
Competitiveness Index calculated by the World Economic Forum, which also says Chile
is at the forefront of market liberalization.
Moreover, Chile is ranked 25th out of 59 economies and leads Latin America in
competitiveness, according to the 2011 World Competitiveness Yearbook published by
the Institute for Management Development (IMD).
7
Cutting-edge Connectivity
Chile has made remarkable progress in connectivity with the involvement of the private sector.
In its annual study ranking world innovators, The Global Innovation Index 2011, INSEAD
Business School ranked Chile 38th internationally and frst in Latin America and the Caribbean,
four places higher than 2010.
Chile ranked frst in Latin America and 30th out of 70 countries globally in e-readiness,
according to the Economist Intelligence Units Digital Economy Ranking 2010.
8
Outstanding Quality of Life
Chile offers a perfect mix of natural beauty, public safety, political stability and modern
infrastructure.
In a 2010 report, Newsweek magazine ranked Chile 30th worldwide and the best country
to live in Latin America due to its economy, health system and political environment.
International Living magazine ranked Chile third in South America and gave it top marks
for safety in its 2010 Quality of Life Index.
9
A Regional Platform
Chile is a good jumping off point for regional operations.
Chiles tax system benefts enterprises that administer businesses in other Latin American
countries. Companies that use Chile as a business platform (e.g. regional HQs) can
administer investments in other countries without paying Chilean income taxes on profts
the foreign investments generate.
10
Top 10 reasons
to invest in Chile
Dynamic Economy
Chile has the most dynamic economy in Latin America.
In 2010, Chiles GDP expanded by 5.2% while per capita income reached its highest level
in eight years, this despite Chile suffering the sixth largest earthquake ever recorded.
The IMF estimates Chiles GDP will reach $222,788 million in 2011, a 6% increase over
2010. The World Bank anticipates that Chile will grow by 5.8% in 2011 and 5% in 2012.
1
Attractive Business Environment
Chile has an attractive and dynamic business climate.
It is the frst country in Latin America and 10th among 179 countries worldwide for
economic freedom, according to the Economic Freedom Index 2010.
And Chile is frst in Latin America and 15th among 82 economies worldwide for its business
friendly environment, according to the Business Environment Ranking 2010-2014.
2
Tax-friendly
Taxes in Chile are the lowest in Latin America and well below many European countries.
Chile has one of the lowest corporate income tax rates worldwide at 17% (temporarily increased
to 20% in 2011 and 18.5% in 2012 as part of the countrys earthquake reconstruction program).
Chile has bilateral agreements to avoid double taxation with 22 countries including Spain, the
United Kingdom, France, Poland and Brazil, and tax treaties with the U.S., Russia and Australia.
3
Low Risk
Chile is a reliable and safe place to do business.
It is the only nation in Latin America to receive the lowest political risk rating from Aon
Corporation, a Chicago-based organization offering risk management services for
corporations looking to invest overseas.
Chiles report card for fnancial security boasts all As: Standard & Poors gave Chile an A+
credit rating; Moodys ranked economic stability an Aa3; and Fitch scored the country an A.
4
High Transparency
Chile has a low level of corruption and government efforts are raising standards of administration.
It ranks frst in Latin America and 21st among 178 countries worldwide in transparency, according
to the Perceived Corruption Index.
Eighty percent of the Chilean economy is free. Chile placed 11th out of 179 countries in the Index
of Economic Freedom World Rankings by Heritage Foundation.
5
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4 Doing Business in Chile | 2012 Edition 5 2012 Edition | Doing Business in Chile
C
hile has a market-oriented economy characterized
by a high level of foreign trade and a reputation
for strong fnancial institutions and sound policy that
have given it the strongest sovereign bond rating
in South America. Exports account for more than
one-fourth of GDP, with commodities making up
some three-quarters of total exports. Copper alone
provides one-third of government revenue. Since
1999, growth has averaged 4% per year. Chile claims
to have more bilateral or regional trade agreements
than any other country. It has 57 such agreements
(not all of them full free trade agreements), including
with the European Union, Mercosur, China, India,
South Korea, and Mexico. Over the past seven
years, foreign direct investment (FDI) infows have
quadrupled. FDI had dropped to about $7 billion in
2009 in the face of diminished investment throughout
the world. But in 2010, Chile received FDI worth $18.2
billion, up 43.3% on 2009. As a result Chile has the
third highest FDI growth rate in the region and is the
third most important recipient. FDI in relation to GDP,
at about 8%, is the highest in the region. The Chilean
government conducts a rule-based countercyclical
fscal policy, accumulating surpluses in sovereign
wealth funds during periods of high copper prices
and economic growth, and allowing defcit spending
only during periods of low copper prices and growth.
Chile: Latin American leader
Diverse economy
Percentage of GDP by sector of the economy
Source: CORFO, INE Chile Statistics
Agriculture
and Forestry
3%
Fishing
1%
Mining
GDP $203 billion (2010)
16%
Manufacturing
13%
Electricity,
Gas, Water
5%
Construction
8% Retail, restaurants,
hotels
9%
Transportation
6%
Communications
2%
Financial Services
16%
Real estate
5%
Personal services
12%
Public
administration
4%
Brazil
Population: 203.4
GDP 2010: 2172
GDP per cap. 2010: 10,800
Avg. GDP growth: 4.4%
FDI 2010: 349
Colombia
Population: 44.7
GDP 2010: 435
GDP per cap. 2010: 9,800
FDI 2010: 85
Venezuela
Population: 27.6
GDP 2010: 345
GDP per cap. 2010: 12,700
FDI 2010: 38
Ecuador
Population: 5
GDP 2010: 115
GDP per cap. 2010: 7,800
FDI 2010: 12
Mexico
Population: 113.7
GDP 2010: 1039
GDP per cap. 2010: 13,900
FDI 2010: 328
Peru
Population: 29.2
GDP 2010: 276
GDP per cap. 2010: 9,200
FDI 2010: 43
Argentina
Population: 41.8
GDP 2010: 596
GDP per cap. 2010: 14,700
FDI 2010: 87
Source: The World Bank
* Population in Millions
GDP 2010 in $ Billions
GDP per capita 2010 in $
Average GDP growth 2006-10
FDI Inbound 2010 $ Billions
Bolivia
Population: 10.1
GDP 2010: 48
GDP per cap. 2010: 4,800
FDI 2010: 7
Chile *
Population: 16.9
GDP 2010: 258
GDP per cap. 2010: 15,400
FDI 2010: 136
As of September 2008, those sovereign wealth funds
amounted to more than $20 billion. Chile used $4 billion
from this fund to fnance a fscal stimulus package
to fend off recession. In May 2010 Chile signed the
OECD Convention, becoming the frst South American
country to join the OECD. The economy started to
show signs of a rebound in the fourth quarter of 2009,
and GDP grew more than 5% in 2010.
Country overview
W
ine, copper, salmon. Chile is an exporting
powerhouse. In 2010, Chilean exports stood
at over $71 billion and China, the European Union
and the United States were Chiles leading trading
partners with 80 percent of all purchases.
The country has an extensive export lineup that
includes the food industry, mining supplies,
biotechnology, global services (off shoring), and
industrial logistics.
ProChile is responsible for implementing and
enhancing Chiles trade policy. It provides support
to small and medium-sized Chilean enterprises,
helping to encourage and diversify exports of Chilean
products and services by increasing the number of
export markets and companies.
As part of the Trade Commission of Chile and the
General Directorate of International Economic Affairs
of Chiles Ministry of Foreign Affairs, ProChile has 56
trade offces and agencies located in 43 countries. It
is active in 90 percent of the destination markets for
Chilean exports.
What should you
be importing
from Chile?
Chilean products and services are highly sought
after worldwide. ProChile can help foreign buyers
link up with Chiles top exporters.
Beyond food and drinks, the Chilean industrial sector
is a competitive global player notably in forestry,
agribusiness, fsheries, aquaculture and mining. The
sector lineup is complemented by innovative new
entrants in felds such as cosmetics and clothing
accessories. In 2010, Chiles total industrial exports
amounted to nearly $12.5 billion.
In the forestry industry, Chile has enjoyed signifcant
growth. The great strides abroad in this industry are
refected by signifcant foreign sales growth in recent
years and the constant development of a wide
range of quality export products. In 2010, some 900
Chilean frms shipped over 360 different types of
forest and lumber products with various degrees of
processing to some 118 markets worldwide.
Mineral resources
The success of the mining industry is one of
the reasons behind the sustained growth and
development the Chilean economy in recent
decades. Chile owns vast mineral resources and is
the worlds largest copper producer and exporter.
Mining exports in 2010 alone exceeded $38 billion.
Copper in cathode and concentrate form is the
leading mining product sold abroad but Chile is
also a major iron, molybdenum, manganese, lead,
zinc, gold, and silver producer. The main customers
for copper exports are mostly in Asia and Western
Europe but the demand for mining products is
growing as well in emerging nations such as China.
With highly qualifed human resources and state
of-the-art technology infrastructure, Chiles service
sector (engineering, technology, architectural,
design and other services) exports grew 9 percent
a year in ten years. Studies expect Chiles non-
traditional service exports to be worth $5 billion a
year in 2015 (IDC, 2010).
Activities abroad
56 trade offces and agencies worldwide
Roles:
Buyersupportforforeigncompaniesimporting
from Chile
Businessmatching:puttingaforeigncompanyin
contact with Chilean partners, for import-export or
investment purposes
Marketanalysis:marketpotentialandentry
strategies for foreign companies interested in FDI
Activities in Chile
15 regional offces
Activities:
AssistChileanmanufacturers/producers
in fnding export markets and clients
Provideadviceforexportfnancing
(letters of credit, international banking, etc.)
Adviseonlogisticsandsupplychainoptions
OrganizestradeshowstoshowcaseChilean
goods and services
ProChile Trade Commissions around the world offer
no-cost expert advice to potential investors and
buyers interested in Chilean products and services.
The food and drink industry is a pillar of the Chilean
economy. In recent years the industry has become the
second-largest currency earner, second only to mining.
With sales of more than $12 billion at present food
exports are expected to top $20 billion in 2015, placing
Chile among the top-ten food-producing countries.
Alcoholic and nonalcoholic drinks ranging from
wine, pisco (a grape brandy) spirit and beer to
specialty waters and fruit and vegetable juices are
key components of the Chilean food industry. They
account for almost 15 percent of overall food industry
exports. Annual drinks and beverages exports are
worth more than $1.7 billion.
Wine is Chiles most emblematic export and the
country is the worlds ffth-largest wine producer.
Chiles wine industry plans to position Chile as the
leading New World producer of premium wines by
2020, increasing export revenues to $3 billion.
ProChile
For more information:
Teatinos 180, Santiago, Chile, Tel. +56 2 827 5300
www.prochile.cl/
To contact the local ProChile trade offce in your
country, please visit:
www.prochile.cl/importadores/en/prochile-en-elmundo/
prochile-en-el-mundo.php
InvestChile: www.investchile.com
Foreign Investment Committee:
www.inversionextranjera.cl, www.foreigninvestment.cl
Central Bank: www.bcentral.cl
Chiles Tax Service: www.sii.cl
Valparaiso is one of Chiles most important seaports.
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Prochiles role in attracting
foreign investment
In addition to promoting the export of
Chilean products and services, ProChile
is also an international investment
facilitator thus giving strategic support
to anyone interested in investing in our
country. We do this through ProChiles
55 trade commissions and trade ofces
in 41 countries,
Our staf worldwide can help you with these investment
tools:
PromotionandinvestmentseminarsinLatinAmerica,
North America, Europe and Asia.
InvestmentmissionsandbusinessmeetingswithChilean
counterparts.
Adviceandhelpgettingintouchwithpotentialcounterparts.
Our extensive network of ofces hold the Interested in
Investing forums and have all necessary information
regarding orientation and advise on investment.
Foreign investment has played a decisive role in our economic
growth and development. Maintaining its upward trend, it
has helped to increase our countrys competitiveness, not
only through resources and new markets but also through
technological development and specialized know-how.
We cordially invite you to get to know our country and its
products, as well as experience Chiles uniqueness that
makes it like no other country on earth. And if you are
considering investing in Chile we can provide you with
detailed information about the benefts and incentives for
foreign investors that make Chile a leading investment
platforminLatinAmerica.
Felix de Vicente
Director of ProChile
fdvincente@prochile.cl
Editorial
ProChile
C
reated in 2000 InvestChile provides a range
of assistance to foreign companies interested
in locating in Chile. InvestChile promotes foreign
investment in specifc economic areas, including
the food industry, biotechnology, mining supplies,
offshoring, and manufacturing and assembly sectors.
InvestChile offers incentives to industries in these
sectors and gives specifc assistance to foreign
investors.
InvestChile has offces in the US, Spain and Portugal,
Germany, the Nordic countries, France and China to
gather business opportunities of every kind. It helps
companies interested in building Chile-based projects
serving Latin America, the US or European markets.
InvestChile has a specialized team of professionals
to support foreign companies with services and
incentives to national and foreign investors, to
enable the evaluation, installation and materialization
of investment in Chile. Its clients are investors that
manufacture, integrate or provide services from Chile
to the world. InvestChile seeks companies that add
value to Chile.
Public funding
One of the sectors with most development potential
is the food sector which represents 23% of exports,
Attracting
industry
InvestChile aims to attract high-impact
investment in order to grow the Chilean economy
and diversify its production and export base.
Companies that chose Chile
Project Jobs created
Oracle Software development center 300
McAfee Engineering center 70
WorleyParsons Engineering center 600
Jazzplat Help desk 1140
Synthon Pharmaceutical plant 91
Pioneer Experimental Agroindustrial
Station
96 permanent,
210 temporary
Source: InvestChile
stages of production with public funding and signifcant
investment available for technology transfers.
The Mining Suppliers investment program is set up to
attract foreign investors that have an interest in settling
in Chile. The country produces more than third of the
copper in the world, as well as other minerals such as
molybdenum, lithium, silver and gold. Its legislation
and the good business environment have made Chile
the mineral capital in Latin America.
Signifcant steps
Elsewhere, Chile has taken signifcant steps to
incorporate biotechnology into its economy including a
series of initiatives aimed at biotechnology companies
abroad, a new regulatory framework and economic
incentives. Meanwhile, manufacturing and assembly
companies are supported with expert consultancy.
InvestChile can arrange meetings with Chilean
counterparts, visits to industrial parks, as well as
arrange contacts with trade associations and potential
supply vendors.
Step-by-step
How InvestChile helps foreign investors
InvestChile approaches
foreign company
Foreign company
approaches InvestChile
Preliminary
market evaluation
- market size
- competition
- entry strategies
- identify potential
local partners
Schedule Chile
exploratory trip
- meetings with govt
- meetings with
potential partners
- biz setup meetings
Feasibility plan/
business plan
- operational
considerations
- fnancial incentives
- taxation benefts
- proft & loss
estimates
Phase 1
implementation
- legal advisors
identifed
- fnancing
arrangements
- real estate
considerations
17% of employment and almost 10% of the Chilean
GDP. Chile is acknowledged worldwide by the quality
of its wines, fresh fruits and sea products, such as
salmon, being the second largest exporter of salmon
around the world.
In line with the importance of the food sector,
InvestChiles Food Industry Investment Attraction
Program supports food industry entrepreneurs in all
Moneda, 921. Of. 520, Santiago, Chile
Tel:+5626318526/6318539
www.investchile.com
InvestChile was created by CORFO (from the
Spanish Corporacin de Fomento de la Produccin)
which was created in 1939 and played a major role
in the development of domestic activities essential
to the development of the country, including the
mining, electrifcation, agriculture, commerce and
transport sectors.
ProChile helps foreign companies interested in locating in Chile.
M
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InvestChile
Promoting Chiles strengths
As CORFOs InvestChile we are
responsible for the promotion and
attraction of direct foreign investment
to Chile. In order to do so, we promote
and communicate the competitive
strengths of the country as a location
for foreign investment and investment
opportunities. We support and facilitate
the process of assessment, decision
and fulfllment of your company in the
country, by providing specialized services and incentives to
the investment.
Since the beginning of its investment promotion in the year
2000, InvestChile has contributed to the materialization of
over $2.4 billion in domestic and foreign investment, and
the generation of more than 40,000 new direct jobs. It is
estimated that on average, the foreign investment represents
43% of this total and in the specifc case of 2010, foreign
investment was 40%, making up for a total of $143 million.
This year, our goal is to contribute to the materialization of
$155 million in direct foreign investment, and the capture of
new foreign projects with a committed investment value that
we estimate at $260 million.
With these advantages, we have all the conditions for those
thatseeLatinAmericaastheirnextstop,andspecifcally
Chile, where we ofer the features of a developed country, but
at the cost of a developing nation.
As CORFOs InvestChile, we want to contribute to making
Chile a regional pole for innovation and entrepreneurship. We
also know that by taking on this task, we are a key piece in
the competitive boost of our country and that is where we
are headed.
Juan Antonio Figueroa,
Head of Investment
Promotion Division
InvestChile
jafgueroa@corfo.cl
Editorial
F
oreign direct investment (FDI) has played a decisive
role in Chiles economic growth and development.
Maintaining its upward trend, it has helped to increase
Chiles competitiveness, not only through resources
and new markets but also through technological
development and specialized know-how.
According to the World Investment Report 2010,
published by the United Nations Conference on Trade
and Development (UNCTAD), the stock of FDI in Chile
reached $121.6 billion in 2009, the second largest in
Latin America after Brazil.
In 2010, Chile received FDI for $18.2 billion, according
to UNCTADs Global Investment Trends Monitor. This
represented a percentage change of 43.3% between
the years 2009 and 2010, well above the average
increase of 21.1% for the region as a whole.
FDI has played a decisive role in Chiles economic
development and, in the three years between 2008
Chile among top
FDI recipients
A strong economy, attractive business
climate and skilled workforce are some
of the reasons Chile is a highly attractive
destination for international businesses and
foreign direct investment.
since last year with its focus on Asian countries and
particularly China.
We are making a decided effort to increase investment
in Chile by Asian countries which currently represent
only 0.2% of total incoming FDI, said Mori. That is
why we have translated our website and publications
into Chinese and have created a China Desk, with
Chinese staff, to better attend the requirements of
investors from that country in their own language.
In addition, we have participated in eight visits to Asia
- China, South Korea, Malaysia and Singapore - to
promote the opportunities Chile offers at investment
seminars and in meetings with government authorities
and businesspeople, presenting a portfolio of specifc
public and private investment projects, added the
Executive Vice-President of the Foreign Investment
Committee.
Excellent results
These activities have already begun to bear fruit,
noted Mori.
In the frst half of this year, the Foreign Investment
Committee has received investment applications
for $417 million from Asian countries, up from $294
million in the whole of last year.
UNCTAD anticipates that, as Asian countries continue
to advance in their international integration, their
outbound FDI will maintain its upward trend.
Preliminary World Investment Report data, in fact,
shows that investment in Chile and Latin America
has continued to increase this year. UNCTAD also
forecasts that, in 2011, global FDI will return to its
pre-crisis level, reaching $1.4-1.6 trillion.
and 2010, averaged 8% of GDP, with positive
externalities that include employment creation,
training, technology transfer and the development of
new industries.
According to report, Chile was the worlds 19th largest
FDI recipient in 2010, up from 26th in 2009. This is the
frst time that it has ranked among the worlds top 20
host countries.
These excellent results confrm our countrys
successful track record in the attraction of foreign
investment and ratify its status as one of the most
attractive places in the region and the world in which
to do business while also reinforcing the trust that
foreign investors have placed in it, pointed out
Matas Mori, Executive Vice- President of the Foreign
Investment Committee.
According to the report, FDI fows into Latin America
and the Caribbean rose by an average 13% in 2010
to $159 billion but, in South America,
the increase reached 56%. Most of this
investment came from Asian countries
where outgoing FDI is running at record
levels.
In 2010, FDI out of emerging Asian
economies rose by 20% to $230 billion.
Investment abroad by countries like
China, Malaysia and South Korea has
accounted for around 17% of global
FDI outfows over the last two years, up
from less than 10% in 2008, and is led
by Hong Kong and Continental China.
This trend is in line with the investment
attraction strategy implemented by
the Foreign Investment Committee
FDI at a glance
Foreign direct investment realized 2002-2010
Source: Central Bank
F
D
I

(
$
M
)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2002 2003 2004 2005 2006 2007 2008 2009 2010
Ahumada 11, Piso 12, Santiago, Chile,
Tel: +56 2 698 4254
cie@foreigninvestment.cl,www.foreigninvestment.cl/
FDI has played a decisive role in Chiles economic development.
C
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Foreign Investment Committee
Update
In 2010, the Foreign Investment Committee approved a total
of more than $13 billion. This is the largest amount authorized
in its history but FIC expects to surpass it in 2011. In times of
global economic instability, Chile is seen as a reliable shelter for
capital. Robust projections of growth and excellent business
opportunities confrm that this is a good time to invest in Chile.
FIC: Who we are
The government agency responsible for
attracting Foreign Direct Investment into
Chile is the Foreign Investment Committee
(FIC or CIE in Spanish for Comite de
Inversiones Extranjeras).
The role of the FIC is to provide
information about procedures and
regulations for investors bringing FDI into Chile. It publishes
an up-to-date and accurate statistical register of foreign
investment under the Foreign Investment Statute by compiling
information about contracts and fows under these contracts.
Specifc investment opportunities in private and public projects
are also published by the FIC and regular reports about
Chiles business climate. Its outreach to foreign investors and
potential investors involves coordinating business missions
abroad, as well as seminars and conferences.
The FIC also provides general information about Chile,
its economic and social environment, legal framework
and policies on foreign investment. And it gives specifc
information on how to begin the process of setting up a
business. FIC members include 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 specifc economic
sectors are invited to participate in meetings when necessary.
It is headed and managed by an Executive Vice-President
who is appointed by the President of the Republic.
Since 1974, the majority of foreign investors have chosen to
usetheDecreeLaw(DL)600mechanismfortheentryof
capital into Chile. Under this regime, whose use is optional,
foreign investors bringing capital, physical goods or other
forms of investment into Chile may ask to sign a foreign
investment contract with the State of Chile. An online version
of the Foreign Investment Application form is available.
Matias Mori
Executive VP
Editorial
O
nce a relatively poor country, Chile has become
prosperous through macroeconomic policy,
structural reforms, trade and investment and
regulation. A rich endowment of copper and other
mineral reserves has been used cautiously to foster
resilience in the face of unexpected headwinds.
Moreover, a stable democracy with an effective rule
of law has been established. For some governance
indicators Chile has caught up with, or even
surpassed, OECD averages. Nonetheless, there is
scope for further positive change.
Income per capita remains signifcantly below the
OECD average making sustained and non-infationary
growth an important goal. Between 1986 and 2007,
Chiles income per capita grew at around twice the
rate in the OECD area and the income gap with richer
countries was reduced substantially. Nevertheless,
convergence slowed after 1998. Based on recent
growth rates, it would take around 30 years to catch
up with the current average OECD per capita income.
For the government to achieve fast growth while
reducing income inequality, the main challenge will be
to maintain the delicate balance between pursuing a
strong recovery and preserving price stability. Strong
domestic demand, partly related to reconstruction
spending after the natural disasters of February 2010,
and booming international commodity prices risk
stoking infation.
One of the new governments key objectives is to
raise average GDP growth to 6% over 201014. This
will require structural reforms. The main reason for
the persistent income gap with high-income OECD
countries is lower productivity; the under-utilization of
labor resources explains a smaller part.
Fast increases in productivity will therefore be key
to sustained economic growth in the long run. While
Keeping up
momentum
Chile has spectacularly transformed itself over
the past decades. In spite of this progress,
there is scope for further positive change.
Chile has made substantive progress in upgrading its
production structure to higher value-added activities,
restrictions in product and labor markets have
prevented full development.
Competition in some areas of product markets,
especially in the services sector, remains weak by
OECD standards. Reducing regulatory red tape for
business start-ups and easing restrictions on entry in
specifc services sectors, would strengthen competitive
pressure. This would also encourage entrepreneurship
and innovation. Similarly, reforming the burdensome
bankruptcy procedure would give creditors legal
certainty and remove the stigma of failure.
Structural reforms in labor markets would raise the
participation rate of women and youth, which are
among the lowest in the OECD, and enhance labor
productivity. Despite substantive progress in childcare
for working women, there remains scope to further
expand these programs.
The minimum wage, which is high from an OECD
perspective, particularly hurts the employment
prospect of youth. A differentiated minimum wage,
with lower rates for young workers, could help. To
enhance labor productivity, the share of informal
employment needs to be reduced. To assist employers,
a reduction in severance pay and expansion of
unemployment insurance would improve the Chilean
model of fexicurity.
Openness to trade and foreign investment has
intensifed competition in domestic markets and
facilitated access to imported intermediate goods.
Yet too much focus lies concentrated in the extractive
sector. Protecting Chiles exceptional biodiversity
through appropriate market-based and regulatory
instruments would boost Chiles attractiveness as an
eco-tourism destination.
In the medium term, higher productivity growth will
be sustainable only with a well-educated and highly
skilled workforce. Scores on standardized tests for
secondary students remain appreciably below the
OECD average. Opportunities for further education
and training for the existing workforce are limited.
Access to quality education at all levels for all Chilean
children is key to reducing income inequality.
The real estate market is also helping consolidate the
recovery in construction. During the second half of
2010, low long-term interest rates, improvements in
employment levels and higher incomes contributed to
the recovery.
While the abundance of offces created by the
excessive production in 2007 led to a decline in
production 2008-2009, the improvement of market
conditions beginning in 2010 allowed production of
offces to return to normal levels.
Accordingly, during the frst half of 2011, the number of
building permits approved for offces increased twice
in comparison with 2010, indicating the emergence of
new projects in the center of Santiago after four years
of inactivity.
Diverse economy
Percentage of GDP by sector of the economy
Source: CORFO, INE Chile Statistics
Agriculture
and Forestry
3%
Fishing
1%
Mining
GDP $203 billion (2010)
16%
Manufacturing
13%
Electricity,
Gas, Water
5%
Construction
8% Retail, restaurants,
hotels
9%
Transportation
6%
Communications
2%
Financial Services
16%
Real estate
5%
Personal services
12%
Public
administration
4%
Benchmarking of South American countries
Source: LNE, Chile Statistical Oce,
The Economist
Notes: GDP growth rate is based on CAGR for the 2004-2009 period
GDP per capita is at PPP for 2009.
GDP Growth Rate
Chile
Brazil
Venezuela
Argentina
Peru
Colombia
G
D
P
/
c
a
p
it
a
0
$8,000
$10,000
$12,000
$14,000
$16,000
0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
For further information, contact Nicola Brandt at the
OECD: nicola.brandt@oecd.org
This article was condensed from the May 2011
OECD publication:
Maintaining Momentum:
OECD Perspectives on Policy Challenges in Chile
Publication date: 14 April 2011
Chile must balance its strong recovery with price stability.
Economic Outlook
T
he process for setting up a business in Chile is
becoming one of the simplest in Latin America.
This is particularly true since the passage of a law
(number 20.494) in March 2011 that reduces costs
and simplifes requirements for the publication and
registration of the articles of incorporation.
Setting up a business in Chile used to be diffcult but
with the new law its getting a lot easier, says Zandra
Valenzuela, a lawyer with the Spencer Global law frm
in southern Chile who specializes in setting up small,
foreign-owned businesses.
The total process for setting up a business in Chile
takes at least three weeks. This is much shorter than
the six weeks or so it took before the reform but
longer than in the United States, for example, where a
company can be set up in a matter of days. However,
the Chilean Congress is currently considering
additional reforms to further simplify the process.
We need further improvement because it is still a bit
complicated, Valenzuela says. Specifcally when
foreign companies want to set up a small business
the articles of incorporation and certifcates of good
standing take time.
Reducing red tape
A new Chilean law simplifes the process of starting
a business. It reduces the time required to get a
business license to one day instead of 14. It also
eliminates the 16-day process to verify activities for
tax purposes and lifts the $150 charge to publish
Fewer rules
for business
creation
Already one of the most businessfriendly
countries in Latin America, Chile is moving
forward on making business creation simpler
and more affordable for foreign investors.
an extract of the companys foundation in the Diario
Ofcial (Offcial Gazette). And a new business that has
all the corresponding permits can obtain its defnitive
municipal license immediately.
First steps
Still, the process for setting up a business in Chile
is one of the simplest in Latin America. The frst
step is to obtain a Tax Identifcation Number. This
is known in Chile as a RUT (Rol Unico Tributario).
This is obtained from the National Tax Service or SII
(Servicio de Impuestos Internos), which has offces
around the country. The next step is to defne the type
of company to be created. In Chilean, there are three
main types of company (see chart below).
While there is no minimum capital required for any
type of company, the SII requires that the capital on
hand is suffcient for the type of business created.
Service companies will need less capital, for example,
than manufacturing companies.
The costs of establishing a company include the
legalization of its deed, its publication in the Diario
Ofcial (Offcial Gazette) and its inscription in the
Companies Register. It is recommended to use an
attorney for the drafting of the articles of incorporation
for all types of companies. Attorney fees depend
on the complexity of the business and the location
since fees are set by the regional Bar Association.
Standard incorporation contracts cost from about
$250 to $5,000.
While it is not necessary to speak Spanish to set
up a company, the articles of incorporation and the
publication and registration of the articles must be
written in Spanish.
Once a company has been established, a business
start-up statement must be submitted to the SII
stating that the taxpayer plans to undertake activities
that may be liable to taxation. The company will also
need to open a bank account with a Chilean bank.
Some economic activities in Chile may be subject to
special permits or requirements. These include health,
environmental and municipal permits. Investors
should obtain advice about permits required before
starting their business.
Employees
In companies with more than 25 employees at least
85 percent must be of Chilean nationality. There are
exemptions for specialized technical personnel not
available locally, as well as for foreigners married to
a Chilean. Foreigners who have been resident in the
country for more than fve years are also exempt. The
minimum working age is 18.
Chile has four types of employment contracts,
including indefnite contracts; fxed-term contracts
that have a maximum duration of one year or,
exceptionally, two years; piecework contracts are
used when a worker is hired for a specifc task of a
fnite duration; or professional services contracts.
Business friendlier
Simplifcation of processes to set up businesses
2008 2009 2010 2011
World rank n.a. n.a. 70 62
Procedures (number) 9 9 9 8
Time (days) 27 27 27 22
Cost (% of income per
capita)
8.6 7.5 6.9 6.8
Minimum capital 0 0 0 0
Source: The World Bank
Types of companies
Company type Individual Limited Liability
Company (E.I.R.L.)
Limited Liability Company
(L.L.C.)
Stock Corporation (S.A.)
Spanish name Empresa Individual de
ResponsabilidadLimitada
SociedadResponsibilidadLimitada Sociedad Annima
Minimum capital None None None
Conditions One person company. Designed
for small business. Requires
full legal residency or Chilean
citizenship.Legalrepresentative
and partner must be the same
person.
Minimum 2, maximum 50
partners. Advantages include
decreased reporting requirements
and simplicity of corporate
structure. Good for sales ofces,
import or export companies.
Partners may be Chilean or foreign,
individuals or legal entities.
A full company with shares, partners, and
all the privileges of a company in Chile.
Most complex in terms of organization
and costs. Ofers greatest fexibility.
Shareholders liabilities limited to
amount of individual capital contribution.
Governed by board of directors. Can be
publicly traded or closely held.
The process for setting up a business in Chile is simple.
M
a
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D
o
n
o
s
o
Setting up Business
Bank accounts see www.sii.cl and www.sbif.cl
Legal formalities and services for entrepreneurs and
businesspeople see www.chileclic.cl
Employment contracts see www.inspecciondeltrabajo.cl
Visas see www.extranjeria.gov.cl and www.minrel.gob.cl
Employees must be paid at least the minimum monthly
wage. For workers between 18 and 65 years of age
this is 165,000 pesos (about $350). For those over 65
or under 18 it is 123,176 pesos (about $260).
Employees with more than one year on the job are
entitled to 15 working days of vacation a year on full
pay. Workers in the Chilean Antarctica and certain
regions are entitled to 20 working days.
Contributions
All workers must contribute to a pension fund (AFP or
Administradora de Fondos de Pensiones). The worker
is free to choose the AFP. The employer deducts the
contribution from the employees earnings and pays it to
the AFP. The minimum total deduction is approximately
12.3 percent of the workers gross wage.
Employees also contribute at least 7 percent for
healthcare coverage, although they can pay more.
The employer pays this amount monthly into either
the National Health Fund (FONASA or Fondo
Nacional de Salud) or to a Health Insurance Institution
(ISAPRE or Institucin de Salud Previsional) of the
workers choice.
Foreign investors must enter Chile under a tourist
visa. These are issued on arrival by the immigration
authorities. After entering Chile as tourists, investors
and businesspeople can apply for a Temporary Visa
for Investors and Businesspeople which allows them
to reside in the country for a year. At the end of the
year, they may apply for permanent residence.
Registering websites
An organization called Nic Chile is responsible for
registering websites that operate under the .cl domain.
To register a name under this domain, individuals must
be legally domiciled in Chile. Public and private legal
entities legally authorized to operate in Chile can also
register a website name. Individuals or legal entities
not resident in Chile may apply to register a website
through a representative domiciled in the country.
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10G005F1R2.indd 1 7/7/10 10:39:35 AM
become subject to the income tax structure in effect
at that time.
Decree Law 600 also provides tax stability with
respect to VAT and customs duties applicable to the
import of machinery and equipment not manufactured
in the country. It also provides tax stability for mining
investments of $50 million or more and an alternative
method for calculating capital gains subject to tax in
Chile when the investment is sold.
Foreign investors who establish their business center
in Chile to invest in other countries can use special
investment vehicles called investment platforms,
which are considered as a foreign legal entity for
tax purposes and as such are subject to taxation in
Chile only on their Chilean source income, not on
investments made outside Chile.
Investment platforms are not very popular because
more signifcant advantages can be achieved using
a regularly taxed company to invest outside of Chile,
including access to the largest tax treaty network
in the region and the inexistence of anti-deferral or
CFCtype legislation.
Chile has one of the most extensive tax treaty networks
in the region. As of October 2011, there were 24 double
taxation treaties. Treaties with the US, Russia and
Australia have been signed but are not yet in force.
Other tax advantages are offered for investments
made in the extreme regions of the country as well
Chiles tax system
Tax type Indicative rate
First category tax (corporate income tax)
1
20%
2
Mining royalty From 0.5% to 5%
Second category tax (employment tax) From 0% to 40%
Global complementary tax (taxes on
Chilean resident individuals)
Up to 40%
Value added tax (VAT) 19%
Stamp tax Normal: from0.1%to 1.2%
Donation and inheritance From 0% to 25%
Real estate tax 1% to 1.2%
Municipal license From 0.25 % to 0.5%
with a cap of ca. $320K
3
1. Corporate tax is allowed as a tax credit against fnal taxes (Additional tax or
Global complementary tax)
2. The 17% corporate tax has been increased to 20% during 2011 and 18.5% for
2012. The tax rate should return to 17% in 2013.
3. The cap is 8,000 Unidades de Fomento. Source: KPMG Chile, CORFO
A
t just 20%, Chile has one of the lowest and most
user-friendly corporate tax rates in Latin America.
And Chiles tax structure recognizes several benefts
and advantages for foreign investors.
The Chilean corporate tax rate has been increased
temporarily to 20% from 17% to fund reconstruction
following the February 2010 earthquake. Under
current law, the tax rate will return to 17% in 2013
(18.5% in 2012), but it is likely the 20% rate will be
extended for additional.
Our tax system utilizes a low corporate tax rate of
20%, as long as the profts are not distributed to
Chilean individual residents, non-resident individuals
or corporate owners, explains Francisco Lyon, Lead
Tax and Legal Partner at KPMG Chile.
If profts are distributed to non-resident entities or
individuals the fnal taxation applicable to those
distributions will be the withholding tax (called
Impuesto Adicional) with a general tax rate of 35%,
but allowing the corporate taxes paid as a credit.
Our tax system allows unlimited carry-back and
carry-forward of tax losses, Lyon explains.
Together with the tax-free distributions of profts
or dividends between Chilean entities, this allows a
sort of tax consolidation when a group of companies
is structured properly, given the possibility of
recovering the corporate tax paid in previous years
on the undistributed profts through current or future
losses,and to stop paying taxes until the company has
returned to a net operating tax proft in the future,
Francisco Lyon says.
Advantages
Chile offers several tax advantages to foreign investors.
For example, foreign investors who are planning to
invest more than $5 million in the country can enter into
an agreement with the Chilean government under the
Decree Law 600. This guarantees nondiscrimination
for the foreign investor and the right to repatriate
the amount of capital originally invested at least one
year after the investment was made and to repatriate
profts at any time.
The foreign investor also can elect for income tax
stability for a ten-year period, although with an
aggregate 42% rate of income tax instead of the
normal 35% rate. In any case, at any time the foreign
investor can forfeit their income tax stability and
Investor-friendly taxation
Compared to other South American countries, Chile has an enviable and simple tax
system that is investor-friendly.
Santiagos dramatic skyline is just one of Chiles many irresistible attractions for businesspeople and tourists alike.
Chilean Customs www.aduana.cl.
Chilean Internal Revenue Service www.sii.cl.
Direccin General de Relaciones Econmicas
Internacionales www.direcon.cl
as to promote R&D. Chile offers a credit against the
corporate income tax equal to 35% of the payments
made under R&D contracts signed with an eligible
external R&D center with certain caps.
Chile also has a fat 6% customs duty and free
trade agreements with 58 countries. Regardless of
the country of origin, capital assets meeting certain
requirements may be imported into Chile with no
customs duties.
Ju
a
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n
e
s
to
Ja
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e
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Taxation
Investors at the door
Many factors account for the recent growth in foreign
direct investment
Chile is experiencing a dramatic rise in foreign direct investment.
Inbound FDI into Chile amounted to nearly $13 billion in 2009,
illustrating the countrys ability to pull beyond its weight. Brazil,
a country almost 10 times Chiles size in terms of GDP, attracts
only about twice the FDI amount annually.
Thereareseveralgrowthfactors,explainsLiliana
Machiavello, head of Cinver, the Chilean investment agency.
Joining the OECD is one factor since this sends a signal of
stability, fnancial transparency, and orientation toward the
global economies.
Chiles tax advantages have also contributed to the growth
inFDI,butaccordingtoFranciscoLyonofKPMG,thekey
success factor for foreign investors in Chile is good returns on
investment.
Repeat investors account for a large portion of investment,
Lyonsays.OnceacompanyhashadatasteofChile,itwants
more. The good returns can be explained by our stability, our
good workforce and the overall growth in Chile.
FDI growth also stems from the 2010 earthquake which
created strong demand for infrastructure projects to
replace residential and commercial real estate, transport
infrastructure, etc.
Another factor is mining, which is attracting signifcant
foreign investment. For the 2009-2017 period we expect
investments of roughly $45.4 billion, and much of this is from
international mining giants, says Danilo Torres of Sonami, the
Chliean mining association.
analysis
D
uring the second quarter of
2010, the Chilean government
announced an anti-tax evasion plan
that seeks to collect $1.3 billion
over four years from increasing
tax audits,on the VAT and income
tax. In this sense, transfer pricing
becameone of the most important
initiatives included within the
framework of the plan. As a part of this
plan, the Chilean IRS (Servicio de Impuestos Internos
or SII) has created a specialized unit (comprised of
economists, lawyers and accountants) that will be in
charge of conducting transfer pricing audits.
Additionally, from the beginning of 2011, the SII has
published in different forums and in the press a Draft
Bill on Transfer Pricing. The authority has repeatedly
indicated that the change in the law is not intended
to provide a new look at the topic. On the contrary,
the essence of the regulation (to comply with the
arms length principle) is maintained. It solely intends
to provide certainty for legal aspects and clarify the
methodology for the taxpayer.
According to the authorities, the items that will be
contained in this new regulation are:
Clarifcation of the accepted methodology:
Both the methodology accepted and the selection of
the method will be consistent with OECD Guidelines
Transfer pricing reform
Compared to other South American countries, Chile has a enviable and
simple tax system that is investor-friendly.
(Chapter 2, OECD Transfer Pricing Guidelines for
Multinational Enterprises and Tax Administrations, July
2010). The accepted methods will be: Comparable
Uncontrolled Price Method, Cost Plus Method, Resale
Price Method, Transactional Net Margin Method, and
Proft Split Method. In the selection of the method,no
hierarchy will be expected. The most appropriate
method must be selected based on the underlying
transaction.
Transfer pricing information return:
Chilean taxpayers conducting transactions with foreign
related entities will be required to fle an informational
return, detailing their cross-border intercompany
transactions. The details of the contents of this return
are yet to be determined by the SII. However, it is
expected (based on other countries experience) that
the return will require the following information: types
and amounts of all transactions with related parties;
names, countries and tax ID numbers of all related
parties; the transfer pricing method(s) used to test
each transaction; and the gross or operating margin
earned by the taxpayer in each transaction.
Advance Pricing Agreements:
The possibility of entering into voluntary Advance
Pricing Agreements (APAs) will be allowed. The
request for agreement will have to include a transfer
pricing report.
Contemporaneous transfer pricing
documentation (Transfer Pricing Report):
As a rule, transfer pricing analyses will not be an
explicit requirement for taxpayers. These will have
no value by themselves. Transfer pricing analysis will
be background information which companies will be
able to use to determine their transfer pricing policy.
Notwithstanding the above, a well-performed transfer
pricing analysis will simplify the audit process.
Corresponding adjustments:
The limit for this type of sequential adjustment is
estimated to be fve retroactive years.
Francisco Lyon
Head of Tax & Legal
KPMG Chile
Source: Chile Budget Oce
0
5
10
15
20
25
2000 01 02 03 04 05 06 07 08 09 2010
Low-tax standout
Chile tax revenues 2000-2010
%
G
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22 Doing Business in Chile | 2012 Edition
in the sector. In this time period Chile had one of
the fastest-growing economies in the world and
mining accounted for 8.5% of the GDP and 47% of
exports. Over the past three decades, private copper
production has been multiplied over 25-fold.
The state-owned frm CODELCO is still the worlds
single largest copper producing company but foreign
private investment has developed several new mines
and the private sector now produces more copper than
CODELCO. Private mining now represents 72% of the
countrys production. Foreign mining companies now
in Chile include Australian giants BHP Billiton and Rio
Tinto, and UK-linked Anglo-American and Xstrata.
The mining sector collects abundant foreign
investment. According to Chiles Foreign Investment
Committee, in 2006 mining was the countrys largest
recipient sector of FDI, receiving almost $1.2 billion
in investments. Furthermore, future mining projects in
Chile are expected to generate approximately $18.5
billion in investments by 2015. This is not only due to
the size and prestige of Chiles mining sector, but also
to the legal environment surrounding the industry. The
Business Monitor states that Chiles mining laws are
perceived to be more investment friendly and globally
aligned than most of its Latin American peers.
W
hat company is the money-earning star of the
Chilean economy? Escondida, a private mining
company that operates the highest-producing copper
mine in the world. In 2010, its net profts totaled
more than $4.3 billion, the highest of any Chilean
company.
Likewise, the mining sector itself is the highest-earning
industrial sector in Chile with nearly $18 billion in net
profts in 2010. This is a 53% increase over 2009
profts of $11.7 billion. Electricity, the second-highest
earning sector, had net profts of less than $3 billion
in 2010, down from more than $3.2 billion posted in
2009. Moreover, the mining sector is Chiles biggest
exporter accounting for 60% of all exports in 2008.
The star of the mining sector is copper, which
represents 86% of mining sector exports. According
to Chiles Central Bank, Chile has approximately
24% of the worlds known copper reserves and is
the worlds largest copper producer. In 2009, Chile
produced 5,520 metric tons of copper accounting for
34% of world total. In 2010 it produced slightly less at
5,390 metric tons.
Chile has been very good at developing itself,
perhaps using Australia or Canada as models,
explains Charlie Sartain, the Australia-based CEO of
Xstrata Copper. We plan to open our South American
project development division here in Chile, with 200
staff coordinating our activities for Chile, Peru and
Argentina.
But copper is not the only ace up Chiles sleeve. The
country is also a leading producer of iodine, rhenium,
lithium, arsenic, molybdenum, mined boron (ulexite),
refned selenium and pumicite. It is the worlds sixth
ranked producer of silver accounting for about 6% of
global mine output. It also accounts for about 2% of
the worlds mine production of gold.
Chile can be thankful for its underground wealth.
Although mining represents a smaller share of the
countrys overall economy (in terms of GDP) than ten
years ago, that is not a refection on a dwindling mining
sector, quite the contrary. Mining is growing in size
as new mines open to exploitation and extensions of
existing mines are planned. Exports of minerals grew
almost four-fold in the past ten years reaching more
than $38 billion by 2010.
Investment friendly
Chilean miners have been digging for gold since
1530 or earlier, but industrial mining activity greatly
expanded in 1974 when Decree Law 600 gave the
private mining sector free wing. The 1990s marked
the beginning of a boom in Chiles mining industry,
especially in copper mining, principally due to FDI
Underground wealth
The Chilean government strongly supports foreign investment in the mining sector and has modifed
its mining industry laws and regulations to create a favorable investing environment for foreigners.
We chose Chile because it is politically
stable and with OECD membership we
expect it will be easier to attract funds
from investors for new projects.
Charlie Sartain, CEO Xstrata Copper
Top mining companies 2010
Rank Company
Year
Founded
Revenues
$M
Profts
$M CEO Website
1 Codelco 1978 16,066 1,876 Diego Hernandez Cabrera codelco.cl
2 Escondida 1893 9,212 4,338 Carlos Mesquita mineraescondida.cl
3 Codelco Div. Chiquicamata n.a. 5,285 492 n.a. codelco.cl
4 Antofagasta 1983 4,577 1,052 Jean-PaulLuksic antofagasta.co.uk
5 Collahuasi 1880 3,929 2,048 Giancarlo Bruno collahuasi.cl
6 LosPelambres 1983 3,286 1,647 Jean-PaulLuksic lospelambres.cl
7 Codelco Div. El TTeniente n.a. 3,216 542 n.a. codelco.cl
8 Codelco Div. Radomiro Tomic n.a. 2,204 496 n.a. codelco.cl
9 Anglo American Sur 1980 2,123 900 John MacKenzie angloamerican-chile.cl
10 Anglo American Norte 1980 2,010 551 John MacKenzie angloamerican.co.uk
Source: AmericaEconomia, the Financial Times
New growth
Investments in expansions and new projects over $1.5 billion
Startup year Company Investment ($M)
2015 CODELCOAndina 4,800
2015 Kinross, Barrick 4,200
2018 BHP Billiton 4,600
post 2011 Antofagasta Minerals 3,200
2015 Teck Cominco 3,000
2017 Teck Cominco 3,000
2013 Barrick 3,000
2014 New Gold (GolfCorp) 2,500
2015 AngloAmerican, Xstrata 2,450
2012 AngloAmerican 2,400
2013 CODELCONorte 2,333
2010 Antofagasta Minerals 2,300
2013 Pan Pacifc Copper
(LuminaCopper)
2,000
2015 BHP Billiton 2,000
2018 CODELCO 2,000
2014 Minera Quadra Mining Chile 1,900
2017 CODELCO 1,533
n.a. LundinMining 1,500
Source: SONAMI, 2010
The mining sector collects abundant foreign investment.
Mining
Upcoming projects
According to SONAMI, the National Mining Society, an
agency that oversees mining in Chile, a total of $45.4
billion in mining investments is on the blackboard until
2017. These investments cover all links in the value
chain. Some are for upstream geological exploration
for new sites. Others are for expansion of existing
mines. Yet others are for downstream infrastructure in
smelting or in export facilities, namely harbors.
Although the copper price is the barometer for new
investment, the stability of the Chilean market
especially compared to its neighbors makes it a
long-term magnet for investment. But will Chile move
down the value chain in mining?
One of the issues we face is that important end-user
markets such as China and India have made very
substantial investments in copper smelters, and so
they do not wish to import refned copper. For them
copper concentrate is suffcient, since their low labor
and energy costs make it effcient to smelt locally,
explains Christian Thiele, General Manager of Minera
Esperanza, part of the Antofagasta group.
Still, SONAMI expects that potential does exist
in the research and development areas, namely
in developing better technology for furnaces, for
smelting or for fne-grinding technologies. There are
also projects underway with the Chilean government,
CORFO and the Education Ministry to establish state-
of-the-art research centers.
National Mining Society (Sociedad Nacional de Minera)
www.sonami.cl
National Copper Corporation (Corporacin Nacional del
Cobre de Chile) www.codelco.cl/english
Optimum Environment
In 2006, Xstrata Copper acquired Canadas Falconbridge
and became one of the top fve copper producers
internationally. In Chile, the acquisition gave it control
of two copper mines and a smelter.
Xstrata Copper is the worlds fourth largest copper producer
with total mined copper production in 2010 of 913,000 tons.
In Chile Xstrata posted an operating proft of $195 million
tha year. The company is also one of the worlds largest
producers of smelter and refned copper, including from third
party materials.
Before acquiring Falconbridge in 2006 for $20 billion,
Xstrata already had operations in southern Peru and so
knew Chile well.
Chile has the worlds most important copper reserves and,
today, that is its principal potential, Charlie Sartain, Chief
Executive of Xstrata Copper, notes. Also, the conditions
it ofers for developing operations and projects within a
framework of sustainable development and its economic,
political and institutional stability help to create a transparent
and optimum business environment.
The Falconbridge copper operations established a strong
center for Xstrata in northern Chile, with the Altonorte
smelter, the Lomas Bayas mine and a 44% share of the giant
Collahuasi mine. The acquisition also strengthened its position
in Peru. Xstrata also has operations in Argentina as well as
Australia, Canada, U.S., Philippines, Papua New Guinea.
Although we have operations around the world, Chile plays
an important role for Xstrata Copper precisely because of the
conditions it ofers for the development of innovative and
sustainable projects in which we hope to continue growing,
says Sartain, who also chairs the International Copper
Association and is a member of the senate of the Sustainable
Minerals Institute at the University of Queensland, Australia.
Santiago is the base of our South American Project
Development Division and that allows us to create synergies
with our other operations in the region, taking advantage of
growth opportunities through our new copper projects and
the expansions already underway at our existing operations
in Chile and Peru.
Chiles business-friendly envirornment allows Xstrata to
maximize its shareholders investment.
In Chile, we can work with institutions and the authorities as
strategic allies, focusing on the management of sustainable
development, which requires legal stability in terms of
environmental, social and labor issues, and that is not a minor
consideration when deciding where to invest, Sartain explains.
After almost fve years in Chile, I can say that our
experience has been very positive; we have found favorable
conditions for the organic growth of our business as well as
professionals who are very technically competent, which is a
further encouragement.
SucceSS Story
responsibility
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Chacun accorde
une valeur diffrente
ce qui lentoure.
The more you look at
the world, the more
you recognise how
people value things
differently.
www.hsbc.fr/entreprises
Avec 8000 chargs daffaires
qui vous appuient et vous conseillent
dans plus de 60 pays et territoires,
nous navons jamais accompagn
autant dentreprises
travers le monde.
Were doing business
with more customers worlwide
than ever before,
with 8000 relationship managers
providing support and advice
in over 60 countries and territories.
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Potential
powerhouse
Over the last few years Chile has seen an
important increase in the use of thermal
energy. Last year for the frst time in its history
more than 50% of the electricity supply was
generated by non-renewable fuels. Chiles
alternate energy resources could change that.
C
hile is a developing country with important annual
growth prospects. But its limited domestic
energy resources are not enough to meet demand.
Energy consumption in Chile has grown fast in recent
decades, especially electricity consumption, which
has increased at an annual rate of 2.4% since 2001
and 4.2% since 1990.
Chiles proven crude oil reserves in January 2006
were estimated at 150 million barrels (equivalent to 20
million tons or Mt), which is insignifcant in comparison
with annual domestic consumption of 11.7 Mt. Proven
natural gas reserves varied between 42 and 98 billion
cubic meters (bcm) in 2006 compared with annual
consumption of 7.8 bcm that year.
Chile does have signifcant low- sulfur, sub-bituminous
coal reserves, estimated at between 200 Mt and 500
Mt. But domestic production falls far short what the
country uses. In 2007 for example, Chile produced
0.8 Mt of coal compared to the 5 Mt it consumed.
Similarly, Chile has abundant
hydropower potential but its
hydropower supply is not as
geographically diverse as that
of other countries making
it vulnerable to hydropower
supply disruptions caused by
recurring droughts every two
or three years.
Filling the demand
To meet its energy demand,
Chile turned to Argentina
to supply natural gas in the
1990s and the share of natural
gas in electricity generation
increased from 1% in 1997 to 33% by 2004. However,
beginning in 2005 because of restrictions on gas
exports by Argentina, as well as low hydrology, the
situation reversed in favor of coal and oil.
Electricity companies turned to coal-fred plants, an
easy solution since Chile is not required to reduce
CO2 emissions by the Kyoto Protocol. Another
solution was the construction of two liquefed natural
gas (LNG) terminals.
The frst project at Quintero Bay, located 114 km
from Santiago, cost $1.2 billion and was developed
by GNL Quintero and processes 2.5 million tons
of LNG annually. A second plant, GNL Mejillones,
owned equally by Suez Energy International and
CODELCO, is an on-shore LNG regasifcation terminal
in Antofagasta.
The government is also supporting the exploitation
of Chiles vast but mostly undeveloped renewable
energy potential. Hydropower will remain a signifcant
component of its energy mix with the construction of
a major new complex in southern Chile.
Chiles two largest generators, Endesa and Colbn,
have created a joint venture, HidroAysen, to build a
2,750 MW installed capacity power hydroelectric
plant and a 2,000 kilometer transmission line, with a
total investment of almost $10 billion.
Hydroelectricity is the main source of renewable
energy there is in the world, says Colbn Chairman
Bernardo MatteLarrain. Any other alternative in
Chile involves importing fuel. As we dont have gas,
we have to bring it from far away. We have very little
coal and its not enough, so we have to import it from
Australia, Colombia, the U.S. and so on. So as an
energy base, hydroelectric power is without a doubt
the way forward for Chile.
Wind has the potential to contribute to a large share
of additional renewable energy capacity. As of end-
March 2009, the list of wind projects under evaluation
in Chiles environmental impact assessment system
and those approved in the period 2006-09 totaled
potential new capacity of around 1,500 MW. The
country currently counts with more than 160 MW of
capacity, but nearly 500 MW of additional capacity is
planned to start construction by 2020.
Chile also has 10% of the worlds active volcanoes,
highlighting an abundant potential for geothermal
energy. Since 2000, special legislation and subsidies
promote the development of geothermal energy,
which has been offcially designated the countrys
strategic priority. Seven 40 MW geothermal generation
projects are planned to be built between 2016 and
2020. The north of the country is rich in solar energy,
which could be used both for thermal energy and
electricity production. The Atacama Desert gets up
to 9.28 kilowatt-hours of sun daily per square meter,
among the worlds highest. More than a dozen solar
installations are planned here.
Electricity generation by source
40 000
50 000
60 000
70 000
0
10 000
20 000
30 000
40 000
1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
G
W
h
Coal/peat
Oil
Gas
Hydro
Comb.
renew.
& waste
Source: OECD/IEA
Chiles primary energy mix 2008
(in teracalories )
Production Imports Consumption
Crude oil 1,397 108,806 110,420
Natural gas 19,695 7,287 24,795
Coal 2,765 43,400 43,695
Hydroelectric 21,496 0 20,865
Wind energy 33 0 33
Wood and other sources 51,170 0 51,170
Total 96,556 159,493 250,977
Source: Chilean National Energy Commission
For more information
Chilean National Energy Commission: www.cne.cl
Central Energia: centralenergia.cl
How do you say fjord in Chilean?
With a strategic vision about clean power in emerging
markets, Norwegian company SN Power is busy developing
renewable and low-CO2 energy projects in Chile and Peru.
Based in Oslo, Norway, SN Power is a joint venture between
Statkraft and Norfund. Founded in 2002, the company had
2010 revenues of $114 million, from eleven countries on three
continents. SN Power frst decided to invest in Chile in 2004,
after several months of evaluation period and feasibility study.
Convinced of the potential in the country, SN Power frst
committed to invest about $800 million in two hydroelectric
projects, La Higuera and La Confuencia, about 250 kilometers
south of Santiago. Both hydropower plants will each produce
around 750 GWh annually.
Completed in 2009, SN Powers wind farm at Totoral, about
300 kilometers north of Santiago, was the companys third
investment in Chile. The wind farms 23 turbines produce
almost 110 GWh every year, supplying energy for about
36,000 people (or 12.000 households).
What makes Chile all the more interesting for us, explains
Torger Lien, CEO of SN Power (Norway), is that we can
start using Chile as a regional platform for our other South
American operations, namely our twin projects in Peru and
our developments in Brazil.
SucceSS Story
Hydroelectricity is Chiles main source of renewable energy.
E
n
d
e
s
a
Energy
C
hile has one of the best coverage and quality
levels in Latin America for water supply and
sanitation, especially in the urban areas where 85%
of the countrys population lives.
In 2010, 99.9% of the population of Chiles urban areas
had access to potable water and 95.9% had access
to sanitation, according to SISS (Superintendencia de
Servicios Sanitarios) the Chilean regulatory agency
for urban areas. Nationally, 91.3% had water supply
access and 82.5% had access to sanitation, according
to the Casen Survey 2006.
Thats a huge improvement since the 1970s when
Chile began extending and developing its water and
sanitation infrastructure.
The situation in the late 1970s was a bit tricky,
explains Gonzalo Cordua, General Manager of Nuevo
Sur, the fourth largest water operator in Chile. We
rely on fruit and agriculture exports for a substantial
part of our economy, yet some of these trees and
vineyards were drinking water from rivers that did
not necessarily pass through waste treatment plants.
It would have been a matter of time before health
concerns arose and alarms went off.
As a result of the infrastructure development, water
access increased from 78% in 1976 to 98% in 1988,
and sanitation access increased from 52% in 1976 to
82% in 1988.
In the 1990s, most utilities were partially handed
over to the private sector. Investment in Chiles water
and sanitation sector reached $5.7 billion during the
19932005 period, according to the World Banks
Private Participation in Infrastructure database.
As a result of public outcry over the privatization of
water utilities, in 2001 the government stopped selling
Cool, clean
water
Chile is the only country in Latin America that
has privatized its entire urban water supply
and sanitation sector.
utilities and started granting 30-year concession
contracts instead via build-operate-transfer (BOT)
agreements.
The outcry against privatization continues as some
Chileans object to price increases and private control
of the resource. For example, in 2009 the Spanish
electricity company Endesa bought up 80% of
the water rights in a big region in the south. In the
north, agricultural producers compete with mining
companies for scarce water supplies.
We have come a long way, and even though 94%
of Chilean water production is in private hands, we
have made great environmental progress, says
Magaly Espinosa, SSI Director. Our next steps will
be to expand our rural water program and confront
challenges in fnding new groundwater sources and
new water desalination investments, mainly in the dry
northern areas of the country.
More than 80% of Chiles fresh water is used for
irrigation, followed by industry (8%), mining (7%)
and drinking (4%). Many of the water development
projects now underway are to supply water to the
countrys mining sector.
About $7.7 billion is planned in current projects to
augment water supply for the mining industry. Copper
production is expected to reach 7.3 million tons in
2020 which means a 45% increase in water use. That
poses a problem since the mining industry is in one of
the driest regions on the planet.
Some mining companies have water rights but in some
cases the aquifers they draw from will be depleted
within a few years. Unless alternative sources of
water are developed, some of the planned mining
expansion wont happen, says Santiago Gonzlez
Larrain, Chiles mining minister.
We must motivate the construction of desalination
plants as an alternative, Gonzlez says.
The private sector agrees. Aguas Antofagasta,
a Chilean water utility, is building a $120 million
desalination plant in the northern city of Antofagasta.
The plant will produce 1,000 liters a second of potable
water and is expected to be completed by late 2013.
And a Spanish sustainable development company,
Acciona, recently won a $65 million contract to build
and operate a desalination plant near the Atacama
desert which will produce 17 million liters (4.5 million
gallons) of fresh water a day.
SISS (Superintendencia de Servicios Sanitarios)
www.siss.gob.cl
Water heads
Top fve private water and sanitation companies (2010)
Rank Name Client base
(1000s)
Ownership
1 Aguas Andinas S.A. 1,577 Agbar-Suez
2 Essbo S.A. 681 Ontario Pension Fund
3 Esval S.A. 542 Ontario Pension Fund
4 Nuevo Sur 225 Ontario Pension Fund
5 Aguas Araucana 201 Marubeni Corp and
Innovation Corp of Japan
World-class hygiene
Percentage of Chileans who now have access to
clean drinking water and sanitation facilities
Source: WHO/UNICEF
78
80
82
84
86
88
90
92
94
96
98
100
1990
Sanitation
1995 2000 2005 2008
Clean drinking water
Chile has made great progress in its water and sanitation standards.
Water Resources
No water, no mining
Chiles mining industry is located in the arid north of the
country. But the scarcity of water in the region is a serious
problem, not just to the mining industry but to the economy as
a whole since mining accounts for about a ffth of Chiles GDP.
Finding new sources of water for industries like mining is an
issue because the overexploitation of limited groundwater
resources in the north puts into question the sustainability of
existing and planned mines.
Many people are convinced that alternative sources of water,
particularly desalination plants, are the solution.
Chiles Minister for Mining, Santiago Gonzlez Larrain, says
that without additional sources of water, some planned
mining developments will not be brought online.
We must motivate the construction of desalination plants as
an alternative, says Gonzlez.
This concern is driving a new wave of desalination projects
in Chiles north, such as in the Atacama region where copper
mining, which consumes the vast majority of the water used
by the mining industry, consumes 105,000 m3 of water a
day, which is in excess of the industrys allocated water rights.
In a recent report, the Chilean copper commission, Cochilco,
states that after peaking in 2017, copper production will reach
7.3 million tons in 2020. To meet this demand, the industrys
water usage will need to increase by 45%. In the Atacama region
alone water consumption will more than double by 2020 .
AnAlySiS
W
ine grapes are not native to the Americas. They
arrived in the 1500s with the Spanish missionaries
who needed wine to celebrate the Catholic mass.
Today Chile is the worlds eighth-largest wine producer
and ffth-largest exporter, selling to 150 markets and
reaching a market share of 8% by volume of the global
international wine market at the close of 2010.
But Chile is planning to conquer an even bigger share
of the market.
We want to play a key role in Chiles progress, says
Ren Merino, President of Wines of Chile, a public-
private organization created to promote Chilean wine
exports. We are convinced of the enormous potential
of Chiles wine industry, its importance at the global
level as a world-class producer, and its multiplying
effect on the image of Chile.
Industry plans are to position Chile as the leading New
World producer of premium, diverse and sustainable
wines by the year 2020, increasing the value of bottled
wine exports to $3 billion within a decade.
With an estimated 8,000 producers of wine grapes,
the countrys planted area of vines for wine has
increased over 70 percent during the last eight years
and is now estimated to be 119,000 hectares. Out
of the total planted area, around 76 percent are red
varieties. Also, close to 75 percent of all planted area
is under irrigation.
Due to low domestic consumption, Chile exports 70%
of the wine it produces making it the worlds most
globalized wine industry. In 2011, wine production
reached an all time record level of 1,046 million liters,
a 14% increase over 2010. This exceeds the previous
production record of 1,009 million liters in 2009.
Export
champion
Wine is one of Chiles most emblematic
exports, recognized worldwide for its quality
and variety. With the growing popularity for
Chilean wine around the world, the industry
aims to grow even more.
Improvements in quality and low prices help to keep
or increase exports levels. Chile traditionally exports
both bottled and bulk wine. Bottled wine exports
expanded more than bulk wine exports in 2010 and
so a large number of wineries are making a big effort
to increase premium-bottled wine exports. Currently,
there are more than 70 Chilean wineries that export.
Chiles main export markets are Europe followed by
the U.S. and China. The industry continues its focus
on the Asian markets, however, less than 10% of
total exports go to that market, according to Wines
of Chile.
Wine takes off
After centuries of obscurity, Chilean wines experienced
an aggressive growth spurt in the 1980s. This was
due partly to foreign investment from Spain, France,
Italy and the U.S. that provided Chilean vineyards
with upgraded technology and facilities. Many
well known foreign vintners have also developed
wineries in Chile, including such prestigious labels
as Bodegas Torres, the Rothschilds, Pernod Ricard,
Kendall-Jackson, Franciscan State and Bruno Prat
and others.
In less than ten years, Chile began to produce frst-
class wines that were becoming recognized around
the world for their quality and style, and demand
abroad for Chilean wine began to grow. To meet
the increase in demand, Chile vastly increased the
amount of land for planting. Between 1996 and 2006,
the amount doubled from 56,000 to 117,000 hectares.
Later, other regions were added including for the frst
time the north and south of the country. The newest
vineyards are planted along the coast and in the
Andes Mountains at altitudes up to 2,000 meters.
But it is Chiles Central Valley that is its winemaking
treasure. Sprawling over 1,200 kilometers north to
south, the valley benefts from an ideal Mediterranean
Growth spurt
Chiles wine exports have grown rapidly since the 1980s
Source: National Agricultural Society (SNA) and Central Bank
0
200
400
600
800
1000
1200
1400
1600
1800
2000
19
8
2
19
9
0
19
9
2
19
9
4
19
9
6
19
9
8
20
0
0
20
0
2
20
0
4
20
0
6
20
0
7
20
0
8
20
0
9
20
10
20
11
Export value ($M)
International taste
Top Chilean wine exporters and quantity exported
in 2010 (bottles and bulk)
Rank Winery Liters exported
(millions)
Export
value ($M)
Avg.
price/L
1 Vina Concha y Toro 107 280 2.63
2 Vina Cono Sur 37 94 2.56
3 Vina San Pedro 45 94 2.09
4 Vina Santa Rita 13 56 4.18
5 Vina Sta. Carolina 20 42 2.07
Source: Vinos de Chile
climate and wide diversity of soils. The Andes on the
east and the Pacifc on the west provide cool breezes
that regulate temperatures and result in a higher range
of terroirs.
The prime wine growing regions are the Elqui, Limar,
Choapa, Aconcagua, Casablanca, San Antonio,
Maipo, Cachapoal, Colchagua, Curic, Maule, Itata,
Bo-Bo and Malleco valleys. These areas grow a
wide range of premium grapes, notably Cabernet
Sauvignon, Merlot, Smillon, Shiraz, Chardonnay,
Sauvignon Blanc, Riesling, Pinot Noir, Gewrztraminer,
and Carmenre.
Chiles wine conquest
The spark for the Chilean wine company Concha y
Toros extraordinary growth was ignited in the early
1990s, when the father of the current CEO had a vision
of grandeur.
With an unwavering confdence in the quality of Chiles wine
potential what oenologists might call the terroir Eduardo
Guilisasti set about constructing the company into what is
now the worlds 8th largest wine producer. Concha y Toro
is now listed in New York and sells over 28 million cases, of
which 67% abroad, representing 2009 revenues of $643
million.
The strategy behind this success, explains Thomas
Domeyko, export director, was part Chilean and part Harvard
Business School (which has published a case). The Chilean
portion is our true gift of fantastic wine country: beautiful
valleys with abundant water; a coastal mountain range that
protects us from the cold Paciic currents; vast longitude
suitable to diferent cpages (grape varieties).
As for the business vision, Concha y Toro has skilfully
expanded along four dimensions. We are double-branded,
explains Domeyko. We have six winery brands, including
the original Concha y Toro, and Almaviva, our venture with
Baron Philippe de Rothschild. Then, within each winery,
we produce wines under diferent labels. Our investment
in global wine brands such as Casillero del Diablo has
been instrumental to our success. The third dimension is
geographical, with vineyards in nine diferent valleys in Chile
and Argentina.
Our fourth dimension is our export scope, adds Domeyko.
We sell in 135 countries and have our own distribution in
the UK, Brazil and Scandinavia. From 10 export employees in
2000 we are now up to 100 people. Their understanding of
these markets is key to our success.
SucceSS Story
Chile is one of the worlds largest wine producers and exporters.
F
e
lip
e
C
a
n
tilla
n
a
Wine
A unique facet of Chilean wine-growing environment
is that because of the countrys geographic isolation,
little or no pesticides are used to ward off grape-
eating predators.
As a result, Chile, along with Argentina, is one of only
two countries in the world not afficted by the lethal
phylloxera pest, an insect that devastated European
vineyards in the late-19th Century and decimated the
vineyards of California in the 20th.
Currently no signifcant expansion in production is
expected as more than 95% of the planted area is in
full production. Any production increases that occur
will be because of the weather, vineyard management
improvements and on future expansion or replacement
of existing but low-producing vineyards.
The government provides no direct subsidies to
support wine production or subsidize exports.
Although Chile does have a successful market
promotion campaign called Tastes of Chile that
includes wine. The government contributes 15% of
the total promotion costs through its export promotion
agency ProChile.
GDF_MixEnergetique UK 210x297.indd 1 04/10/2011 17:19
Saved from Extinction
Carmenere was one of the most widely planted varieties
in Bordeaux until the 1860s when the deadly phylloxera
louse arrived in Europe. Carmenere vines are particularly
defenseless to phylloxera and so the variety was abandoned
when phylloxera-resistant American rootstocks were
introduced in France.
Prior to the phylloxera crisis, Chilean vignerons took cuttings
from Bordeaux vineyards thinking they were Merlot, which
is similar-looking to Carmenere. In doing so they unwittingly
saved Carmenere from extinction.
The mistaken variety came to be known as Chilean Merlot.
The error was not discovered until 1994 when DNA research
carried out in Montpellier, France, confrmed that it was
Carmenere. Since then Carmenere plantings have grown
rapidly, from 330 hectares in 1997 to 8,411 hectares in 2008,
representing 7% of Chiles total vineyard plantings.
Wines of Chile: www.winesofchile.org
MOVI (Vintners Independent Movement) is a group of
independent vintners: www.movi.cl
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37 2012 Edition | Doing Business in Chile
L
atin America has shown great
resilience in the face of the
economic recession and presented
the fastest-growing fows of both
inward and outward foreign direct
investment. The volume received
in 2010 exceeded the average of
previous years, refecting the region
as a new solid investment destination
for transnational companies.
Also, it is important to highlight the rise of trans-
Latins. A signifcant proportion of Latin American
investments are made within the region. According to
deals reported by Bloomberg, 47% of M&A concluded
by Latin American companies in 2010 took place in
a neighboring country. Moreover, as stated by the
Economic Commission for Latin America (ECLAC),
greenfeld investments also are mainly directed within
the region itself (59% of the total in 2010).
Given this situation, the importance of trans-Latins
as agents of regional integration is growing fast.
Investments made by Chilean frms reached a record
$8.7 billion, 58% of which was directed to other Latin
American countries, mostly to fnancial, retail and
FDI and M&A activity
in Latin America
While much of the global economy has experienced a sharp reduction in foreign direct
investment and M&A deal-making as a result of the fnancial crisis, Chile and other
Latin American countries are holding their own.
Alejandro Cerda
Head of Advisory
KPMG Chile
manufacturing sectors. The most dynamic sectors for
M&A activity in 2010 were basic materials, consumer
goods and fnancial services, reaching a volume of
$3.8 billion, according to Bloomberg.
The reasons behind this increase in transaction
volume are the high economic growth of emerging
economies, high commodity prices, lower costs of
capital, restructuring and sale of distressed assets,
and the overall trend towards consolidation.
In 2011, Latin American M&A activity has been mainly
concentrated in such sectors as energy and natural
resources, telecom and materials. These sectors
along with consumer goods and fnancial services will
most likely dominate M&A activity both in Chile and
in the region.
Due to reduced infation levels, capital access and
investment reforms, Latin American countries are
becoming more hospitable to M&A especially in light
of the current economic and political situation in the
US and debt crises in Europe. There is reason to
believe that this trend will continue in coming years,
causing an increase in overall deals and in market
confdence in Latin America.
Source: UNCTAD (www.unctad.org)
Brasil
Annual ow amount ($M) Annual growth
25,900
30,200 16.60%
52.80%
43.30%
20.80%
4.00%
43.70%
25,900
19,100
12,700
18,200
7,200
8,700
4,900
5,100
4,800
6,900
Mxico
Chile
Colombia
Argentina
Per
2009 2010
FDI in Latin America 2009-2010
(Total in 2010 = $88,200 million)
Good Investments
Trends in mining
Mining sector investment in 2011 is
expected to exceed $460 million. Chiles
mining association (Sociedad Nacional
de Minera) projected investment in the
industry for 2011-2018 would reach $70
billion. The main source of investment is
copper, for which production levels are
expected to increase by 48% by 2018. Investment in gold
mining is expected to triple the current level of production
(from 40 to 120 tons by 2018). For its part, the Chilean
Copper Commission (Cochilco) projects copper mining will be
at a level close to $54 billion by 2020.
Benedicto Vasquez
Head of Mining
Industries, KPMG Chile
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TRUST CREDIBILITY ACCURACY COMMITMENT
VALUE ADDI NG TRUST WE LEAD BY EXAMPLE STEADI NESS
COMMITMENT QUALITY CREDIBILITY
SERVICE CULTURE CREDIBILITY CREATIVITY QUALITY WE WORK TOGETHER TRUST
GLOBAL MINDSET COMMITMENT CAPABILITY
TRUST WE WORK TOGETHER STEADINESS KNOWLEDGE CREDIBILITY ACCURACY QUALITY
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KNOWLEDGE CAPABILITY COMMITMENT
S E R V I C E C U LT U R E C R E D I B I L I T Y C A PA B I L I T Y
QUALITY WE WORK TOGETHER TRUST
53645 WE WORK TOGETHER 45&"%*/&44 ,/08-&%(& 53645 $3&%*#*-*5: $3&"5*7*5: $0..*5.&/5
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COMMITMENT QUALITY
VALUE ADDI NG TRUST WE LEAD BY EXAMPLE
TRUST CREDIBILITY ACCURACY SERVICE CULTURE ACCURACY TRUST CREDIBILITY ACCURACY COMMITMENT
WE WORK TOGETHER CAPABILITY GLOBAL MINDSET
QUALITY COMMITMENT
GLOBAL MINDSET CLOSENESS
53645 8& 803, 50(&5)&3 45&"%*/&44 '038"3% 5)*/,*/( 8& 803, 50(&5)&3
CAPABILITY TRUST
WE WORK TOGETHER WE LEAD BY EXAMPLE
TRUST CREDI BI LI TY QUALI TY COMMI TMENT
ACCURACY KNOWLEDGE ASSESSMENT CREATIVITY WE WORK TOGETHER
ASSESSMENT COMMITMENT
45&"%*/&44 $"1"#*-*5: STEADINESS &91&35
VALUE ADDING TRUST WE LEAD BY EXAMPLE STEADINESS
QUALITY CREDIBILITY
WE WORK TOGETHER
KNOWLEDGE CREDIBILITY ACCURACY QUALITY
1"44*0/"5& &91&35 4&37*$& $6-563& 26"-*5: 53645 130'&44*0/"-4
45&"%*/&44$"1"#*-*5:8&803,50(&5)&3$3&"5*7*5:$0..*5.&/5
8& -&"% #: &9".1-& $3&%*#*-*5: "$$63"$: 45&"%*/&44 53645
SERVICE CULTURE CREDIBILITY CAPABILITY WE WORK TOGETHER TRUST
Sector Description
companies at a glance
Rank Company Sector
Year
founded
2010
Revenues
$M
2010
profts
$M CEO Website
41 Xstrata Copper Chile Mining 1926 1,707 n.a. Michael Davis xstrata.com
42 Supermercados Santa
Isabel
Retail 1976 1,652 n.a. n.a. santaisabel.cl
43 Ripley Chile Retail 1956 1,544 78 Lazaro Calderon ripley.cl
44 Salfacorp Construction 1929 1,512 14 Francisco Javier Garces Jordan salfacorp.cl
45 Empresas Banmedica Healthcare 1988 1,509 95 Carlos Kubik Castro empresasbanmedica.cl
46 Telefonica Chile Telecoms 1930 1,495 224 Ramiro Lafarga Brollo telefonicachile.cl
47 Gasco Oil and gas 1982 1,435 108 Gerardo Cood Shoepke gasco.cl
48 Candelaria Mining 1912 1,434 542 Richard C. Adkerson fcx.com
49 CMPC CELULOSA Pulp/paper 1920 1,413 322 Arturo Iniguez Mackenna, cmpc.cl
50 Petrobras Oil and gas 1953 1,373 n.a. Jos Gabrielli petrobrastuchile.cl
51 CMPC TISSUE Pulp/paper 1920 1,345 44 Arturo Iniguez Mackenna, cmpctissue.cl
52 Terpel Oil and gas 1968 1,338 n.a. Amaury de la Espriella terpel-web.co
53 Molymet Industrial 1975 1,297 92 John Graell Moore molymet.cl
54 Cge Distribucion Energy 2003 1,292 26 Francisco Javier Marin Estevez cge.cl
55 Empresas Navieras Transport 1992 1,273 44 Franco Montalbetti Moltedo empresasnavieras.com
56 Minera Del Pacifco Mining 1981 1,271 902 Erick Weber cmp.cl
57 Minera Spence Mining 2001 1,243 n.a. Marius Kloppers spence.cl
58 Paris Retail n.a. 1,227 n.a. n.a. paris.cl
59 Gnl Quintero Oil and gas 2007 1,178 n.a. Antonio Bacigalupo gnlquintero.com
60 La Polar Retail 1998 1,153 64 Martin Andres Gonzalez Iakl lapolar.cl
61 Minera El Abra Mining 1912 1,126 483 Richard C. Adkerson phelpsdodge.com
62 E-CL Energy 1981 1,120 200 Lodewijk Verdeyen e-cl.cl
63 Minera Zaldivar Mining 1995 1,119 529 Robert Mayne-Nicholls Scul barrick.cl
64 Finning Chile Heavy
Equipment
1997 1,091 n.a. n.a. fnning.cl
65 Minera Valparaiso Multisector 1906 1,069 234 Emilio Pellegrini Ripamonti minera.cl
Chiles top 65
Rank Company Sector
Year
founded
2010
Revenues
$M
2010
profts
$M CEO Website
1 Codelco Mining 1955 16,065 1,876 Diego Hernandez Cabrera codelco.cl
2 Cencosud Retail 1960 13,226 633 Daniel Rodriguez Cofre cencosud.cl
3 Enersis Electricity 1983 13,193 1,038 Ignacio Antonanzas Alvear enersis.cl
4 Empresas Copec Energy 1934 12,150 603 Eduardo Navarro Beltran empresascopec.cl
5 Escondida Mining 1988 9,211 4,338 Carlos Mesquita escondida.cl
6 Falabella Retail 1986 8,923 883 Juan Benavides Feliu falabella.com
7 Enap Energy 1950 8,180 70 Ricardo Cruzat enap.cl
8 Copec Combustibles Oil and gas 1934 7,775 n.a. Lorenzo Gazmuri Schleyer copec.cl
9 Sudamericana De Vapores Transport 1872 5,448 171 Guillermo Luksic Craig csav.cl
10 Endesa Energy 1982 5,120 1,139 Joaquin Galindo Velez endesa.cl
11 Walmart Chile Retail 1985 4,861 89 Enrique Ostale Cambiaso dys.cl
12 Antofagasta Plc Mining 1983 4,577 1,052 Jean-Paul Luksic antofagasta.co.uk
13 LAN Transport 1987 4,387 419 Enrique Cueto Plaza lan.com
14 CGE Energy 1982 4,295 128 Pablo Guarda Barros cge.cl
15 Cmpc Papeles Y Cartones Pulp/paper 1920 4,216 637 Arturo Iniguez Mackenna cmpc.cl
16 Collahuasi Mining 1880 3,929 2,048 Giancarlo Bruno collahuasi.cl
17 Arauco Pulp/paper 1967 3,788 701 Cristian Infante celarauco.cl
18 Mall Plaza Retail 1990 3,653 n.a. Fernando de Pea Yver mallplaza.cl
19 Hipermercados Lider Retail 2009 3,320 n.a. Enrique Ostale Cambiaso lider.cl
20 Los Pelambres Mining 1983 3,286 1,647 Jean-Paul Luksic lospelambres.cl
21 Sodimac Retail 1952 2,619 168 Juan Pablo Del Rio Goudie sodimac.cl
22 Entel Telecoms 1982 2,314 369 Antonio Buchi Buc entel.cl
23 Chilectra Energy 2006 2,142 322 Cristian Fierro Montes chilectra.cl
24 Anglo American Sur Mining 1980 2,123 900 John MacKenzie angloamerican-chile.cl
25 Ripley Corp. Retail 2004 2,083 77 Lazaro Calderon ripley.cl
26 Anglo American Norte Mining 1980 2,010 551 John MacKenzie angloamerican.co.uk
27 CAP Industrial 1946 1,992 590 Jaime Charles Coddou cap.cl
28 Embotelladora Andina Beverages 1946 1,898 30 Jaime Garca koandina.com
29 Shell Chile Oil and gas 1919 1,837 n.a. Peter Voser /
Rodrigo Infante Casanello
shell.cl
30 Sigdo Koppers Construction 2005 1,832 113 Juan Pablo Aboitiz Domnguez sigdokoppers.cl
31 Sqm Mining 1983 1,829 382 Patricio Contesse Gonzalez sqm.cl
32 Movistar Telecoms 1995 1,802 n.a. Claudio Munoz Zuniga movistar.cl
33 Aes Gener Energy 1981 1,801 170 Luis Felipe Ceron Ceron gener.cl
34 Entel Pcs Telecoms 1964 1,800 262 Juan Jos Hurtado Vicua entelpcs.cl
35 CCU Beverages 1982 1,790 236 Jose Patricio Jottar Nasrallah ccu.cl
36 Agrosuper Agroindustrial 1960 1,770 n.a. Jose Guzman agrosuper.cl
37 Supermercados Jumbo Retail 1960 1,743 n.a. n.a. jumbo.cl
38 Supermercados Unimarc Retail 1961 1,729 n.a. n.a. unimarc.cl
39 Enami Mining 1960 1,721 30 Hernn Eduardo de
Solminihac Tampier
enami.cl
40 Fasa Retail 1997 1,712 -5 Marcelo Weisselberger Araujo fasa.cl
Rank Company
Year
founded
2010
Revenues
$M
2010
profts
$M CEO Website
1 Banco Santander 1978 2,918 1,011 Claudio Melandri santander.cl
2 Banco de Chile 1893 2,468 799 Pablo Granifo bancochile.cl
3 Banco BCI 1937 1,579 469 Lionel Olavarria bci.cl
4 Banco Estado 1953 1,562 180 Pablo Piera bancoestado.cl
5 Corpbanca 1871 689 249 Mario Chamorro corpbanca.cl
6 Banco BBVA 2000 618 102 Ignacio Lacasta bbva.cl
7 Scotia Bank 1944 595 152 James Callahan scotiabank.cl
8 Banco Itau 2007 389 100 Boris Buvinic itau.cl
9 Banco Security 1991 244 71 Francisco Silva security.cl
10 Banco BICE 1979 228 86 Alberto Schilling bice.cl
Chiles top ten banks
Company Rankings
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VALUE ADDI NG TRUST WE LEAD BY EXAMPLE STEADI NESS
COMMITMENT QUALITY CREDIBILITY
TRUST WE WORK TOGETHER STEADINESS KNOWLEDGE CREDIBILITY ACCURACY QUALITY
1"44*0/"5&&91&354&37*$&$6-563&26"-*5:53645130'&44*0/"-4
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QUALITY WE WORK TOGETHER TRUST
53645 WE WORK TOGETHER 45&"%*/&44 ,/08-&%(& 53645 $3&%*#*-*5: $3&"5*7*5: $0..*5.&/5
CLOSENESS ACCURACY
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VALUE ADDI NG TRUST WE LEAD BY EXAMPLE
TRUST CREDIBILITY ACCURACY SERVICE CULTURE ACCURACY TRUST CREDIBILITY ACCURACY COMMITMENT
WE WORK TOGETHER CAPABILITY GLOBAL MINDSET
QUALITY COMMITMENT
GLOBAL MINDSET CLOSENESS
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WE WORK TOGETHER WE LEAD BY EXAMPLE
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ACCURACY KNOWLEDGE ASSESSMENT CREATIVITY WE WORK TOGETHER
ASSESSMENT COMMITMENT
45&"%*/&44 $"1"#*-*5: STEADINESS &91&35
VALUE ADDING TRUST WE LEAD BY EXAMPLE STEADINESS
QUALITY CREDIBILITY
WE WORK TOGETHER
KNOWLEDGE CREDIBILITY ACCURACY QUALITY
1"44*0/"5& &91&35 4&37*$& $6-563& 26"-*5: 53645 130'&44*0/"-4
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SERVICE CULTURE CREDIBILITY CAPABILITY WE WORK TOGETHER TRUST 40 Doing Business in Chile | 2012 Edition
T
he new report from the World
Bank and International Finance
Corporation (IFC) shows that
economies are still adopting reforms
that promote transparency and
access to information, improving the
ability of local frms to do business.
The facts speak for themselves. In
the latest World Bank Doing Business rankings,
Chile advanced two places from 41st to 39th place
out of 183 economies. In Latin American, this advance
puts us in frst place for ease of doing business.
The Ministry of Economy bears primary responsibility
for this improved assessment. The Ministry promoted
the adoption of new technologies and improvements
required. These changes were the result in part of the
enactment of Law 20.494, passed in March 2011,
which streamlined business creation procedures.
It is through these efforts and other reforms that we are
achieving positive results. These are measurable and
comparable with those of more developed countries.
This improvement makes us proud. It reverses a
trend of decline in Chiles international rankings in
competitiveness and clearly demonstrates that the
life of entrepreneurs in our country is improving.
Creating an environment
conducive to entrepreneurs
Chile has moved up in World Bank rankings, proving it is up to the challenge of creating one of
the worlds most business-friendly environments.
Cristin Bastin
Senior Partner
KPMG Chile
Nevertheless, according to the World Bank ranking,
Chile is weak in two variables: training and plant
closings. But thanks to recent reforms, we have
reduced the barriers to addressing these weaknesses,
which further explain why we have progressed in the
ranking.
The process of reform can be very slow and ineffcient,
which is why the Ministry of Economy is addressing
another area impacting businesses, the bankruptcy
system. The Ministry has proposed measures that will
reduce the overall complexities and constraints of the
current bankruptcy procedures.
We believe it is a key and fundamental task for the
development of our country to generate a favorable
environment for entrepreneurs with real opportunities
and business regulations adapted to the 21st
Century.
Indeed, our country is on track to achieving this goal.
It is an honor to be the frst country in South America
to become a member of the OECD. We must continue
to work effciently to overcome our weaknesses and
attain the level of our peers among the developed
nations of the world. Indeed, it will be a challenge, but
a challenge we are certain to overcome.
Ranking Chiles top companies
For executives and entrepreneurs interested in doing business in Chile or other Latin American countries,
AmricaEconoma magazine is a comprehensive source of information about the region.
AmricaEconoma was created in 1986 and is published monthly in Spanish and Portuguese. The 25th
anniversary issue of the magazine, published July 2011, focuses on Chile and provides in-depth analysis and
rankings on all aspects of Chiles business, economic and fnancial climate.
The centerpiece of the issue is a detailed ranking of Chiles top 500 companies based on 2010 revenues.
The ranking provides more than 20 indicators about each companys health such as annual profts, ROI and
number of employees.
Sector Description
Salmon exports
leaping back
Chiles fsh farming industry began with
private sector initiatives and despite
occasional setbacks the industry is awash
with opportunities for entrepreneurs to get
involved in the industrys future.
C
hilean salmon fsheries are recovering from the
outbreak of infectious salmon anemia (ISA) in
2007 which severly damaged one of the countrys
leading exports. Salmon production fell dramatically
as a result of ISA and is not expected to recover fully
until 2013.
The industry association, SalmonChile, says the results
of the exports of salmon and trout in the frst half of 2011
exceeded 187,000 tons, a growth of 23% in volume
compared to same period of 2010, the low point of the
crisis. Exports sales amounted to $1.4 billion, a 45%
increase compared to the frst half of 2010.
We see a gradual recovery in the industry, but the
important thing is that growth is with environmental,
health, sustainability and social support, says Carlos
Odebret General Manager of SalmonChile. These
are the lines of the new programmatic agenda of
SalmonChile for the next three years.
Salmon accounts for 93% of Chiles fsh farming
industry. The industry includes 140 producers and
more than 1,000 suppliers of associated good and
services. Prior to the ISA outbreak Chile was the
second largest producer of salmon and trout in the
world after Norway. The main markets for salmon are
Japan, the U.S. and Brazil.
Until 2007 Chile experienced 15 years of growth in
the salmon farming industry. By 2006 it accounted for
38% of the worlds salmon production and Norway
produced 39%. In 2006 salmon was Chiles third
largest export product in terms value, just behind
copper and molybdenum.
Because of the low per capita consumption of fsh
in Chile, it is produced primarily for export. Chilean
aquaculture products for export include rainbow trout,
Atlantic and Pacifc salmon, turbots and molluscs,
Northern scallops, Pacifc oysters, mussels, red
abalone and Chilean oysters. Chile is the worlds
second largest producer of scallops and fourth largest
producer of mussels.
Commercial fsheries exports were led by jack
mackerel, southern hake, and Chilean sea bass.
Chile also produces considerable amounts of fsh oil
and fsh meal for use in the animal feed and other
industries. Algae and algae byproducts for industrial
use are another important export.
Chile is a natural fshing and fsh-farming country. The
Chilean Sea is considered among the most productive
marine ecosystems in the world with clear, clean and
cold waters.
Just as Chile is blessed with natural attributes for
grapes, so it goes for fsh farming, explains Cesar
Barros, President of SalmonChile. The 5-20C range
No chips
Chiles top fve aquaculture companies
Company 2010 revenues
in ($M)
2010 profts
($M)
Exports as
% of sales
Multiexport
Foods
202 32 1.4%
Salmones
Multiexport
162 n.a. 100%
Mainstream Chile 137 n.a. 100%
Trusal 129 n.a. 80.6%
Salmones
Antartica
103 n.a. 100%
Source: AmericaEconomia
of our waters suits fsh growth. We also have a great
network of fjords, islands and canals so fsh can breed
easily. Lastly, the distance between sweet and salt
water is very short so transport costs are low.
The private sector has been the main impetus behind
Chilean fsh farming from the beginning. In 1974 the
frst private initiative to raise trout for commercial
purposes began. In 1976, Coho salmon eggs were
imported and in 1977 the fry were released into
Chilean lakes. The next year, the state created
Sernapesca, the National Fish Service, and over the
next two years a series of private initiatives created
companies dedicated to salmon farming. By 1985,
the year SalmonChile was created, there were 36 fsh
farms and production reached 1,200 tons.
Chile currently has 174 aquaculture farms dotted along
its 6,500 kilometers of coastline, down from a tally of
344 farms in 2008. On average each farm produces
over 500,000 fsh in a two-year growing cycle.
Several factors have been decisive in the expansion
of fsh farming such as technological development,
business entrepreneurship and foreign investment.
Between 1989 and 2004, foreign investment reached
$300 million. Fishing and aquaculture, particularly
salmon, are supported by public and private research,
development and innovation programs. The main
investment opportunities are in fsh farming due to the
forecasted increase in global demand for farmed fsh.
The National Fishing Association (Sonapesca)
www.sonapesca.cl
The National Fish Service (Sernapesca)
www.sernapesca.cl
Controlling the catch
Chileans have always relied on fshing for food and jobs. Today
fshing is still a big business in Chile but that industry is under
threat. The total commercial fshing catch in 2010 was 3.3
million tons, compared to 7 million tons in 1996.
In 2000, the government introduced Individual Transferable
Quotas (ITQs) to stop the decline. Under ITQ, a total catch
permitted is given to fshing companies each year based on
historic catches.
The law has met with some success. Although total catches
remain low, a guaranteed quota means companies can focus
more on quality and produce more high-value products, such
as canned and frozen fsh for human consumption, and less
fshmeal, used as feed by salmon farming companies.
This has helped create jobs and increase exports, which have
risen from $1 billion in 1996 to $1.5 billion in 2010. About two
thirds of the catch is now canned or frozen fsh.
The ITQ system will expire in 2012 and the government is
expected to propose a new law to regulate the industry for the
next 25 years. One option being considered is to modify the ITQ
system by putting part of the individual quotas up for auction.
This has raised protests from opponents who say that, among
other things, it has been tried and failed in other countries.
Proponents argue that the current system limits the entry of
new players into an industry dominated by six companies.
Chiles capture shing industry
exports 2010
Source: National Customs Service
Fishmeal
35.3%
Fresh Frozen
4.2%
Seaweed &
Related Products
12.1%
Others
0.4%
Frozen
35.9%
Fish Oils
3.3%
Canned
8.9%
AnAlySiS
Chile is a natural fshing and fsh-farming country.
Fisheries
Food power
The food industry is one of most dynamic
sectors of Chiles economy representing
around 24% of its GDP.
C
hiles food exports have grown at an average annual
rate of 10% over the past ten years, making it the
worlds fastest-growing food exporter. By 2010 exports
had risen to more than $11.6 billion compared to $5
billion in 2002. The Chilean food industry now employs
more than a million people, representing around 20%
of the countrys workforce and providing 174 countries
with premium fresh and processed food products.
Agriculture is one of the engines of the Chilean
economy, says Juan Pablo Matte, Secretary
General of Sociedad Nacional de Agricultura (SNA),
the agricultural association. Our agro-industry is
no longer content with the mere export of natural
resources. There is a new dynamism with regards to
adding value to these products, and moving beyond
being just a commodities exporter.
If Chile is successful in its bid to become a food
power, it will be among the worlds ten largest food
exporters (including the U.S., France, Belgium,
Germany, Holland, Canada, China, Spain, Italy and
Australia). This would be an important jump from its
current 17th position and would mean food exports of
$250 billion by 2015. Projections suggest that in the
future exports will reach $62 billion by 2030 and the
sector will account for more than 35% of Chiles GDP,
employing one in three workers.
Chile is a leading producer and exporter of some
of the worlds fnest fruits, berries, vegetables, fsh,
shellfsh, poultry, meats and premium wines. It is the
worlds largest exporter of fresh grapes (29%), plums
(23%), and fresh fsh fllets (22%). It is the worlds
second largest exporter of frozen pacifc salmon
(30%), avocados (16%), and other frozen fsh (10%).
And it is the worlds ffth largest exporter of wine (5%)
and frozen pork meat (5%).
The area cultivated for fruit has increased from 221,000
to 265,000 hectares over the 2004 to 2009 period,
representing an increase of almost 20%. However, the
share of cultivated land devoted to subsistence crops
(such as wheat and maize) has seen a substantial
drop in acreage, although they still have the largest
number of hectares in cultivation. As a result, wheat
imports have grown four-fold since 2004. Beef is also
a large import item, about 100,000 tons each year.
Chilean foods win awards for their taste and quality
in international food competitions. For example,
Chilean olive oils have garnered international acclaim
at competitions including the Leone DOro dei Mastri
Oleari 2006, Parma, Italia, and the Sol dOro 2006,
Diploma di Gran Menzione. In addition, a Chilean
cheese received the American Cheese Society award,
while Chilean lamb was recognized as the Best
Organic Product from ANUGA.
Favorable conditions
Chiles prodigious food production is the result of the
convergence of several factors.
Chile still has vast untapped agricultural potential,
Matte says. We have four important competitive
advantages.
First, Chile is 4,300 kilometers long and extremely
narrow, creating a diverse geography and unsurpassed
climatic range and soils that are suitable for growing
a wide range of foods. The mild, Mediterranean-style
climate of Chiles central region is ideal for growing
fne-quality fruits and vegetables, both traditional as
well as exotic varieties, which the country exports to
70 markets.
As a southern-hemisphere country, Chile also has off-
season production, which means its produce does
not compete with European or American produce
during their peak seasons. Chile can thus supply the
fresh fruits and vegetables to northern hemisphere
countries during their winter months.
Moreover, the protective natural barriers of ocean,
high mountains, desert and glaciers have protected
Chiles meat (pork, lamb, and beef) and poultry
industries from the parasites and diseases common
to most other countries. Chile has never experienced
any known cases of avian fu or mad cow disease.
In addition, Chile is free from all animal diseases
registered on List A of the World Organization for
Animal Health (OIE).
Lastly, Chile has a network of trading arrangements
with 58 countries meaning Chilean producers have
preferential tariff access to markets that represent
over 80% of global GDP and almost half the worlds
population. And by 2012, 74% of Chilean agribusiness
exports will be duty free.
Ministry of Agriculture : www.odepa.gob.cl
Sociedad Nacional de Agricultura: www.sna.cl
Chilealimentos: www.chilealimentos.com
foodies
Chiles top 5 agro-industrial companies
Company Products Sales 2010 ($M)
Agrosuper Poultry, pork,
sausages, salmon
1,800
Supercerdo Pork 660
Watts Fruit derivatives,
cooking oils, pasta,
pork, wines
624
Super Pollo Chicken 595
Soprole Dairy, fruit
derivatives
579
Growing bounty
Annual exports of Chilean agricultural products ($B)
Source: ProChile
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010
Unbeatable climate
Chiles climate and geography were the main attractions for
Pioneer, a world leader in the development of agricultural
biotechnology and the production and sale of seeds
Located in the Azapa Valley in the Arica Region in northern
Chile, Pioneers Experimental Agroindustrial Station
specializes in the development of corn seed hybrids,
soybeans and canola.
The unbeatable natural and climatic conditions of the
Azapa Valley make it a unique place for the development of
specialized agriculture and seed research. Together with the
important support of CORFO, this made us decide on Arica
to set up one of Pioneers most important centers in the
world, says German Alessandri, External Afairs Manager for
Semillas Pioneer Chile.
Pioneer, a subsidiary of the U.S. chemical company DuPont,
chose Arica for the research center because of the regions
natural advantages, such as its year-round dry climate
and the fact that the valley is isolated from the countrys
agricultural zone.
And because Chile is in the southern hemisphere, Pioneer
can take advantage of the months in which the northern
hemisphere is in winter. This extends the total number of
months in which continuous research can be made to nearly
nine months a year. This means costs savings and longer
research time.
The CORFO-InvestChile program provided Pioneer with
guidance during the evaluation and development of the
business, assistance in collecting information, and granted
fnancial incentives to the company for project development.
Pioneer employees 96 employees permanently and 210
temporarily including professional researchers and technicians
in the area.
SucceSS Story
Chile is a leading food producer and exporter.
Agriculture
F
or trading in stocks, bonds, currencies and other
fnancial instruments, Chilean investors and
institutions turn mostly to the Bolsa de Comercio
de Santiago (BCS), the stock exchange. Founded
in 1893, the Santiago Stock Exchange is hosted in
a venerable old building, and boasts a beautiful
trading foor, where the high-tech digital displays vie
for attention with marble foors, wood panelling, and
stuccoed walls.
For traders wanting a complete electronic alternative,
Chile offers the Bolsa Eletronica de Chile (Chilean
Electronic Exchange).
At the creation of the BCS in 1893, ffty companies
register for trading. Twenty years later, the BCS
construction of the actual building started, and the
mural by artist Pedro Subercaseaux was completed
in 1917.
In 1958, the IGPA index was launched, followed in
1977 by the more selective IPSA index.
In 1981, two events of importance occurred. The
frst was the introduction of computers in the back
offce and the trading systems. The second had a
strong indirect effect: the creation of privately-owned
pension fund administrators (to handle the obligatory
social security system), which were to become the
largest institutional investors and users of the BCS.
In good
company
Chiles main stock exchange, the Bolsa de
Comercio de Santiago, has performed well
over the past decade. It relies more on bonds
and debt instruments than on a less-active
equity market.
In 2010, sights have been set on greater integration
with exchanges in Peru and Colombia, through the
MILA, Latin America Integrated Market.
Proof the value of the BCS? The fact that one of its
licenses (enabling trading) sold for about $4 million
in 2008.
The Santiago stock exchange has seen healthy
growth rates over the past years, even weathering the
2008 fnancial crisis with serenity. In 2008, the stock
exchange managed to grow by 3.1% (in terms of
traded value) over the prior year, whilst the rest of the
world was licking its fnancial wounds.
For its activity, the stock exchange relies less on equity
trading (i.e. company shares), and more on bonds and
monetary instruments. Equities represented only 7%
of the value traded in 2010, explains Pablo Valdes,
the chairman of the Santiago Bolsa de Comercio in
the exchanges annual report. Whilst 51% of the
trading was in money market (add explanation), and
27% in fxed income instruments.
The Santiago stock exchange presents a mixed
picture in terms of performance. Even though the
number of listed companies has been in slight
decline, the market capitalization has increased
dramatically over three-fold to represent almost
$350 million in 2010.
As for the number of companies listed, it stood at
about 230 in 2010, a slight drop from the 2001 tally of
250 companies. In fact, the stock exchange typically
only sees only one or two IPOs each year. 2005 was
a banner crop, with fve companies listed capturing
$500 million in fresh capital. In 2010, the single listing
generated new capital of almost $200 million for the
new market entrant.
Although the IPO market is limited, the stock exchange
is oft-used by existing listed members to raise fresh
capital for ongoing expansion projects. In 2010, the
listed companies raised a total of $3.5 billion in fresh
money via bonds and other issues.
The activity of the stock exchange closely refects the
economic make-up of the country, with commodity
companies being the most active members,
representing about 27% of the free foating trading.
Utilities and retail are the next most active, also with
about 25% each. Industrial goods and FMCG only
represent 12% and 5% respectively.
To bolster its growth and regional position, the Bolsa
Comercio has extended to operators beyond the 230
listed companies. There are 60 approved issuers for
the money market instruments, and 143 issuers for
the fxed income market. These players include not
just famous banking names (e.g. Santander or Banco
Chile), but also blue-chip industrial operators, such as
Coca-Cola or highway operating companies. There are
also 118 issuers in the offshore market, specializing in
foreign currency denominated instruments.
For further information
Bolsa de Comercio de Santiago
www.bolsadesantiago.com
Bolsa Electronica de Chile www.bolchile.cl
BCS makes available a 110-page annual report (search
for Resea de valores 2010)
Stock market name Cos listed Year founded Market cap ($ Bill) CEO Website
Bolsa de Santiago 268 1893 $342 Jose Antonio Martinez bolsadesantiago.com
Bolsa Comercio de Buenos Aires 105 1854 $445 Adelmo Gabbi bcba.com.ar
BM&F - BOVESPA (Brazil) 470 1890 $1,540 Edemir Pinto bmfbovespa.com.br
Bolsa Mexicana de Valores (Mexico) 157 1933 $749 Luis Tellez Kuenzler bmv.com.mx
Source: BCS Annual Report 2010
Equity
shares
7%
Currencies
19%
Fixed
income/Money
market
74%
Trading money mostly
BCS trading by type, 2010
Source: BCS Annual Report 2010
0
100
200
300
400
500
600
700
800
900
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
T
r
a
d
in
g
v
a
lu
e

(
$

B
ill)
Lots of action
Evolution of BCS trading value
As of 1984, another growth driver was the government
privatization process, which favored new listings on
the BCS. The year 1990 saw further expansion of
activities, namely dollar currency trading, and futures
contracts.
The Santiago stock exchange has seen healthy growth rates.
Capital Markets
Growth factors
What will drive the further growth of the Chilean
fnancial sector? At least three factors shine through.
The underlying economic growth of Chile will have its normal
multiplier efect on the sector. Chile has a good economic
system that weathered the recession well and enables the
country to pull ahead quickly. Growth will be derived from the
reconstruction and rebuilding projects, purports Mr. Hassi of
MetLife. The expected 6% growth for 2010 will probably be
followed by higher levels thereafter, he pursues.
Novel marketing techniques, combined with a non-saturated
market also mean growth will remain healthy in the near
future. We experimented with direct marketing and
telemarketing in 2007, and although it represents a small
portion of sales, it shows good promise, says Hassi of
Metlife. Another growth factor has been the extension of our
network of branches nationwide.
The increasing globalization of our business is a key driver,
explains Mr. de la Barra of Compass Group. The outlook is
very positive outlook for the next fve years. Much investment
is coming in. For Compass, the sectors showing the best
promise include healthcare, education, infrastructure and real
estate, which never sufered from a bubble so the market
fundamentals are strong. Education is one area I would
stress, says Mr. de la Barra. There is a current defcit which
needs to be addressed. There is also a need for school
construction, especially post-earthquake.
Banking
T
he best benchmark for the growth of the Chilean
fnancial sector? As in many countries, it seems to
be the sprouting number of skyscrapers that dot Las
Condes, the neighborhood of Santiago that hosts many
of Chiles roughly 20 banks, 60 insurance companies,
and numerous asset management companies.
Finance is Chiles hottest economic engine, thanks
in large part to the countrys stability, down-to-
earth economic policies, and governance. Financial
services already represent 16% of Chilean GDP, as
much as mining.
Chile remains a small fnancial platform, explains
Alejandro Alarcon, head of ABIF, Chiles banking
association. Our total banking assets are the same
as that of one large Brazilian bank.
Although small, Chile lies on sound bases, as explains
Lionel Olavarria, chairman of BCI, Chiles third largest
bank: Our 1982 fnancial crisis remember the
petrodollars? ensured that we cleaned up our banking
framework and instilled some healthy competition. It
also freed our currency from its previous dollar peg.
One of the most important drivers of our fnancial
sector is the tremendously high savings rate, pursues
Joaquin Echenique of Primamerica Consultores, a
consulting frm specialized in insurance. Because
there are no company retirement plans, and only a
limited government retirement plan, almost two-thirds
of the Chilean working population have private pension
plans, managed via fve asset management frms.
The Chilean savings rate is currently an astounding
21.6%, placing Chile in the ranks of the top frugal
countries worldwide. The countrys mandatory
savings system for all dependent employees certainly
helps. Also of assistance to the fnancial sector is the
fact that the Chilean government has been in regular
budget surplus for the past years.
Growth via openness
Surely the openness of Chiles fnancial market
namely to foreign investors has been an important
driving factor. Under our constitution, domestic and
foreign investors have the same rights. The suspension
of the reserve requirement, and the elimination of the
one-year minimum requirement have also been strong
growth factors, emphasizes Mr. Alarcon.
Chiles banking sector underwent some structural
reform in 1997, when the capital market laws helped
enforce market deregulation. Further openness was
achieved in the early 2000s under president Ricardo
Lagos, when the capital account was opened, and
tax levels were reduced (namely capital gains tax and
withholding tax).
Chile currently has 20 banks, of which the largest is
Santander, followed by Banco de Chile (see table).
Foreign banks poured into the country when the
sector opened up to foreign investment. Aside from
Santander, other players from abroad include Scotia
Bank, Itau, Deutsche Bank, HSBC and others. There
is still good growth potential for banks, as there
subsists a substantial number of Chileans without
bank accounts, says Mr. Olavarria of BCI.
With this vast pool of savings to invest, it will come as
no surprise that Chile has experienced fast growth.
Mutual funds have had 20% compound annual
growth over the past ten years, expounds Valentin
Carril of Principal Financial. Our biggest challenge
is to fnd good investments in Chile, especially since
Chile Central Bank bonds yield only around 3%.
Further growth can be expected due to Chiles low risk
premium, as Felipe Bosselin, deputy chairman of the
Association of Mutual Funds, explains: Our prudent
macro-economic management has translated into a
low risk premium, which will mean a lower external
funding cost for Chilean companies and therefore an
increasing investment portfolio.
It does not help that Chiles stock exchanges are not
the most dynamic. We need to work on that front,
says Mr. Alarcon. Our Bolsa de Comercio is old and
not very deep with an insuffcient amount of titles
traded. The more recent Bolsa Electronica, which
operates between Chilean banks, could speed things
up. Another boost could come from commodity
markets, especially since Chile is home to so much
mineral production.
The extension of the Chilean exchanges could also
facilitate the integration with other South American
countries, as explains Mr. Olavarria of BCI: I trust our
new government to be more active in this area, and
also hopefully in helping to create a separate high-
yield market for small-cap companies. Chile needs
more investment opportunities, especially since
many companies are family-controlled and therefore
inaccessible to outside investors.
Money fows south
Chile is developing a strong fnancial services sector, based on its political stability,
strong savings rate, and low lending rates.
ABIF (Association of Chilean Banks and Financial Institutions)
www.abif.cl
Jorge Awad, Chairman, + 56 2 892 2802
Chile has one of the most open fnancial markets in Latin America.
SucceSS Story
Breakdown of assets in the
Chilean nancial system 2009
Source: Principal Financial, Sept. 2009
Banking system,
$112 billion
AFP (pension funds) ,
$117 billion
Insurance
assets,
$29 billion
Mutual funds,
$32 billion
F
u
n
d
a
c
i
n
Im
a
g
e
n
d
e
C
h
ile
Chiles
insurance
sector grows up
With a prosperous economy and an open
market, Chiles insurance sector expanded
powerfully during the last decade. Now as
the demand for new insurance products
increases, the market is getting more
competitive but looks set to keep on growing.
C
hile has one of the fastest-growing insurance
markets in Latin America. The value of total
insurance premiums more than tripled in Chile over
the last decade, from $2.7 billion in 2001 to $9 billion
in 2010. During most of those years the insurance
sector grew faster than the mighty Chilean economy
18.1% in 2010 compared to GDP growth of 5.2%.
Moreover, Chileans spend a higher percentage of their
incomes on insurance than any other Latin American
country. In 2010, they spent 4.1% of their GDP on
insurance, far above the 3.2% posted in 2001.
Similarly, per capita spending on insurance, more
than $528 in 2010, was the highest in Latin America.
The strength of Chiles insurance sector can be
attributed to the countrys sound economic situation,
the development of a long-term capital market,
its pension system, and its openness to foreign
participation which started in the early 1980s.
Chile was the frst Latin America country to open its
market to foreign insurance, says Joaquin Echenique,
a consultant with PrimAmerica Consultores which
specializes in the insurance industry. Foreign
ownership of local insurers was never restricted as it
was in most of the neighbor countries. Licensing an
insurance company is quite straightforward, although
approval from the superintendent is required, as well
as $3.6 million in capital.
Stability is another factor. Due to tight supervision by
the Chilean insurance regulator (the Superintendencia
de Valores y Seguros or SVS), plus reasonably
conservative regulations, Chile has maintained the
same number of insurance companies, an average of
54, for more than a decade.
The supervision at the central level explains why
insurance failures are few and far between, Echenique
explains. The last failure, seven years ago, amounted
to less than $70 million, a drop compared to AIG. The
failure statistics in the U.S. are far worse.
The good life
Top 5 life insurance companies in 2010 based on premiums ($M)
2001 2010 Increase
Metlife Chile 118 641 443%
Consorcio Nacional 276 494 79%
Chilena 135 467 246%
CorpVida 106 426 302%
Inter Vida y Ahorro 44 340 673%
Source: FECU
Chiles insurance sector is usually divided into life
insurance and general insurance (property and
casualty). Life insurance is by far the largest of the two
accounting for about two-thirds of the total insurance
market, and its growing fast. Between 2001 and 2010,
life insurance premiums tripled from about $2 billion
to nearly $6 billion, growing at an average annual rate
of 13%.
The dominance of life insurance is due to Chiles pension
system which obligates workers to save in private
pension funds. On retirement, the money is usually
transferred from the fund to a life insurance company
to buy annuities. Although that is changing as can be
seen in the decline of annuities premiums, which fell
from 65.5% to 38.2% between 2001 and 2010.
On one hand, there has been a drop of retirement
pensions due to changes on early retirement
requirements and also due to lower return of pension
funds because of the 2008 crisis, says Sergio Ovalle,
CEO of BiceVida, one of Chiles largest life insurance
companies. On the other hand, we have witnessed
an increase in market share for the other life products.
This comes from a growing concern for different life
insurance products by the population.
These different products now include individual
pension savings schemes similar to the 401k in the
U.S.; group life policies as most companies now offer
their employees health and life insurance; mortgage
and loan insurances which are usually required by
fnancial institutions; and disability and survivorship
insurance.
Meanwhile, the non-life insurance sector, despite
having a smaller share of the market, has grown faster
than life insurance. Non-life sales nearly quadrupled
between 2001 and 2010 going from $740 million to
more than $3 billion. The sector grew at an average
annual rate of 17% compared to 13% for life, now
non-life occupies a third of the entire insurance sector
whereas ten years ago it had a fourth.
There are many reasons for the growth of non-life,
says Eduardo A. Couyoumdjian, CEO of General
Insurance for Chilena Consolidada, which is 90%
owned by the Swiss insurer Zurich.
Events such as the reconstruction after the 2010
earthquake and the subsequent rise in housing prices
contributed. Privatization of the construction industry
did as well. Most public construction projects such
as schools and hospitals are now built by private
companies which are required to have insurance
to bid on projects. Chiles developing economy is
another factor.
Chile is getting a mature economy, we are in the
OECD, poverty is reduced, the country is expected to
reach 7.2 percent GDP this year, and there is a higher
mentality for insurance, says Couyoumdjian.
While the number of insurance products being sold
have remained the same, the sales channels have
become bigger and more competitive.
The market has changed aggressively in the last
ten years, Couyoumdjian says. At least 25% of
multiple lines of business now go through large retail
department stores like Falabella, Almancen Paris and
Ripley, or through insurance banks. So now we are all
in bed with them and its quite delicate.
SVS (Superintendencia Valores y Seguros)
www.svs.gob.cl
Strong in general
Top 5 general insurance companies in 2010 based on
premiums ($M)
2001 2010 Increase
RSA Seguros S.A. 68 442 550%
Penta Security S.A. 66 343 277%
Mapfre Seguros
Generales
52 299 475%
BCI Seguros Generales 30 278 827%
Liberty Seguros S.A. 65 262 303%
Source: FECU
General versus life insurance
share of the market
Source: FECU
27.2%
33.7% 31.9% 30.5% 32.8% 33.0% 33.3% 35.0% 34.8% 33.9%
72.8%
66.3% 68.1% 69.5% 67.2% 67.0% 66.7% 65.0% 65.2% 66.1%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Life Insurance General Insurance
Chileans spend a high percentage of their income on insurance.
S
V
S
Insurance
L
atin Americas favorable economic outlook is
driving the offce real estate markets as well as all
other commercial facilities. The regions total offce
supply has increased an average of 6% a year over
the past decade and is expected to grow by another
8% a year over the next two years to satisfy demand,
real estate company Colliers International says in their
end-of-year report on the Chilean market.
In Chile, the dynamic growth of the economy is
refected into both industrial and offce markets. Brazil
and Chile, among the strongest regional economies,
report the lowest vacancy rates in Latin America,
averaging between 3% to 5% by mid-2011. In
Santiago, offce vacancy fell to 2.6%.
Despite the tight market, rents have stabilized for
Class A buildings in the Chilean capital and are among
the lowest in the region. In Rio de Janeiro, for example
average asking rents rose almost 8% during the frst
half of 2011 to more than $81 m
2
/month. This was
driven by strong rental growth in the citys numerous
submarkets.
But in Buenos Aires and Santiago, rental values
have remained stable. Currently at just over $27 m
2
/
month, Santiago offce rents are slightly lower than
the average at year-end 2010.
The low offce vacancy rate in the Chilean capital will
begin to ease up next year with the opening of the
Costanera Center, the countrys fagship real estate
project.
The $600 million project will consist of four skyscrapers.
The 70-story main tower is set to enter to the market
in April 2013 and will be the tallest in Latin America at
more than 300 meters high. It will have a total surface
area of 694,000 m
2
, split between offce and retail
Spurred on by a strong economy and optimistic
growth expectations, Chiles real estate market is
growing rapidly. In addition to the Costanera Center,
the new Plaza San Damian and Rosario Norte 100
buildings in the Las Condes submarket of Santiago
which opened in 2011 will provide almost 30,000 m
2
of Class A offce space.
In Santiago the supply of offce space is only beginning
to match demand, particularly in class A offce space.
The total new supply of offce space in Santiago in
2010 was 161,500 m
2
, an increase of 148% on 2009.
Net absorption was up by 74%. The net absorption of
existing space has been high and is increasing. One
cause of this is the 2010 earthquake which encouraged
tenants to migrate to newly-constructed buildings.
Expanding companies are seeking new offce space
despite the recent delivery of large buildings.
In the industrial market, both demand and supply
are increasing, but in balance, with demand slightly
outpacing supply. This is so even though new supply
has been added at a very high rate.
In Santiagos industrial sub-sector, there has been
an intensifying pickup from 2010. Chiles real
estate sector has for years broadly kept supply and
demand for commercial property in balance. Limited
development before the current growth surge began
in 2010 has produced just enough supply to ensure
low vacancy rates.
The absorption in class A+ and A offce building in
Santago reached 35,543 m
2
in the second quarter of
2011, according to a Colliers Research and Forecast
Report on Santiago. While this was a slight decrease
from the previous quarter, the pace of absorption is in
line with an expanding market.
Mining, engineering and energy companies absorbed
much of the offce space. The areas of Santiago that
saw the most absorption were the El Bosque/El Golf
and the Nueva Las Condes areas.
Real estate
boom
Santiago class A+/A ofce market index by neighborhood (Q2 2011)
Submarket Inventory (m
2
) Vacancy rate Average Lease Price ($/m
2
) Average Sale Price ($/m
2
)
El Bosque/El Golf 790,185 1.39% 28.80 2,927
Nueva Las Condes 384,976 6.34% 25.55 2,602
Providencia 178,180 0.35% 24.15 2,416
Santiago Centro 295,542 1.16% 19.04 1,951
Vitacura 47,961 4.27% 24.15 2,462
Ciudad Empresarial 4,826 0% n.a. n.a.
Source: Colliers International
space. The main tower itself will provide Santiago
with 128,000 m
2
of new offce space.
The emblematic Costanera Center was the icon of
the recession, paradoxically it has become the icon
of the real estate reactivation, a spokesperson for
Colliers says.
Santiagos offce space supply is set to increase
massively when the Costanera Center, the
countrys fagship real estate project, opens.
National Chamber of Real Estate Services
www.acop.cl
Real Estate Developers Association
www.adi-ag.cl
Source: CBRE
Good value
Cost of oce space in major Latin American cities as of Q2 2011
0 10 20 30 40 50 60 70 80 90
Lima
Mexico
City
Buenos
Aires
Santiago
Bogota
Caracas
Rio de
Janeiro
Average monthly rent ($/m
2
)
Sanhattan skyscraper
The Costanera Center is more than just another skyscraper,
according to the buildings developers Cencosud. The mega-
project is an example of the concept of neo-urbanism, an
urban design movement against urban sprawl.
The Costanera Center is designed to make maximum use
of the space on which is it built. Costanera Center has built
more than 700,000 m
2
in an area of 47,000 m
2
. It will use
the latest technologies to reduce energy use and privileges
a concentration of residential, commercial and professional
activities. This concept limits the number of roads needed,
reduces trafc and improves pedestrian spaces.
The $600 million Center will include two hypermarkets;
a Jumbo, an Easy, Santa Isabel, shops Paris, Ripley and
Falabella, a large food court, a gastronomic walk with
restaurants and cafes, 12 cinemas, bowling alleys, medical
health centers, ftness center and parking to accommodate
5,500 vehicles into six levels.
The tallest of the Centers four buildings, named the Gran
Torre Santiago, was designed by Argentine architect Csar
Pelli, one of the most renowned architects in the world,
designer of the Petronas Towers in Malaysia, and the World
Financial Center in Hong Kong.
The Gran Torre itself will be 300 meters in height, making it the
tallest building in South America and the sixth highest building
in the world. Two other buildings will be 170 meters high.
The Costanera Center is being built in the Sanhattan
fnancial district of Santiago between Providencia and Las
Condes. Construction was put on hold in January 2009 as a
consequence of the recession but resumed later that year.
The Center is scheduled to be completed in 2013.
Closeup
The growth of the economy is refected in Chiles real estate market.
P
la
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M
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Real Estate
Retail is
ringing
Good news for retailers. The forecast is for
strong growth across all retail sectors as
Chileans have more disposable income due to
the countrys strong economic growth.
C
hile has become one of the worlds most attractive
countries for retailers. It placed third for retail
development in a 2011 study of 30 emerging countries,
moving up three places from 2010. With Brazil and
Uruguay ranked frst and second respectively, and
Peru eighth, South America had four countries in the
top 10 for the frst time.
The region is ready for that next wave of modern
retail growth, says Hana Ben-Shabat, a partner at
management consulting frm A.T. Kearney, which has
conducted the study for ten years.
With a population of almost 17 million, Chiles
economy grew at a 9.8% annual rate for the three
months ended March 31, 2011, compared with 6.8%
for Uruguay and 4.2% for Brazil. Chiles retail sales
are forecasted to grow 14.5% by 2015, from $53
billion in 2011 to $61 billion, according to Business
Monitor International.
Chiles retail sector is growing because of high
consumer spending power, well developed physical
infrastructure, a business-friendly regulatory
environment and large urban population. Almost
88% of Chileans live in urban areas, with 40% in the
Santiago metropolitan area alone. In 2009 about 44%
of supermarket sales were in the metropolitan area.
By 2015, more than 90% of the countrys population
will live in urban areas.
Strong growth is forecasted across all retail sectors up
to 2015, including food and drink, mass grocery retail,
over-the-counter pharmaceuticals and automobile
sales. With GDP per capita higher than in Argentina
or Brazil, Chiles consumer electronics markets is one
of the most sophisticated in Latin America. Sales here
are forecast to rise nearly 36% to more than $3.23
billion by 2015.
Along with sales, employment fgures are also rising.
By the end of 2011, the supermarket industry foresaw
10,000 new jobs being created due to growing
demand, a 9% increase over 2010.
Chiles retail market is highly concentrated with fve
chains dominating 60% of sales. Cencosud and Walmart
lead the supermarket industry. Walmart entered Chile in
2009 and now has almost 300 stores there.
We were aware of Chiles political, economic and
institutional stability as an incentive for foreign
investment and of its interesting network of bilateral
trade agreements with a wide range of countries, says
Eduardo Solrzano, President and CEO Walmart Latin
America. This made Chile the right place to invest.
The department store sector is dominated by Falabella,
Almacenes Paris (part of the Cencosud group) and
Ripley. La Polar is also a dominant player but it has
had fnancial trouble and shares in the company fell
signifcantly in 2011.
While Chile has become one of Latin Americas most
promising retail markets, foreign companies may
encounter hurdles there. High levels of growth may
be offset by consumer credit volatility. In addition,
outside of the largest cities, the population is largely
rural, which limits expansion opportunities.
Still the country is a big enticement for foreign
retailers. Besides Wal-Mart, Gap, the largest
U.S. clothing chain, opened its frst store in Latin
America in Santiago in October. The store opened
the same week Gap revealed plans to close 189
stores in the U.S.
Chile is a great match for Gap brands aesthetic
and target customer, said Stefan Laban, Managing
Director of Strategic Alliances for Gap Inc. With a
nearly $6 billion apparel and footwear market, a retail
sector that makes up 9.4% of the countrys GDP, and
a proven customer base interested in American style
and brands, Chile represents a natural extension for
our brands.
But because of the concentrated market, some Chilean
chains are expanding regionally. Several retailers
have opened stores in Peru, including Cencosud (64
supermarkets and hypermarkets) Ripley (15 stores)
and Falabella (57 supermarkets and stores).
Other Chilean companies have already opened shop in
Colombia including Falabella, Cencosud, LAN Airlines,
and fuel and forestry conglomerate Copec.
Top retailers
Rank Company Sales
2010 ($M)
Increase
over 2009
Profts
2010 ($M)
1 Cencosud 13,226 26% 633
2 Falabella 8,923 28% 883
3 D&S (Walmart) 4,861 7% 89
4 Mall Plaza 3,653 68% n.a.
5 Hipermercados Lider 3,320 19% n.a.
Source: AmricaEconomia
Balancing factors
Source: A.T. Kearney
100% is most attractive and most saturated
Market attractiveness Market saturation
0
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20
30
40
50
60
70
80
90
100
Brazil Uruguay Chile Peru Mexico Colombia Argentina
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Fulflled expectations
Wal-Mart, the leading supermarket chain in the U.S., made
its debut in Chile in 2009 after acquiring a majority stake in
the local D&S chain. This was the largest foreign investment
materialized in Chile in 2009. Wal-Mart now has almost
300 stores in Chile. Eduardo Solrzano, Wal-Marts President
and CEO for Latin America, responds to questions about the
companys experience in Chile.
Q: What was Wal-Marts impression of Chile before
entering the market?
A: We had a very good opinion of Chile. We were aware of its
political, economic and institutional stability as an incentive
for foreign investment and of its interesting network of
bilateral trade agreements with a wide range of countries.
Together with its solid macroeconomic fundamentals, its
business climate and its open and competitive economy.
Q: What were the key factors for Wal-Marts decision to
invest in Chile?
A: In D&S we found a solid, stable and serious company, with
corporate values similar to ours, which promised to facilitate
the future integration of the two companies. In addition, Chile
ofered excellent conditions in terms of a propitious economic
and institutional environment for doing business.
Q: What characteristics made Chile attractive for
positioning your regional expansion strategy?
A: The decisive aspects included its political, economic
and social stability, together with the respect that exists
for government institutions and the role they each fulfll. In
addition, Chiles growth rates over the past two decades,
accompanied by controlled infation, are an undeniable
attribute for any investor.
Q: In retrospect, how do you evaluate your venture
through D&S?
A: Very positively because it has fulflled our expectations.
We are happy with the decision we took three years ago and
have found very good conditions for the development of our
projects, which will allow us to continue growing through
innovative and sustainable initiatives.
suCCess story
Santiago Chamber of Commerce www.ccs.cl
Strong growth is forecasted across all retail sectors.
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T
he February 27, 2010, earthquake that struck Chile
caused an estimated $20 to $30 billion in damage
to the countrys infrastructure, including 400,000
homes that were either damaged or destroyed, not
to mention dozens of schools, hospitals and other
public facilities.
The total cost to the insurance industry from the
earthquake was estimated at up to $7 billion, which
could increase insurance premiums for companies
with assets in Chile.
Nevertheless, the task of reconstruction has given
private construction companies a boost and the sector
is projected to grow 11.3% in 2011, according to the
Chilean Construction Chamber (CChC), an association
of Chiles biggest construction companies.
Part of the impetus to grow is coming from the
Chilean government, which plans to spend $14 billion
on infrastructure development by 2014, with $6 billion
coming from the state budget and $8 billion sought
from the private sector.
Much of the investment will be spent on public
infrastructure, including eight new hospitals with a total
value of $1.4 billion. Homes are another priority. In 2010
the government replaced 30,000 homes and repaired
another 70,000. In 2011 it will deliver 220,000 grants that
are expected to deliver more than 160,000 new homes.
In 2010, 1,000 schools were repaired and in 2011 and
2012 another 1,000 will be repaired and 40 rebuilt.
Beyond earthquake reconstruction, the government has
several development projects coming up. One of these
is expanding the passenger terminal at the Santiago
International Airport, the sixth busiest airport in Latin
America by passenger traffc. The airport has operated
Construction
revival
Chile has suffered some devastating blows
recently, including the 2009 fnancial crisis
and the 2010 earthquake. Like many sectors
of the economy the construction industry is
coming back strong.
in excess of its 9.5 million passengers/year maximum
capacity since 2008 and is projected to need to be able
to handle 50 million passengers/year by 2045.
Furthermore, the government has also announced
plans to improve the countrys roads, including
fve new urban highways with an estimated total
investment of $2 billion. Several new prisons will be
built as well to relieve the overcrowding and poor
conditions of existing facilities.
Private sector
Construction is one of the main drivers of the Chilean
economy. In 2010 the sector represented 7.3% of
Chiles GDP and employed 8% of the countrys
workforce of 7.3 million people.
Private construction employment is likely to peak
in 2012 due to increased mining activity. Mining
construction could account for more than 35% of all
private construction jobs (about 39,000) by December
2012, according to a report by the Corporation
of Technology Development and Capital Goods
(Corporacin de Desarrollo Tecnologico de Bienes de
Capital or CBC).
The copper mining regions Atacama and Antofagasta
are expected to attract half of the countrys private
construction workforce, while Santiago will get more
than 22 percent, the most of any single region.
According to the estimates of the CChC, 70% of
the investment in construction is associated with
infrastructure projects particularly mining and energy.
By 2020 mining construction projects should amount
to almost $70 billion.
As long as China wants our copper we will continue
to have investments in mining, says Javier Hurtado,
CChC Research Manager. Moreover, 30% of Chiles
energy is consumed by mining.
In other sectors, tourism-related construction includes
31 hotels, resorts and similar lodgings scheduled for
construction by 2013, most (58%) of which will be in
the central Valparaso and metropolitan regions.
The real estate market is also helping consolidate the
recovery in construction. During the second half of
2010, low long-term interest rates, improvements in
employment levels and higher incomes contributed to
the recovery.
Source: CBC
Bring a hammer
Projected investment by construction type 2010-2014 ($B)
1 2 3 4 5 6 0
Residential
Tourismrelated residential
Oces
Hotels and casinos
Parking garages
Airport terminals
Prisons
Hospitals, clinics
Commercial centers
Other
Top Chilean construction companies (2010)
Company Sales
($M)
Profts
($M)
Founded
Sigdo Koppers 1,800 113 2005
Salfacorp 1,500 47 1929
Socovesa 551 25 1982
Besalco 537 36 1995
Claro Vicua Valenzuela 178 12 1958
Built to last
Sacyr Vallehermoso is a leading Spanish construction company
based in Madrid. In 1997, Sacyr won its frst concession
contract in Chile, which was for the Los Vilos-La Serena section
of Route 5 (the Pan-American Highway) north of Santiago.
Since then, its subsidiary Sacyr Chile has completed civil
works and infrastructure projects worth $2.7 billion. It has
won nine major highway concessions either directly or with
consortia, including a 227-kilometer section of Route 5
between Vallenar and Caldera that opened in November 2011.
That same month, Sacyr Chile and Agua Santa, one of
Chiles largest construction frms, was awarded a $68 million
contract for a 66-kilometer access road to the El Morro mine
in the Atacama Region.
Chile was, is and will be absolutely strategic for the
companys future, says Sergio Gritti Bravo, General Manager
for Sacyr Concessions Chile. Chile was Sacyr Vallehermosos
frst international project and so started a process of
internationalization that opened Sacyr to the world.
Gritti praised Chiles positive business environment, its deep
fnancial markets and well functioning institutions. We have
encountered a serious country, with clear rules, established
macroeconomic indicators and a legal system that protects
businesses, he says.
For the moment, Sacyr Chile is focused on completing two
new highway concessions now under construction, bidding
on new public works contracts and participating in new
business opportunities in the private sector, especially in the
growing mining sector. But it has bigger ambitions.
In the shortest time possible, we want to replicate in Chile
the diversifed business areas that the Sacyr Vallehermoso
group has in Spain, Gritti says.
While the abundance of offces created by the
excessive production in 2007 led to a decline in
production 2008-2009, the improvement of market
conditions beginning in 2010 allowed production of
offces to return to normal levels.
Accordingly, during the frst half of 2011, the number of
building permits approved for offces increased twice
in comparison with 2010, indicating the emergence of
new projects in the center of Santiago after four years
of inactivity.
Chilean Chamber of Construction
www.cchc.cl
suCCess story
Construction is an economic driver.
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Construction
Good
connections
When it comes to telecommunications, its
not by chance that Chile stands out among its
Latin American neighbors. Chiles geographic
isolation makes the ability to communicate
with the rest of the world essential to its
continued economic growth.
C
hile has one of the most advanced
telecommunications infrastructures in South
America. IMDs 2011 World Competitiveness Yearbook
ranks Chile frst in Latin America and 25th out of 59
economies worldwide. One reason it gives for this is
the countrys high-standard telecommunications.
Nokias Connectivity Scorecard 2011I ranks Chile
second worldwide and adds that in Latin America,
Chile outperforms Mexico and has widened the gap
with Argentina and Brazil.
The countrys internet and broadband penetration
rates are among the highest in the region, and this can
be attributed to its relatively high GDP, its receptivity
towards new technologies, and high competition in its
broadband market, the report states.
Chile is especially strong when it comes to adopting
new technologies, it adds. It was the frst country
in Latin America to introduce mobile WiMAX, IPTV,
wireless TVoIP, triple-play services, EDGE, and mobile
voice-to-text, and was second to introduce 3G mobile
services.
Competition for quadruple-play (mobile and fxed
telephone, TV and internet package) is heating up as
well.
The trend in Chile is more advanced than in other
countries of the region, says Sergio Rodriguez, a
telecommunications analyst with Fitch Ratings, who
adds that fxed telephony operators offer quadruple
play as a way to control disconnection rates as
subscribers move to mobile.
Penetration of mobile telephony in Chile is almost
twice the world average and on a par with rates in
industrialized countries. In one decade the number
of subscribers rose from 5 million to 19.8 million by
2010 when, in December, penetration reached 115.6
per 100 inhabitants.
Chiles telecoms operators are also investing in fber
optic networks. The government estimates overall
investments in fber optics will amount to $7 billion in
the next few years.
Investments will focus on fber optic to homes and
investments in mobile networks to improve data
(mobile broadband) services and investments in LTE,
says Patricio Soto, a telecommunications analyst
with IDC.
LTE, or Long Term Evolution, is a standard for wireless
high-speed data communication comprised of 3G
and 4G networks.
Furthermore, Chile stands out for internet use. In 2010
it had 1.8 million fxed-line broadband connections,
up 6.3% on 2009, with a household penetration rate
of 36.58%. Mobile broadband access has shown
explosive growtha 649% increase between January
2009 and December 2010, according to Subtel
(Undersecretariat for Telecommunications).
Including both fxed-line and mobile, Chile had more
than 3 million internet connections by December 2010.
The main trends in internet use include a drop in the
price of computers, increased broadband access
even among lower-middle sectors of the population,
an increase in average connection time, the growth
of social networks (about 26% of Chileans have
Facebook accounts) and the greater internet use for
transactional activities.
According to the Santiago Chamber of Commerce
(CCS), Chiles digital economy accounted for sales
of over $32 billion in 2010, up 10% on 2009, with
e-commerce accounting for $20 billion of that amount.
Chiles top telecoms operators
Rank Company Sales
2010
($M)
CEO Website
1 Entel 2,314 Antonio Buchi
Buc
entel.cl
2 Telefonica
Moviles Chile
1,802 Claudio Munoz
Zuniga
movistar.cl
3 Entel PCS 1,786 Juan Jos
Hurtado Vicua
entelpcs.cl
4 Telefonica
Chile
1,495 Ramiro Lafarga
Brollo
telefonicachile.cl
5 Telefonica
Telefonia Fija
1,027 n.a. movistar.cl
Source: Subtel
More mobile
Penetration of mobile telephony is now on a
par with rates in industrialized countries
0
5
10
15
20
25
2
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0
2
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1
2
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120
Total subscriptions millions Subscriptions per 100 inhabitants
Over the next few years, e-commerce is expected
to continue to show high growth. In the medium
term, the outlook is also extremely promising as
the market incorporates the generation that grew
up with computers, mobile telephones and online
social networks.
Subtel (Subsecretara de Telecomunicaciones)
www.subtel.gob.cl
Virgin Mobile targets Chile
Virgin Mobile Latin America has selected Chile for the initial
launch its mobile virtual network operator (MVNO) service
in Latin America. Virgin Mobile plans to launch the service in
Chile before the end of the frst quarter 2012.
We felt that the progressive economy, transparent and
inviting regulatory environment along with Chile being
right-sized for our frst launch in the region made it an ideal
market candidate, says Peter Macnee, President and CEO
of Virgin Mobile Latin America. In addition, Virgins heritage
of building a strong brand relationship with the youthful
market segment suits the generally young demographic of
this country.
Part of the UK-based group founded by Richard Branson,
Virgin Mobile will provide its MVNO services in Chile using
Movistars Telefonica Chile network.
Chile will be our frst launch with Colombia likely our
second, Macnee says. We are focusing much of our business
development eforts now on Argentina, Brazil and Mexico.
The company will invest more than $200 million to develop
MVNO service across Latin America over the next fve years.
Latin America is viewed as an attractive market for MVNOs
because of its signifcant population of more than 550 million,
strong economic prospects and attractive regulatory structures,
there are fewer than ten active MVNO operators in the region.
In a statement, Richard Branson said: We are excited to
have made such good progress towards launching our
frst mobile business in Latin America in Chile. This is an
exciting project for Virgin and we believe Virgin Mobile
Chile customers will be delighted by the services we will be
ofering them at launch.
An MVNO is a company that provides mobile phone services
but does not have its own licensed frequency allocation
of radio spectrum, nor does it necessarily have all of the
infrastructure required to provide mobile telephone service.
suCCess story
Chile telecoms sector tops its neighbors.
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C
hile is one of the worlds most attractive
destinations for investment in global services,
which is one of the worlds most dynamic industries.
Comprised of four sectors -- Information Technology
Outsourcing (ITO), Innovation Processing Outsourcing
(IPO), Knowledge Process Outsourcing (KPO), and
Business Process Outsourcing (BPO) the global
services industry is worth $280 billion worldwide is
expanding at a rate of 10% a year..
In the case of Chile, the industry grew from $200
million in 2006 to more than $700 million in 2010,
generating approximately 30,000 skilled jobs. The
US management consultants A.T. Kearney ranked
Chile 8th out of 50 countries internationally in its 2009
Global Services Location Index. It indentifed Chile as
the most attractive country for these services in Latin
America because of its political stability and favorable
business environment.
Its main strengths are in the high-value-added area,
which has boosted IT service companies such as Oracle
and TCS, and knowledge processing outsourcing
(KPO) activities in IT and biotech, the report stated.
Chiles IT market is one of the most developed in
Latin America, according to the Chile Information
IT sector
growing fast
Because of the high growth potential of global
services, Chile has made it a priority. As a result,
the country is now one on the worlds most
attractive destinations for this type of investment.
An excellent business environment
Evalueserve is a Knowledge Process Outsourcing frm that
produces specialized research for the U.S. and Europe. It
opened in Chile in 2006 adding to its operations in India,
where it was founded in 2000, China and Romania.
Evalueserve opened its Latin American operations center
in Chiles port city of Valparaso with an initial investment
of $2 million. With more than 200 employees, the
companys most important clients are in banking, healthcare,
telecommunications, construction and transport. Evalueserve
aims to provide outsourcing services to clients in North
America, Europe and Asia,
What were your selection criteria?
We studied six locations Sao Paolo, Mexico City, San Jos in
Costa Rica, Buenos Aires, Santiago, and Waterloo in Canada.
We evaluated the talent pool, business environment, and
the cost of doing business. Evalueserve decided to open the
center in Chile primarily because its clients in the Western
hemisphere did not want to work with the time diference
with India. It is now able to ofer a global reach and an
ofshore model also for customers in Spain and Portugal.
What did you see as Chiles main advantage?
In the three aspects that we analyzed Chile came out well in
comparison to the other countries in the region. It ofers global
services companies and excellent business environment
and has urban infrastructure that is by far the best in Latin
America. Chile is an example, in the region and worldwide, or
appropriate economic policies and political stability. Corruption
is non-existent and the crime rate is low. In addition, the
country is home to some of Latin Americas best universities.
What has your experience in Chile been like?
Very good. In addition to talent, Chileans have good work
habits and are innovative. I would also like to stress the
support provided by CORFO which ofers a very attractive
subsidy package to foreign investors. This demonstrates the
intention of developing string and clear policies to transform
Chile into a South American Silicon Valley.
What are your plans in Chile?
We want to stay in the country and continue growing. For
2014 we would like to have 500 employees working there.
We plan to incorporate new services and sooner or later to
install anther ofce in the country.
Technology Report Q3 2010 by Business Monitor
International. The report stated Chiles IT sector is
projected to grow at a compound annual growth rate
of 11% from 2010 to 2014. Chile posted IT sales of
$2.3 billion in 2010 and these are expected to grow to
around $3.4 billion by 2014.
Chile retains some strong IT market fundamentals,
including consumer affuence and a relatively
favorable business environment, the report states.
Chiles development as an offshoring location will
attract more investment in IT services, with sectors
like retail, distribution, fnancial services, telecoms
and healthcare all offering opportunities.
In 2009, the Chilean government in association with
the Chilean Association of Information Technology
Enterprises (ACTI) created Chile-IT, a not-for-proft
organization committed to fostering the national IT
industry. Chile-IT acts as a bridge between the local
providers and its potential foreign partners.
In the last year, the IT industry in Chile had a
turnover of $3 billion, says Gordana Stojkovich,
Executive Director of Chile-IT. The sector is growing
so fast because Chile has many of the attributes that
outsourcers are looking for. We have a large pool of
some of the most highly educated computer engineers
in the region, yet their wages are highly competitive
especially when you compare them to wages in the
United States or Europe. Moreover we have the
most state-of-the-art infrastructure in Latin America.
And of course there is a lot of government support
for developing new technologies and for attracting
international investors.
Currently more than 60 international companies
operate in Chile in the different areas of the global
services industry. Among others, these include JP
Morgan, Citigroup, Accenture, Sandvik, Yahoo and
Bayer. McAffe Labs decided to establish its frst Latin
American engineering centre in Santiago in 2010.
After three years of research, we reached the
conclusion that Chile was top of the list because it
fulflled all of McAfee Labs needs, says Hiep Dong,
Director of Operations. There are three issues that
are key for us the availability of talent, economic
and political stability, and infrastructure. Chile was
well evaluated on all these points.
Exporting powerhouse
The main markets for Chiles global services exports
are South America (Peru, Colombia, Argentina),
followed by the U.S. and Europe. Export revenues
for the global services industry in 2009 topped $840
million and employed 20,000 people, according to a
report by the IDC consulting company.
Chile is well-positioned to continue expanding into
new markets. A 2010 survey by ACTI (Chile-IT) and
Diego Portales University found over half of Chiles ICT
companies are exporting their services, especially to
South America (67%) and Central America (18%). ACTI
Expects to rise to export value over $1.5 billion in 2015.
Opportunities abound for global services investors
in Chile across the industry. The main areas are in
application development and administration, systems
integration, ITO consultancy, customer services, BPO
and KPO.
Engineering services are the area of KPO that
generates the most revenues. With exports of $276
million, it represents 73% of the sectors revenues
and more than a third of the total export revenues.
Global services
Chiles export revenues by category for 2009
Outsourcing category Share
of sector
Annual
revenues ($M)
Information Technology (ITO) 20% 170
Innovation Processing (IPO) 12% 97
Knowledge Process (KPO) 44% 378
Business Process (BPO) 24% 199
Total 100% 844
Source: IDC
Chile-IT: www.chile-it.com
Chilean Association of Information Technology
Enterprises (ACTI: www.acti.cl)
Five-fold growth
Global services exports fromChile 2006-2010 ($M)
Source: IDC
0
200
400
600
800
1000
1200
2006 2007 2008 2009 2010
Tops in services
Chiles ranks 8th out of 50 countries
in a 2009 survey on global services quality
Source: A.T. Kearney
India 1
2 China
3 Malayasia
8 Chile
11 Mexico
12 Brazil
14 United States
23 Costa Rica
27 Argentina
28 Canada
31 United Kingdom
suCCess story
Information Technology
Search for
innovation
In Chile, open television is still the most
relevant medium in terms of nationwide
penetration, with a potential reach of 98%
over the total population. At the same time,
it is the medium with the highest share of ad
spend in the local industry (48% of the mix).
C
ompanies continue to trust TV as the most
important medium for their communication
plans, and they are looking for innovation as a way to
differentiate their brands from the rest. Currently they
count on several tools to achieve that goal, such as 3D
spots, interactive placements or platforms combining
both, open TV and the digital world. This has clearly
refreshed the way brands and agencies are using this
medium, way beyond the traditional 30-second spot.
The big change that TV is going to face in the coming
years is the implementation of digital TV, for which
the Chilean state has adopted the Japanese norm
ISDB (Integrated Services Digital Broadcasting). This
process, currently in the testing period (started in 2010)
will take about eight years to be fully implemented. It is
expected that digital TV will cause important changes
not only for users but also for the way that TV is being
commercialized.
Even though there are several TV channels in the
country, only seven of them have a national coverage.
These stations are organized in ANATEL (National
Television Association).
As for the internet, it has been steadily becoming a
relevant medium for advertisers. The explosive growth
experienced by online media, which is estimated
to have grown 28.7% in terms of ad spend in 2010
alone, is just a refex of the high consumption that this
medium has achieved among Chilean population. In
fact, Chile is one of the leaders in the region in terms
of internet penetration.
We are already observing an increase and
specialization of social marketing (social networks),
and a trend to mobile marketing in light of the
exponential growth of smart phone users. The internet
is, day by day, obtaining a more important role in the
mix, and advertising agencies are taking measures
to adapt themselves to these new needs by creating
specialized areas for the digital world.
The print press has showed a downward tendency
the last few years, which is directly connected to the
increase of internet use, given the change of habits
that it has caused among consumers, especially in
their way of staying informed. The main challenge for
the press has been the invention of new formats as
they try to become more avant-garde and fexible.
There are two major holdings in the Chilean press
market, which accounts for 80% of ad spend. The
main group is El Mercurio (55% of SOI) with its brands
El Mercurio, Las ltimas Noticias and La Segunda.
All of these provide national coverage plus a strong
presence in provinces through associated local media.
The other important group is Copesa, which handles
the brands La Tercera, La Cuarta and La Hora, all of
them which provide national coverage. Copesa also
is involved with some magazines including Paula and
Qu Pasa, and radio stations such as Zero, Carolina
and Disney FM.
Outdoor advertising (OOH) is experiencing an
interesting tendency towards innovation, with an
evolution to technology, including movement, light
and sound on billboards. Traditional structures are
being used less due to the search of more interactivity
between the billboards and individuals. There is a
strong presence of international groups working this
medium, like CBS Group, Clear Channel, Stand Off and
JC Decaux. Decaux has exclusivity for commercializing
the advertising in Santiagos subway.
Pay TV has almost doubled its penetration during
the last three years from 35% in 2008 to current
levels of 60%. VTR is the main actor in this medium,
offering a wide range of channels both nationally and
internationally. VTR commercializes spots during
breaks especially defned for VTR. Satellite television
is becoming a relevant player in pay TV, given the
possibility of reaching locations where cable TV
cannot access.
Magazines are a medium with several titles oriented to
different demographics, some of them very targeted.
Televisa Group stands out with over 20 titles covering
interests such as lifestyle, home and family, and health
and wellness. Other important magazine companies
are Holanda Comunicaciones, Copesa and Tiempo
Presente.
The radio scene is very developed in Chile with a large
number of stations, nationwide and locally, offering
different styles and themes oriented to different
audiences. There are four dominant radio groups in
the country: Ibero Americana Radio Chile (37.5%
potential reach, which belongs to Spanish group
Prisa), Grupo Dial (13% potential reach, belongs
to Copesa), Cooperativa (8% potential reach), and
Bezanilla Group (7% potential reach)
Marcelo Lazo, Managing Director
ZenithOptimedia Chile
marcelo.lazo@zenithoptimedia.cl
National Televison Council www.cntv.cl
What's on?
Chile's TV stations ranked by advertising spend
Station Owner Ad spend
TVN Government 26%
CHV Turner 26%
Mega Claro Group 19%
Canal 13 Luksic Group/ Catholic
University of Chile
15%
Red TV Red Group 8%
Telecanal Alfa Tres 4%
UCV TV Catholic University of
Valparaiso
2%
Source: Megatime
Share of ad spend by media 2010
Source: ACHAP
Open TV
48%
Newspaper
27%
Radio
7%
Magazine
2%
Outdoor
advertising
8%
Pay TV
4%
Online
4%
Growing digital
Chilean daily newspaper readership February-July 2011
Newspaper Online only Total online/print
Las Ultimas Noticias 387,401 703,068
El Mercurio 54,355 407,222
La Tercera 46,890 354,307
La Segunda 26,593 92,167
La Cuarta 21,671 408,638
La Hora 3,123 321,242
Publimetro 1,739 367,314
Source: IPSOS
The main challenge for the press has been the invention of new formats.
T
V
N
Media
Remote
potential
Chile wants to take advantage of its remoteness
by turning its off-the-beaten track reputation
from a disadvantage into an advantage for
tourists looking for unique experiences.
S
eparated from the rest of South America by
the Atacama Desert, the Andes Mountains and
the Antarctic, Chile is practically an island. But it is
exactly this remoteness that Chiles tourism industry
is promoting.
As a country we are interested in serving as a
destination for high-quality tourism. And there we
have a great competitive advantage because what we
offer is aligned with the unique experiences sought
by tourists in the special-interest market, says Hugo
Lavados, Chiles Minister of the Economy.
Consequently, Chile has made the development of
high-quality, special-interest tourism a priority. Not
just to showcase the countrys unique environment
and local cultures, but to accelerate its economic
growth while protecting its environment and cultures.
To encourage foreign investment in this type of tourism,
Chile has developed new destinations, improved its
tourist infrastructure, upgraded highways, airports
and ports, built hotels and is installing internet access
in remote locations visited by tourists.
We have set ourselves the goal of transforming the
tourism industry into the third most important sector
in the country, increasing its contribution to GDP
from the current 3%, to 6% or 7% within the next ten
years, says Tourism Minister Pablo Longueira.
Tourism accounted for 3.4% of Chiles GDP in 2010,
according to the World Economic Forum Travel
and Tourism Competitiveness Report 2011, and is
forecasted to increase by 5.3% annually until 2020.
The report ranks Chile 9th in the region for tourism
competitiveness and 57th globally, due to its cultural
resources (it has six World Heritage cultural sites) and
several international fairs and exhibitions.
In addition, policy rules and regulations are conducive
to the development of the T&T (travel and tourism)
sector, with few foreign ownership restrictions, a
liberal visa regime, and open bilateral Air Service
Agreements, the report states, adding that also tops
the rankings among Latin American and Caribbean
economies for security.
International tourism is increasing steadily. During
April-June 2011, international arrivals grew 19.8%
compared to the same period in 2010 and 13.5% and
27.4% compared to 2009 and 2008. Still, at least 70%
of Chiles tourism is domestic although per capita
income has increased at an annual average rate of
3.7% during the last fve years.
In line with Longueiras goal, Undersecretary of
Tourism Jacqueline Plass has developed a tourism
strategy that includes developing investment
opportunities in tourism. As part of this strategy, the
Foreign Investment Committee has compiled a list
of private projects for tourism investment which it is
distributing to potential foreign investors.
These opportunities include building high-quality
ecotourism facilities and fshing lodges, developing
marinas along the Pacifc coast, constructing
theme trails in national parks as well as networks of
agrotourism lodges and activities.
Plass recently announced a $169 million plan to
promote tourism in the southern Chilean region of
Araucana, home of the Mapuche indigenous culture.
The main focus of the plan, which will run through
2014, is infrastructure improvement. This includes
improving the regions international airport and
highways, and implementing a GPS system.
At the other end of the country, in the northern Atacama
desert, astronomical tourism is being promoted
in the Coquimbo Region where eight international
observatories are located along the so-called Route
of the Stars.
Business tourism is also growing in importance. From
2001 to 2008, the business market increased from
11.8% of all visitors to Chile to 21%. In 2010 Chile
hosted 97 international meetings compared to 37 in
2001, according to the International Congress and
Convention Association.
To support investors, Chile offers incentives to help
develop tourism and other industries in remote
areas of the country, such as in the Arica, Palen and
Parinacota provinces and the Aysen and Magallanes
regions. Tourism and some other industries are eligible
for tax and customs benefts for setting up business
in the Magallanes region and Chilean Antarctic.
For more info:
National Tourism Service (Sernatur) www.sernatur.cl
Chile Travel www.chile.travel
World attraction
International arrivals to Chile have increased almost 13%
comparing the rst half of 2008 to 2011 (thousands)
Source: Sernatur
1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
2008 2009 2010 2011
January-June
Friendly neighbors
Principal countries of origin of international tourists
to Chile during rst half of 2011
Source : Sernatur
Argentina
38.5%
Europe
12.7%
Peru
10.9%
Bolivia
10.2%
Brazil
8.7%
Colombia Australia
USA
6.3%
Rest of
world
9.6%
Way off the beaten track
Here are a just few of the many unique sites that Chile ofers
adventurous tourists looking for something unique.
The Atacama Desert is the worlds driest. Visitors are
attracted to the desert because of its variety of landscapes
and salt fats. Several movies have been flmed here,
including the James Bond flm Quantum of Solace. The
most noteworthy tourist attractions are the Valle de la Luna,
the Valle de la Muerte, the El Tatio geysers and the areas
lakes and famingos. The Atacama Salt Flats are the second
largest in the world. Several volcanoes also dominate the
desert landscape.
Easter Island is located 3,800 kilometers of the coast
of Central Chile in the Pacifc Ocean. The island is one of
Chiles main tourist attractions due to its natural beauty
and ancestral culture, of which the only remains are 887
giant stone statues known as moai. The island also has
outstanding marine life and opportunities for diving. The
Rapa Nui National Park is a World Heritage Site.
Northern Patagonia stretches from Puerto Montt south
to Cape Horn and boasts ancient forests, glaciers, vast
ice felds, lagoons, fjords, rivers and lakes. It is ideal for
adventure tourism, fshing, trekking, extreme sports,
kayaking, rafting and observing fora and fauna in its most
natural state. The Southern Highway runs 1,240 kilometers
to Villa OHiggins and provides access to one of the worlds
most unspoiled regions.
Adventure
Chile has made the development of special-interest tourism a priority.
S
e
r
n
a
tu
r
Tourism
Rooms for
growth
Chiles hotel sector is growing quickly,
especially in Santiago and the popular central
region. Areas outside the center lag but could
present signifcant development opportunities.
C
hiles central regions, including the cities of
Santiago and Valparaiso, are the favored
destinations of 65% of all tourists visiting the country.
Not surprisingly, it is also where most of Chiles current
hotels and resorts are found and where most tourist-
related new construction will take place.
This is especially true of the region northwest of
Santiago, which includes Valparaiso. The region has
the highest concentration of hotels and resorts (179)
in Chile, representing 17% of the countrys total.
The metropolitan region, which includes Santiago,
comes in second with 125 hotels and resorts, or
12% of the total.
The metropolitan region, however, has the most
rooms (8,515) or 23% of the national total, whereas
Valparaiso (5,333 rooms) has 14% of the total. Nearly
50% of the 36,844 hotel and resort rooms in Chile
are located in Santiago, Valparaiso and Antofagasta,
a north-central region with 3,786 rooms.
Hotel investment in Chile is dynamic. Hotel
development proposals range from large foreign
chains like Accor (with projects for its IBIS and
Novotel brands), Hilton (the recent opening of the
Hotel Garden Inn at the airport) and plans to add four
more in the coming years hotels, Hyatt (with projects
in Santiago and Via del Mar), and national chains
such as Atton, Diego de Almagro, Radisson, and The
Singular.
New construction
Most (58%) of the 31 tourist-related building projects
scheduled for construction by 2013 will be in the
Valparaso and metropolitan regions. This will add
nearly 1,800 rooms in the metropolitan region, a 21%
increase, at an investment of $419 million. Valparasos
capacity will increase 13% with 716 new rooms and
an investment of $130 million. Countrywide, new
hotel construction will add more than 3,600 rooms to
the current hotel capacity by 2013.
Many tourism projects are for large foreign chains
like Accor. The French multinational has been in
Chile for ten years and currently operates fve hotels
there: three in Santiago, one in Antofagasta and one
Concepcion. It is planning a major expansion mostly
in Santiago.
Accor has defned Chile as a priority country for
development for the group in Latin America, says
Gilles Gonzalez, Senior Vice President Development
Latin America. By 2015 we plan to operate 30 hotels
in Chile with a concentration in Santiago, 40% to 50%
of our portfolio, because the capital itself concentrates
almost 50% of the countrys GDP.
Hilton, which recently opened the Garden Inn Santiago
Airport, plans to add four more hotels. Hyatt has
projects in Santiago and Via del Mar. And national
chains such as Atton, Diego de Almagro, Radisson
and The Singular are also expanding.
Much of the hotel investment focused on the
Top fve with 5
Michelins top fve 5-star rated hotels in Chile
Hotel name Location Price from ($):
Hotel Boutique Le Reve Santiago 229
Panamericana Hotel
Antofagasta
Antofagasta 100
Hotel Cumbres Patagnicas Puerto Varas 200
Hotel Boutique Acontraluz Valparaiso 160
The Aubrey Santiago 280
Source: The Michelin Green Guide
Accor: Chile makes development easy
The French multinational Accor is the worlds leading hotel
operator with more than 4,200 hotels in 90 countries. It is
present in ten Latin American countries where it has 200
hotels. It has been in Chile for ten years and operates fve
hotels there including three in Santiago.
Brazil is Accors strategic country in Latin America. The
country makes up more than 82% of Accors portfolio in the
region. However it has made other countries a priority for
development including Chile, Argentina, Peru, Colombia and
Mexico. By the end of 2015, Accor plans to open 85 more
hotels across Latin America.
The results we have had in Chile are very encouraging which
is why we are planning to operate a total of 30 hotels there by
2015, half of these will be in Santiago, says Gilles Gonzalez,
Senior Vice President Development Latin America. These
investments will be made by Accor and our local partners.
Chile has excellent fundamentals, according to Gonzalez,
including a secure and stable business and legal environment,
known rules of the game, and funding opportunities in the
local currency at competitive rates.
Its very easy to do business in Chile which promotes our
development, says Gonzalez. Besides anticipating operating
30 hotels the only limit is that the market, which while
promising, is still limited because the population is only 17
million. The GDP and population of Brazil are ten times higher!
suCCess story
metropolitan area and Valparaiso is due to the regions
developed infrastructure and promotional expertise
which facilitates the development of hotel initiatives.
Chiles challenge now is to promote tourism in regions
with less-developed infrastructure and lacking
promotional expertise.
Some projects are on the books for these areas
nevertheless. Projects that would add 470 new rooms
(an increase of 17%) are being considered in the Bio
Bio region. In Aysn, one of the regions with lowest
hotel capacities, two projects are expected to add
125 new rooms which means an increase of 36% and
bringing the total for the entire region to 474 rooms.
But other regions such as Arica-Parinacota, Tarapac,
Maule and Los Rios (which has the lowest number
of rooms in hotels and resorts) have no projects
planned. Chiles Undersecretary for Tourism, the
National Tourism Service and the National Forestry
Corporation have launched a call for projects of
sustainable tourism in 12 wild protected areas (ASP).
The projects selected in this process have not yet
made known, but 13 proposals for accommodation
from hotels, lodges and cabins, total an estimated
investment of nearly $87 million.
Sustainability is becoming an expected amenity by
many travelers to Chile wanting to experience some
of the worlds most spectacular landscapes. In 2007,
Chile became the frst country in South America with
a hotel certifed for sustainable construction practices
by the U. S. Green Building Council. Since then other
resorts that have little to no negative impact on the
environment have been built in some of the remotest
regions of the country.
Fedetur (Federation of Tourism Enterprises)
www.fedetur.cl
Sernatur (National Tourism Service) www.sernatur.cl
CONAF (National Forestry Corporation) www.conaf.cl/
Source: Fedetur
0
50
100
150
200
250
300
350
400
450
Valparaso Metropolitan Santiago Total other regions
In
v
e
s
t
m
e
n
t
(
$
M
)
Central focus
Valpariso and Santiago get 58% of
all new hotel investment for 2011-2013
Both foreign and national chains are investing in Chiles hotel sector.
E
n
jo
y
H
o
te
ls
Hotels
Window on
the Universe
The transparent skies above the Atacama
Desert in northern Chile are among the best
in the world for star-gazing. No wonder Chile
is home to the most ambitious astronomical
projects the world has ever undertaken.
A
re we alone? One of the places astronomers are
hoping to fnd the answer to mankinds oldest
question is 3,000 meters up in Chiles northern
Atacama Desert. Thats the site of the European
Extremely Large Telescope (E-ELT), also known as the
great window of the Earth to observe the universe.
Due to its gigantic dimensions, which includes a
primary mirror measuring 42 meters in diameter, the
E-ELT will be the biggest telescope of its kind in the
world when it starts operations early next decade.
One of its purposes will be to track down Earth-like
planets around other stars where life could exist.
The Atacama Desert was chosen as the site for the
$1 billion facility after several other sites in Spain,
Morocco and Argentina were rejected.
The decision to build the in Chile was made on
a scientifc and technical basis -- to situate the
best telescope in the world in the best place in the
world, says Massimo Tarenghi, representative in
Chile of the European Southern Observatory (ESO), a
European intergovernmental astronomy organization
that provides research facilities for astronomers and
astrophysicists.
With 42% of the worlds current astronomy
infrastructure, Chile is the astronomy capital of the
world. Almost 80% of state-of-the-art telescopes
south of the equator are in Chile. By 2018 the
country will have 70% of the worlds infrastructure
of telescopes.
Chiles stellar position attracts many of the worlds
leading astronomers to come and work there. Moreover,
Chilean universities are granted 10% of the observation
time at E-ELT and other observatories, providing
students at local universities a unique opportunity.
Compared to the United States and Europe, Chile
has the enormous advantage of making it possible
Looking up
European Southern Observatory (ESO) observatories in Chiles Atacama Desert
Name Type Location Start of operations Why special?
VLT (Very Large Telescope) 4 x 8.2 meter and 4 x 1.8 meter
optical telescopes
Cerro Paranal 1998 Worlds most advanced
optical instrument
NTT (New Technology
Telescope)
3.58 meter optical and infrared
telescope
La Silla 1989 First with a computer-
controlled main mirror
ALMA (Atacama Large
Millimeter/submillimeter Array)
50 x 12 meter antennas, 12 x 7
meter and 4 x 12 meter antennas
Chajnantor 2013 (planned) Largest ground-based
astronomical project ever
E-ELT (European Extremely
Large Telescope)
39.3 meter optical to mid-infrared
telescope
Cerro Armazones early next decade Studies planets around
other stars, black holes,
dark matter, dark energy
Source: ESO
to facilitate the use of its observatories, which
is very complicated in northern countries, says
Nelson Padilla, a professor of astronomy at Chiles
Universidad Catlica. Postgraduate students can
use the facilities for free so they can obtain data from
the observatories for subsequent analysis in class, a
beneft that also extends to foreign students.
Normally, a nights worth of observation in the Cerro
Paranal observatory, for example, costs about
$50,000.
Observatory heaven
The E-ELT will not be alone in the Atacama Desert.
ESO operates three observatories there including
the fagship facility at Cerro Paranal, home of the
Very Large Telescope (VLT). This is actually an array
of four telescopes, each capable of seeing celestial
objects so far away it is said to be like being able to
see objects four billion times fainter than those that
can be seen with the naked eye.
ESOs frst site at La Silla, 600 km north of Santiago,
started operations in 1989 and was the frst observatory
in the world to have a computer-controlled main
mirror, a technology now used on most of the worlds
large telescopes.
One of those is the Transiting Planets and
Planetesimals Small Telescope (TRAPPIST), one of
the newest telescopes installed at La Silla and which
will be operated from a control room in Belgium.
TRAPPIST is the frst step in a new type of research
called astrobiology, the study of the origins and
distribution of life throughout the universe.
The latest star rising on ESOs horizon is the Atacama
Large Millimeter/submillimeter Array (ALMA). The
$1.2 billion observatory is expected to be completed
in 2013 and will have 66 high-precision antennas
capable of picking up objects in the coldest parts of
the universe. This includes molecular gas and dust
and leftover radiation from the Big Bang the building
blocks of all the stars, planetary systems, galaxies
and life in the universe.
With the construction of the E-ELT, Chile will have 60%
of worlds cosmic observation, and will consolidate
the countrys position as the main astronomical pole
on earth.
Other projects under construction include the Large
Synoptic Study Telescope (LSST) that will be built by
2017 and is said to be the largest photographic camera
in the world. The Giant Magellan Telescope is scheduled
to be installed by 2018 in Atacama. ALMA will be the
largest radio-astronomical project in the world.
This scientifc infrastructure is due to the good
conditions the Chilean skies offer for observing the
cosmos. The country currently owns more than
a third of the existing area for capturing the light
originating in stars, planets or galaxies on the far side
of the universe, a term known in astronomy as photon
collection.
Galileos telescope revolutionized our perception of
the universe 400 years ago. The world should get
ready for another cosmological revolution this time
coming from Chiles high desert.
The National Commission for Scientifc and
Technological Research www.conicyt.cl
European Southern Observatory
www.eso.org
E
S
O
/F
. K
a
m
p
h
u
e
s
Chiles stellar position attracts many of the worlds leading astronomers.
Astronomy
BREAKFAST BUSINESSCENTER LAUNDRY
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Tel: (56-2) 499-2200.
h5233-re@accor.com
www.novotel.com
LOCATION:
Located just 20 minutes from International
Airport, in the privileged Vitacura district.
Novotel offers a modern and welcoming space,
transforming a business or leisure trip more enjoyable and
relaxing. It is very close to the convention centers Casa
Piedra (5 minutes) and Espacio Riesco (10 minutes). For
those who want to go to the ski centers or for the coast,
the location is very convenient - only 5 min of the highway to
the snowy mountains and for cities like Via del Mar and
Valparaso. Novotel emphasizes natural light in all ambient,
creating a pleasant feeling of wellbeing. It has a complete
spa and offers free Wi Fi throughout the hotel.
E
S
O
/S
. B
r
u
n
ie
r
Contracting for ESO has its privileges
When the Atacama Large Millimeter Array (ALMA) telescope in
Chile becomes fully operational in 2013 it will have a resolution
of measurements ten times better than that of the Hubble
space telescope.
One of the main reasons for ALMAs precision is instruments
supplied by a small Swedish company named Omnisys
Instruments. Founded in 1992, Omnisys won its frst European
Space Agency contract in 1993.
In June 2007, it was awarded an $8 million contract with the
European Southern Observatory (ESO) for 58 water vapor
radiometers for the satellite dishes that make up ALMA, the
worlds largest radio telescope.
The radiometers measure the amount of water vapor at
the site of each antenna so the correlation of measurements
between the antennas can be more precise, says Omnisys
CEO Martin Kores.
Although Omnisys was a foreign company importing goods into
Chile, it benefted from customs privileges ESO had negotiated
with the Chilean government back in 1963.
It has been very smooth for us, says Mats Wannerbratt,
Omnisys Project Manager for the ALMA radiometer contract.
We declare the goods and ESO in Santiago handles the
customs procedures for us.
ALMA is a partnership between Europe, North America, East
Asia and Chile. As an international organization, ESO has
negotiated privileges with the Chile government, such as an
exemption from custom duties on goods needed for their
projects.
The privileges and immunities granted to ESO are
consistent with what usually is granted to intergovernmental
organizations, says Nikolaj Gube, a legal advisor for ESO
in Santiago. Because we have several member states that
fnance us we want to make sure that all member states are
treated.
Other privileges ESO has negotiated include immunity from
jurisdiction, inviolability of ESO property, exemptions from VAT
and income taxes, and no restrictions on transit and residence
for ESO ofcials. None of these privileges can be used for
personal beneft.
Although the privileges ESO has with the Chilean government
were not aimed at benefting its foreign contractors such as
Omnisys that is the result. It also benefts ESO.
It makes procedures and formalities easier so the contractor
saves money which otherwise would be charged to ESO, says
Gube. Also because ESO in general is free to contract without
restrictions, companies from all member states can work in
Chile. This greatly increases the number of companies available
and thus leads to more competition.
But perhaps those who will beneft most are the recipients of
the new knowledge that ALMA and other ESO projects will bring.
InsIght
The Milky Way as seen from La Silla, Chile.
north from the fertile central zone. Here lies the valley
of Elqui, one of the spiritual centers of the Earth, said
to be magical. The mysterious forces of Elqui attract
pilgrims who come there to make contact with the
cosmic energy of the universe, and many stay on
to live in esoteric communities. Meditation, Eastern
religions, gurus of various stripes, theres something of
everything in Elqui. Its like a little corner of California.
It is also from Elqui that our pisco comes, a liquor
made from the muscatel grape: transparent, virtuous,
and serene as the angelic force that emanates from
the land. Pisco is the prime ingredient of the pisco
sour, our sweet and treacherous national drink, which
must be drunk with confdence, though the second
glass has a kick that can foor the most valiant among
us. We usurped the name of this liquor, without a
moments hesitation, from the city of Pisco, in Peru.
If any wine with bubbles can be called champagne,
even though the authentic libation comes only from
Champagne, France, I suppose our pisco, too, can
appropriate a name from another nation. The norte
chico is also home to La Silla, one of the most
important observatories in the world, because the air
there is so clear that no stareither dead or yet to
be bornescapes the eye of its gigantic telescope.
Apropos of the observatory, someone who has
worked there for three decades told me that the most
renowned astronomers in the world wait years for
their turn to scour the universe. I commented that it
must be stupendous to work with scientists whose
eyes are always on infnity and who live detached
from earthly miseries, but he informed me that it is
just the opposite: astronomers are as petty as poets.
He says they fght over jam at breakfast. The human
condition never fails to amaze.
The valle central is the most prosperous area of the
country, a land of grapes and apples, where industries
are clustered and a third of the population lives in
the capital city. Santiago was founded in 1541 by
Pedro de Valdivia. After walking for months through
the dry north, it seemed to him that hed reached the
Garden of Eden. In Chile everything is centralized in
the capital, despite the efforts of various governments
that over the span of half a century have tried to
distribute power among the provinces. If it doesnt
happen in Santiago, it may as well not happen at all,
although life in the rest of the country is a thousand
times calmer and more pleasant.
The zona sur, the southern zone, begins at Puerto Montt,
at 40 degrees latitude south, an enchanted region of
forests, lakes, rivers, and volcanoes. Rain and more
rain nourishes the tangled vegetation of the cool forests
W
e Chileans still feel our bond with the soil, like
the campesinos we once were. Most of us
dream of owning a piece of land, if for nothing more
than to plant a few worm-eaten heads of lettuce. Our
most important newspaper, El Mercurio, publishes a
weekly agricultural supplement that informs the public
in general of the latest insignifcant pest found on the
potatoes or about the best forage for improving milk
production. Its readers, who are planted in asphalt
and concrete, read it voraciously, even though they
have never seen a live cow.
In the broadest terms, it can be said that my long and
narrow homeland can be broken up into four very
different regions. The country is divided into provinces
with beautiful names, but the military, who may have
had diffculty memorizing them, added numbers for
identifcation purposes. I refuse to use them because
a nation of poets cannot have a map dotted with
numbers, like some mathematical delirium. So lets
talk about the four large regions, beginning with the
norte grande, the big north that occupies a fourth
of the country; inhospitable and rough, guarded by
high mountains, it hides in its entrails an inexhaustible
treasure of minerals.
I traveled to the north when I was a child, and Ive
never forgotten it, though a half-century has gone
by since then. Later in my life I had the opportunity
to cross the Atacama Desert a couple of times, and
although those were extraordinary experiences, my
frst recollections are still the strongest. In my memory,
Antofagasta, which in Quechua means town of the
great salt lands, is not the modern city of today but
a miserable, out-of-date port that smelled like iodine
and was dotted with fshing boats, gulls, and pelicans.
In the nineteenth century it rose from the desert like
a mirage, thanks to the industry producing nitrates,
which for several decades were one of Chiles principal
exports. Later, when synthetic nitrate was invented,
the port was kept busy exporting copper, but as the
nitrate companies began to close down, one after
another, the pampa became strewn with ghost towns.
Those two wordsghost towngave wings to my
imagination on that frst trip.
I recall that my family and I, loaded with bundles,
climbed onto a train that traveled at a turtles pace
through the inclement Atacama Desert toward
Bolivia. Sun, baked rocks, kilometers and kilometers
of ghostly solitudes, from time to time an abandoned
cemetery, ruined buildings of adobe and wood. It was
a dry heat where not even fies survived. Thirst was
unquenchable. We drank water by the gallon, sucked
oranges, and had a hard time defending ourselves
from the dust, which crept into every cranny. Our lips
were so chapped they bled, our ears hurt, we were
dehydrated. At night a cold hard as glass fell over
us, while the moon lighted the landscape with a blue
splendor. Many years later I would return to the north
of Chile to visit Chuquicamata, the largest open-pit
copper mine in the world, an immense amphitheater
where thousands of earth-colored men, working like
ants, rip the mineral from stone. The train ascended
to a height of more than four thousand meters and
the temperature descended to the point where water
froze in our glasses. We passed the silent salt mine
of Uyuni, a white sea of salt where no bird fies, and
others where we saw elegant famingos. They were
brush strokes of pink among salt crystals glittering
like precious stones.
The so-called norte chico, or little north, which some
do not classify as an actual region, divides the dry
where our native trees rise tall, ancients of thousand-
year growth now threatened by the timber industry.
Moving south, the traveler crosses pampas lashed by
furious winds, then the country strings out into a rosary
of unpopulated islands and milky fogs, a labyrinth of
fjords, islets, canals, and water on all sides. The last city
on the continent is Punta Arenas, wind-bitten, harsh,
and proud; a high, barren land of blizzards.
Being so far from everything gives us Chileans an
insular mentality, and the majestic beauty of the land
makes us take on airs. We believe we are the center of
the world-in our view, Greenwich should have been set
in Santiago-and we turn our backs on Latin America,
always comparing ourselves instead to Europe. We
are very self-centered: the rest of the universe exists
only to consume our wines and produce soccer teams
we can beat.
My advice to the visitor is not to question the marvels
he hears about my country, its wine, and its women,
because the foreigner is not allowed to criticize-for
that we have more than ffteen million natives who
do that all the time. If Marco Polo had descended on
our coasts after thirty years of adventuring through
Asia, the frst thing he would have been told is that our
empanadas are much more delicious than anything in
the cuisine of the Celestial Empire. (Ah, thats another
of our characteristics: we make statements without
any basis, but in a tone of such certainty that no one
doubts us.) I confess that I, too, suffer from that chilling
chauvinism. The frst time I visited San Francisco, and
there before my eyes were those gentle golden hills,
the majesty of forests, and the green mirror of the
bay, my only comment was that it looked a lot like
the coast of Chile. Later I learned that the sweetest
fruit, the most delicate wines, and the fnest fsh are
imported from Chile. Naturally.
From MY INVENTED COUNTRY. Copyright 2003
by Isabel Allende. HarperCollins Publishers. All
rights reserved. Used by permission.
My
Invented
Country
Isabel Allende is one of Latin Americas foremost writers.
In this excerpt from her 2003 memoire My Invented Country:
A Nostalgic Journey Through Chile, Allende takes us on
an evocative tour of her homeland from north to south.
Isabel Allendes books have sold more than
57 million copies and have been translated into
37 languages. Allende was born in Lima, Peru
in 1942 but returned to Chile with her father, a
diplomat, at the age of three. She worked as a
journalist in Chile until the 1973 military coup,
when her uncle, Chilean President Salvador
Allende was assassinated. She fed with her
husband and children to Venezuela and now
lives in California.
L
o
r
i B
a
r
ra
Memoire
OFFICIAL LANGUAGE
Spanish. Most hospitality industry personnel
speak some English. Some may speak German
or French.
TIME ZONE
Winter: -4 GMT
Summer: -3 GMT (Daylight Savings Time
is from 2nd Saturday in October to 2nd
Saturday in March).
SEASONS
Chile is a Southern Hemisphere country
which means its seasons are opposite of
Northern Hemisphere countries.
CURRENCY
Chilean peso (CLP)
Exchange rate: $1 = approximately 500
Chilean pesos (as of November 2011)
Currency exchange bureaus: 9 a.m. to 6 p.m.
(1800) Monday to Friday, 9 a.m. to 2 p.m.
(1400) Saturday
Foreign currency: Cash or travelers checks
may be exchanged at banks, currency
exchange bureaus, and most hotels. Most
major credit cards are honored throughout
Chile and most foreign bank cards can be
used for ATM withdrawals.
HOURS
Businesses: 9 a.m. to 6 p.m. (1800),
Monday to Friday
Banks: 9 a.m. to 2 p.m. (1400),
Monday to Friday
Stores: In Santiago most larger stores open
daily from 9 a.m.to 9 p.m. (2100), with
Sunday shopping the norm. Elsewhere,
shops may close from 2 p.m.to 4 p.m. (1600).
POWER
Chile uses 220V 50Hz type C (two-prong) and
type L (three-prong) electric plugs.
CLIMATE: Santiago
Temperature C January April July October
Maximum 29.4 23 14.5 22
Minimum 12.4 7.6 3.2 7.8
DRINKS
Cup of coffee/tea: 500 to 1,000 pesos ($1-2)
Glass of beer: 1,000 pesos ($2)
Glass of Chilean wine/pisco: 1,000 pesos ($2)
ENTERTAINMENT
Cinema:
General: 3,000 pesos ($6)
Children/elderly: 2,000/3,000 pesos ($4/$6)
3D flms: 5,000 pesos ($10)
Museum:
General: 3,000 to 4,000 pesos ($6-$8)
Children, students/elderly: 2000 to
3000 pesos ($4-$6)
Teachers: 1,000 pesos ($2)
TRANSPORT
Taxi: Airport to downtown Santiago 20,000
pesos ($40). In Santiago, taxis charge a base
price of 250 pesos ($0.50) plus about 100
pesos per 200 meters distance (or per-minute
wait). Rates are indicated on the windshield.
Negotiate a price with the driver for longer
distances or locations outside the city.
Subway and bus: The Metro de Santiago
is part of the Transantiago integrated public
transport system that includes bus routes.
Transantiago uses an integrated fare system.
Passengers can make bus-bus or bus-metro
transfers for the price of one ticket. The system
uses a contactless Bip! card which can be
purchased in all stations for 2,000 pesos ($4).
Single-trip tickets are available but dont allow
transfers to buses. Fares depend on the time of
day. Peak fares are 620 pesos ($1.25).
Car rental: A compact car rents for 20,000
to 25,000 pesos ($40 to $50) a day. Rates are
lower in Santiago than in the provinces. Smaller
companies may negotiate prices.
Hotel Acontraluz is a place to gather, re-energize and share experiences. Located in the heart of
Cerro Alegre, the hotel overlooks Valparaso, one of Chiles most beautiful cities, named part of the
World Cultural Heritage by UNESCO.
Our hotel is a place of silence, colors, lights and shadows. Textures of the urban landscape and sea
reach through windows and onto terraces, accompanying guests at all times of the day and night.
With its discreet early 20
th
century German architecture, the hotel offers first-class facilities, indoor
and outdoor dining rooms and gardens, an underground bar, wine cellar and cinema.
Spacious rooms give a spectacular view of the great bay of Valparaso. Other rooms overlook
the hills and colorful urban landscape surrounding the bay, a view admired by artists, poets and
everyone who visits our patrimonial city.
Welcome to the Hotel Acontraluz.
San Enrque 473, Cerro Alegre, Valparaso - Chile.
Information: +56.32.211 1320 +56.32.328 0602 info@hotelacontraluz.cl
Hotel Boutique Acontraluz
Val par ai so - Chi l e
w w w . h o t e l a c o n t r a l u z . c l
Practical information
for visitors to Chile
www.kpmg.cl
AUDIT - TAX - ADVISORY
Like in 149 other countries in the world, a
KPC rn is wailing lo provide your business
wilh services ol lhe highesl slandards.
KPC in Chile has 32 parlners, nore lhan
750 prolessionals, and lhree olces dislribuled
in lhe nain urban areas ol lhe counlry.

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2012 01 KPMG Doing Business in Chile

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