29
2
Snapshot of the Chilean Economy
Source: Central Bank of Chile
SocialPopulation 17.6 millionOfficial Language SpanishCurrency Peso Literacy rate 97%Life expectancy 78 years
EconomyGDP 2012 US$ 268 billion (IMF)GDP per capita (PPP, 2012) US$ 18.354 (IMF)Actual interest rate (Monetary Policy, Jan 2013)
5.0%
Unemployment rate (Avg. 2012) 6.5%Exports (2012) US$ 78,8 billionImports (2012) US$ 74,6 billion
Chile’s Sovereign RatingsFitch Ratings AA-Standard & Poors AA-Moody’s Aa3
Chilean Economic Activity
3Source: Central Bank of Chile
IMACEC Index, which tracks the Chilean economic activity in a monthly basis, has consistently reached levels above 5% during the past few years. Also, it highlights the 2010 earthquake’s impact on the economy.
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-6
-4
-2
0
2
4
6
8
4,1*4,5*
2,1*
Mundo Latinoamérica y el Caribe Chile OECD
Growth comparison: World, Latin America and OECD 2000-2013
*Projected growth
Economic Growth Projections
Source: International Monetary Fund4
VenezuelaBolivia
EcuadorBrazil
ArgentinaParaguayUruguay
MexicoColombia
PeruChile
IrelandIcelandKorea
United KingdomNorway
DenmarkUnited StatesNew Zealand
Hong KongSingapore
177153
130126
113102
9053
424139
10987654321
Doing Business 2012 Competitiveness Yearbook 2012 Economic Freedom Index
2012 (7 out of 179 economies)*(39 out of 183 economies)*
*Selected economies.
Category Pos.
Protecting investors 29 Chile leads Latin America.
Argentina
Colombia
South Africa
Russia
Brazil
Peru
Czech Republic
Chile
Japan
South Korea
United Kingdom
Germany
Sweden
Hong Kong
55
52
50
48
46
44
33
28
27
22
18
9
5
1
(28 out of 59 economies)*
Outstanding Business Environment
5
Chile, un país abierto al mundoA country with an open economy: 22 Free Trade Agreements with 59 countries.
Turkey Ecuador Colombia Australia Peru Cuba Panama Japan India P-4 China EFTA Korea United States European Union Central America Mexico Canada MERCOSUR Venezuela Bolivia Malaysia
Thailand Hong Kong Nicaragua Vietnam
63% of world population
86% of the global GDP
90.5% of Chile´s export markets
Agreements In force
Agreements signed but not yet in force
Agreements under negotiation
Globally integrated economy
Source: Government of Chile| Foreign Investment Committee6
Belgium Denmark Spain France Ireland Poland Portugal United Kingdom Sweden Switzerland Norway Croatia Canada Colombia Ecuador Mexico Peru Argentina Brazil Paraguay South Korea
Agreements in force Agreements signed but not yet in force
Agreements under negotiation
Thailand Malaysia New Zealand United States Russia Australia
Avoidance of Double Taxation Agreements (ADTA)
Chile has entered into 25 ADTA with 25 countries.
Source: Government of Chile, Foreign Investment Committee7
FDI in Top 10 Host Economies
Top 10 host economies(FDI inflows, average 2009-2011, US$ Billions)
8
FDI in Emerging Markets
9Source: Central Bank of Chile
The FDI historical flows exhibit imbalances among the 3 main emerging markets worlwide: Em. Asia, Em. Europe and LatAm. However, we observe a positive trend towards Latin America in the past year, which is estimated to increase this year.
-18,30%
7,20%
52,70%
World LatAm Chile
FDI Flows into Latin America and the Caribbean
Latin America’s Largest FDI recipients2011-2012* (ThUS$ million)
Forecast Growth Rate of FDI inflows by Region, 2012 (%)
•While Latin America and the Caribbean would register an average growth of 7,2%, FDI flows worldwide would score US$1,3 billion, with a 18,3% decrease over the previous year. This figure, close to the 2009 figure, would be influenced by low FDI inflows to Europe and the U.S., mainly due to the uncertainty in macroeconomic policies for investors.
•Chile became Latin America’s second largest recipient of FDI in 2012. United Nations forecasted a US$26.400 million FDI inflow to Chile last year, however this was topped by the actual figure of US$28.152 million.
Source: Global Investment Trends Monitor, UNCTAD.
* 2012 figures are estimates.Source: Global Investment Trends Monitor, UNCTAD.
10
FDI in ChileFigures provided by the Central Bank of Chile exhibit a record level of FDI in 2012, reaching US$28.152 million, a 62,7% increase from previous record in 2011. This implies a 27,1% CAGR between 2002 and 2012, placing 2012’s FDI as 11 times the 2002 level.
11
2.5504.307
7.173 6.984 7.298
12.53415.150
12.87415.096
17.299
28.152
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Foreign Direct Investmentin Chile (US$ MM)
Source: Central Bank of Chile
United States24,6%
Spain19,0%
Canada18,1%
United Kingdom8,0%
Japan5,5%
Australia4,6%
Italy2,4%
Mexico2,2%
Netherlands2,1%
France2,0%
Others11,5%
Breakdown by countries Breakdown by industries
Mining34,1%
Services22,4%
Electricity, Gas & Water18,4%
Transport & Communications
11,1%
Manufacturing10,9%
Construction1,7%
Agriculture, Forestry & Fishing1,4%
Source: Foreign Investment Committee
FDI in Chile, inflows under D.L. 600
1974-2011 (US$82,021 million)
12
24%
19%
17%
9%
8%
5%
5%
13%
Foreign Direct Investment in Chile By Country of Origin (2002-2011)
Canada (Canadá)
Spain (España)
United States (Estados Unidos)Japan (Japón)
United Kingdom (Reino Unido)Australia (Australia)
Mexico (México)
Canadian FDI in Chile
Source: Foreign Investment Commitee
Canada has been the main source of Foreign Direct Investment in Chile for the past decade, accounting for 24% of total FDI in that period (MMUS$ 7.799), according to the Foreign Investment Committee.
13
25%
19%
18%
8%
5%
5%2%
18%
Historical Foreign Direct Investment in Chile By Country of Origin (1974-2011)
United States (Estados Unidos)Spain (España)
Canada (Canadá)
United Kingdom (Reino Unido)Japan (Japón)
Australia (Australia)
Italy (Italia)
Others (Otros)Source: Foreign Investment Commitee
0
1.000
2.000
3.000
4.000
5.000
6.000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Foreign Direct Investment in Chile (D.L. 600 materialized, US$ MM)
FDI from Canada
Other FDI
Source: Foreign Investment Committee
Since 1974, when FDI measure was first implemented in Chile, Canada has been the third largest foreign investor in the country, accounting for 18% of total inflows (MMUS$ 14.822).
Source: Foreign Investment Commitee
Chile is a world class player.
Mining companies plan to invest US$91 billion during the next eight years.
Mining
Investment Opportunities: Produce Industry; Wine Industry and
grape sub-products; Olive Industry; Meat and Dairy sub-
products; Salmon Industry; Food Ancillary
Industries; Elaborated Foods; Biotechnology
applied to the Food Industry.
Food Industry
High growth potential.
Investment Opportunities:
Natural conditions for Non-Conventional Renewable Energy;
Need for matrix diversification;
Energy independence.
EnergyChile has an investment portfolio of an aggregate amount of US$7,9 billion in public tenders.
Infrastructure
Export-oriented fabrication & integration of parts &components.
Manufacturing & AssemblyIn 2010, service
exports totaled US$10.8 billion. 15% of our total exports and 5% of GDP.
Services
Source: Government of Chile, Foreign Investment Committee
Investment Opportunities
14
International Trade: Chile - Canada There are 2 main sources to measure international trade between Chile and Canada: StatsCan and the Central Bank of Chile. Even though there might be differences in their figures, trends are usually similar.
0
500
1.000
1.500
2.000
2.500
2006 2007 2008 2009 2010 2011 2012*
Trade Balance Chile-Canada (US$ MM)
Chilean EXPORTS to Canada
Chilean IMPORTS from Canada
TRADE BALANCE Chile - Canada
Differences between 2 main sources: •Tariff Codes are different•Intermediate destination sometimes accounted as final•Time gaps until product arrives to destination
Source: StatsCan
US$ MMStatistics Canada
Central Bank of Chile
2006 417 4562007 710 9252008 682 9532009 562 6922010 572 6712011 825 847
2012* 389 965
Chilean IMPORTS from Canada
US$ MMStatistics Canada
Central Bank of Chile
2006 1.635 1.3152007 1.575 1.3042008 1.720 1.2452009 1.520 1.2792010 1.819 1.2872011 1.936 1.476
2012* 921 1.268
Chilean EXPORTS to Canada
* 2012 figures from StatsCan are Jan-Jun 2012 only.
15
* 2012 figures from StatsCan are Jan-Jun 2012 only.
Figures provided by StatsCan exhibit a positive trend in Trade Balance between 2007 and 2011, driven by an increase in Chilean exports to Canada.
International Trade: Chile - Canada Chilean exports to Canada are concentrated in few products. Based on Statistics Canada’s figures, the top 3 exported products (Gold, Silver and Grapes) accounted for 54% of total exports to Canada in 2011. Likewise, the top 6 exported products (+ Copper, Wine and Fish) explained 71% of total.
05
1015202530354045
2006 2007 2008 2009 2010 2011 1S12
Shar
e in
Tot
al E
xpor
ts (%
)
Top 6 Chilean Products Exported to Canada (71% of total in 2011)
Gold
Silver
Grapes
Copper
Wine
Fish
Source: StatsCan
16
In 2011, minerals accounted for almost half of total Chilean Exports to Canada. In terms of products, Gold has increased significantly its share in the past few years, while Copper has exhibited the opposite trend.
Chilean Exports to CanadaUS$ MM 2006 2007 2008 2009 2010 2011 1S12Gold 184 128 28 122 374 622 249Silver 0 20 54 97 173 256 75Grapes 127 124 155 141 167 159 142Copper 565 636 621 330 302 135 41Wine 61 75 83 84 97 100 47Fish 70 80 77 73 76 95 46TOP 6 1.006 1.064 1.019 847 1.190 1.367 601TOTAL 1.635 1.575 1.720 1.520 1.819 1.936 921% Top 6 / Total 62% 68% 59% 56% 65% 71% 65%
35 40 3622 17
7 5
119
514 30 45
35
10 36
0
63
1
44 47 5464
48 4559
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 1S12
Chilean Exports to Canada by Sector(% of total exp.)
Non Minerals
Other Minerals
Gold + Silver
Copper
Source: StatsCan
1. Strengthen our contact network in Canada, with a special focus on its four major provinces
2. Deliver high quality market research to our Chilean exporters
3. Organize high quality commercial missions nationwide
4. Organize investment attraction activities that invite Canadian companies to go to Chile
5. Positioning Canada as an attractive market for our entrepreneurs
ProChile Canada
Exports
Investment
Tourism
ProChile Canada contributes to Chile’s economic development through its promotion abroad, supporting Chilean exporters to the internationalization of their business in a sustainable path. Likewise, enhancing the promotion of investment and tourism are new strategic targets to achieve in the upcoming years.
TRADE COMMISSION OF CHILE In Canada
17
SustainableGrowth
IncreasedProductivity Gains
Science &Education
Innovation &Entrepreneurship
Chile’s Next Growth Phase: (2010-2030)
18
19
Culture and
ecosystem
Human Capital
Institutions
Global Connection
R&D
Financing
The basic elements of our action planChile is a globally integrated economy, with strong foundations and outstanding business environment. We strongly believe that Chile’s Next Growth Phase (2010-2030) should arise from becoming a Regional Hub for Entrepreneurship & Innovation.
Where is Chile going to add value
20
A new culture for innovation
Emblematic Projects
Competition for a better business
environment
2013: The year of innovation
21
Entrepreneurship at the core of a new economy
22
1. Entre-preneurship •For and From the people
2. Goal•Build a strong ecosystem:•Positive culture - Knowledge & technology - Human networks•Global thinking - Financing
3. Government•Retreat from “market zone” and concentrate where market fails•Make it easy to create companies•Avoid red-tape
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -
20 40 60 80
100 120 140 160 180 200
Financial crisis
Earthquake
Record of creation of
new companies
2002=100
New registered activities on an historical record
Source: Chilean IRS23
(Snapshot – nota The Economist – October 13th., 2012)
A hub for Global Entrepreneurs
24
• 35% Tax Credit for all R&D expenditure (remaining 65% is tax deductible) = almost 50% of R&D is “paid” by Gov.– All R&D expenditures are allowed, incl operational expenses, real and
personal property, payroll, etc– R&D activity can be performed in-house or by third parties, and if
needed, up to 50% can be done in a foreign country– Annual maximum tax credit per company (legal entity) is US$1,2 million
(however all remaining expenditure is tax deductible)– Tax benefit can be carried forward 10 years
• New tax credit law become effective on September 7th 2012– Law was approved with overwhelming majority from all parties– Law will be valid (i.e. new projects can be certified) until at least 2025
New R&D Tax Credit
25
INRIA-Chile
• Has become a Chilean legal entity and was formally launched as CIRIC in June 2012. Introducing new activities with ALMA (Astronomy)
Wageningen-Chile.
• Around 85 people collaborating. Articulated cooperation with vast number of customers, and exploring new funding alternatives with other food industry actors . Officially launched in July 2012.
Fraunhoffer-Chile
• R&D being performed for more than a year, more than 75 people contributing to projects, extra funding leveraged, signing of additional research contract with industry, among others
CSIRO-Chile
• Centre launched, staff being hired (18 people already), and starting R&D activities in Santiago and Antofagasta. Closed funding from 5 major Mining companies.
Centres of Excellence: First Institutional Call – A success!
26
• This 2nd Call will not have ex-ante sector or industry priorities in place.
• Proposals tackling high impact areas for Chile’s economy (or even with the potential of creating new industries and leverage regional platforms) will be valued better off.
• Proposals may leverage additional regional funds within the country.
• Projects should contribute to position Chile as an innovation hub within Latam.
• Target are Centers with investment close to USD24M
– Institutional Centers: USD 12.8M in 8 years– Corporate Centers: USD 8M in 4 years and 1:2 funding
Centres of Excellence 2.0 — New Round!
27
Regional Hub for Entrepreneurship & Innovation
28
Trade Commission of Chile | ProChile - Canada2 Bloor Street West, Suite 1801, Toronto, Ontario
Tel.: [email protected]
DISCLAIMER: The information contained in this document is for the purposes of information only and the particular conditions of each specific potential project may vary from those set out here. The contents of this document should in no way be interpreted as a legally binding obligation of the Republic of Chile or any other state agency that participates in any way in the processes of administrative approval or of any other nature corresponding under Chilean law. This information in no way constitutes an authorization to start or exercise the economic activity potentially intended to be developed. The resulting agreements will be governed and interpreted exclusively according to the laws of the Republic of Chile, their related regulation and the national policies applicable to each particular case.
