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U.S. Commercial Service Chile Chile Briefing for The Americas Business Forum March 2011 Mitch Larsen Commercial Counselor U.S. Embassy Santiago
U.S. Commercial Service Chile
Chile Briefing for
The Americas Business
Forum
March 2011
Mitch Larsen
Commercial Counselor
U.S. Embassy Santiago
Key Facts
• Nearly 2,800 miles long
• Just 100 miles wide (average)
• Diverse climate and geography
• Opposite seasons from the U.S.
• Isolated by mountains, desert & sea
• 17.2 million population
• Principal city and capital - Santiago
Economic Transformation
• “Chicago Boys” take charge in 1974
• Huge budget deficit eliminated
• State-owned firms privatized
• Tariffs slashed
• Foreign investment restrictions ended
• Economy begins to grow rapidly
Chile Today
• President Sebastian Piñera took office on March 11, 2010. New
term runs from 2010-2014.
• Transition from Center-Left “Concertación”
Coalition to Center-Right “Alianza” of the
President
• Broad Consensus
• Open Economy – Free Market
• Democratic Institutions
Sustained Economic Growth
Source: Central Bank, Chile
Unemployment Level
Source: Banco Central de Chile
Price StabilityAnnual Inflation (%)
Source: Asociación de Bancos e Instituciones Financieras
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
8.9 8.26.6 6.0
4.7
2.34.5
2.6 2.81.0
3.0
3.7
2.6
7.8 7.1
-1.4
3.0
Declining Poverty Rates(as a percent of population)
Source: Mideplan, CASEN Study, 2010
0
10
20
30
40
50
1987 1990 1992 1994 1996 1998 2000 2003 2006 2009
45.1
38.6
32.6
27.523.2 21.7 20.6 18.8
13.7 15.717.4
12.98.8 7.6 5.8 5.6 5.3 4.7
3.2 3.8
Below Poverty Line
Indigent
Note: Indigence is defined as having income inadequate for a
basket of goods sufficient to support a family of 4. Poverty is
defined as income less than 2x the value of the same basket.
Chile: Leader in Free Trade
FTAs:Canada 1997
Mexico 1998
Central America 1999
European Union 2003
South Korea 2004
United States 2004
Trans-Pac. Partnership 2005
China 2006
Japan 2007
Colombia 2009
Australia 2009
Peru 2009
CEAs:Bolivia 1993
Venezuela 1994
Ecuador 1995
Mercosur 1996
India 2006
TPP = New Zealand, Singapore,
Brunei, U.S., Chile, Australia,
Peru, Vietnam, Malaysia
Economic Indicators and Facts
• Overall GDP „10: $199.2 billion; GDP Growth: 5.0%
• 2010 Per Capita GDP: approx. $15,000
• Unemployment 2010: 7.1% ; 2009: 9.6%
• Import growth: 30% (2010 over 2009)
• Inflation 2010: 3.0%
• Newest Member of OECD (best projected growth for
2011)
• Mobile Phone Penetration: 97%
"Cole, Catherine A" <[email protected]>
AON 2011 Political Risk Map
Americas-South
Source: AON Corporation 2011
Growth of exports
Great management capacity
Transparency of financial institutions
Availability of qualified engineers & other
professionals
Good level of telecommunication technology
(97% mobile penetration; decreasing fixed lines)
Strengths
Source: Facultad de Economia de la
Universidad de Chile
"Cole, Catherine A" <[email protected]>
Challenges
Unemployment / underemployment
Low GDP per capita
Low level of value added to exports
High labor costs
Low productivity rates
Deficient educational system
Investment Welcome
• “A+” credit rating (S&P)
• $ 9.0 billion in new foreign investment in 2010
(compared with $6.3 billion in 2009)
• Over $15 billion total (FDI plus portfolio)
• Since 1974, total FDI in Chile has topped well
over $75 billion. Top investors: U.S., Spain,
Canada, U.K., Australia
• Santiago selected as “Best City for Business‟‟
in Latin America
• A springboard to other markets
Our Free Trade Agreement
• 95% + of bilateral trade in goods duty-free
• 75% + of U.S. farm goods duty-free by 2008
• Stronger protection of intellectual property rights (IPR)
• Open and fair government procurement (www.chilecompras.cl)
• Commitments on labor rights and environmental protection
• Phases out all tariffs within 12 years (by 2016)
• U.S. market share was up to around 20% in 2010; under 15% in 2003
Visit our U.S. Exporters Guide to the US – Chile FTA at http://www.buyusa.gov/chile/en/ftaguide.html
Effective January 2004
U.S.-Chile Trade
in Merchandise/Goods (In US$ Billions)
0
2
4
6
8
10
12
14
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
3.5 3.8 3.7
4.7
6.7
9.69
8.2
6
7
3.12.6 2.7
3.6
5.2
6.8
8.3
12.1
9.4
10.9
Imports from Chile Exports to Chile
U.S. Department of Commerce, Bureau of the Census (www.census.gov)
*
Main U.S. Exports
to Chile
NAICS US$ Millions FAS
2008 2009 2010
Total Exports (billions): 11.8 9.3 10.9
324- Petroleum & coal products 3,525 1,747 2,162
333- Machinery, except electrical 1,917 1,707 1,946
334- Computer & electronic products 1,227 1,152 1,452
325- Chemicals 1,529 1,032 1,380
336- Transportation equipment 1,196 1,689 1,251
Source: TradeStats Express
Main Chilean Exports
to the U.S.
Source: Bureau of Census
NAICS US$ Millions Customs Value
2008 2009 2010
Total Exports (billions): 8.2 6.0 7.0
331- Primary metal mfg. 3,388 1,752 2,656
111- Agricultural products 1,432 1,463 1,620
321- Wood products 658 502 518
311- Food manufactures 455 462 442
114- Fish, fresh/chilled/frozen & others 299 314 315
325- Chemicals 372 272 293
312- Beverages & tobacco products 229 278 283
Main Destinations for Chilean
Exports (2010)
Source: www.aduana.cl
2011 Growth Sectors / Best
Prospects for U.S. Exports
• Construction
• Energy / Electrical Power Equipment
• Medical Equipment & Healthcare
• Food Processing & Packaging Equipment
• Environmental Technologies & Services
• Agricultural Machinery & Equipment
2011 Growth Sectors / Best
Prospects for U.S. Exports (cont.)
• Mining Equipment
• Telecommunications Equipment & Services
• Travel & Tourism Services
• Franchising
• Safety & Security
Earthquake – February 2010
• More than 75% of population concentrated in affected
region
• Affected Industries:
•Pulp & Paper; Forestry; Sea Port
Estimated Damages & Costs
• Total cost of damage and lost production: • US$30 billion; 17% of 2009 GDP
•Infrastructure•Estimated economic impact of infrastructure projects: US$173 billon•Damaged or destroyed bridges: 221•Damaged highway: 966 miles•44% of port infrastructure inConcepcion must be rebuilt
•49% of canal and reservoir inConcepcion must be repaired
•Schools•Damaged or destroyed schools: 3,049•Affected students: 1,250,000
•Hospitals•60 Damaged and 15 destroyed
•Homes•Damaged or destroyed: 370,000
Chilean Government Response
Emergency Care2/27/2010 – 3/31/2010• Meet basic needs
Winter Emergency2/27/2010 – 6/21/2010• Ensure basic classrooms, medical facilities and
living environments
Reconstruction Plan
2/27/2010 – 2/27/2014 (Start date June 21, 2010)
• Restore affected area while focusing on job generation
Opportunities for U.S. Companies
• Who is needed?
• Subcontractors
• Suppliers
• Engineering and Consulting
• What is needed?
• Energy Efficient Technology
• Machinery & Equipment
• Specialty Building Materials
• Structural Engineering
• Success Story Examples…
– Acrow (earthquake)
– Center Rock Inc. (mining collapse)
Opportunities for U.S. Companies
•What is the channel?
• Competitive bidding
• Partnership with local contractor
• Sale of product or service to contractor
• Government concessions
www.chilecompra.cl
www.mercadopublico.cl
Exponor – Antofagasta, Chile
Expo Hospital – Santiago, Chile
Pesca Sur – Concepción, Chile
Expocorma – Concepción, Chile
FIDAE – Santiago, Chile
Expomin – Santiago, Chile
June 13-17, 2011
June 22-24, 2011
October 25-28, 2011
November 16-19, 2011
March 27-April 1, 2012
April 2012
Recent / Upcoming
Local Trade Events
American Int’l Toy Fair
Graphics of the Americas
ProMat
International Franchise Expo
Waste Expo
National Restaurant Assoc. (NRA)
February 13-16, 2011
February 24-27, 2011
March 21-24, 2011
April 1-3, 2011
May 9-12, 2011
May 21-24, 2011
Int’l Buyer Program (IBP) Events
We Can Help!
• Counseling and Advocacy
• Finding International Partners
• Customized Market Research
• Trade Events
Visit www.buyusa.gov to locate your nearest
U.S. Export Assistance Center and get
information on our services.
U.S. Embassy / Department of Commerce
Santiago, Chile
www.buyusa.gov/chile
E-mail: [email protected]
Tel: (56-2) 330-3316 Fax: (56-2) 330-3172
Thank you!
