Foreign Investment in Chile Liliana Macchiavello Executive Vicepresident

Foreign Investment in Chile Liliana Macchiavello, Executive Vicepresident Foreign Investment Committee www. foreigninvestment. cl June, 2010

Snapshot of the Chilean Economy Social Population : 16. 9 millon Oficial Language : Spanish Currency : Peso Literacy rate : 97% Life expectancy : 78 years GDP 2009 : US$ 164 billion GDP per capita (PPP , 2009) : US$ 14, 341 Interest rate (Monetary Policy) : 0. 50% Unemployment rate : 9, 7% Public debt (2009) : US$ 2. 563 millones Exports (2009) : US$ 53, 7 billion Imports (2009) : US$ 39, 7 billion Economy 2009 (*estimated by IMF) Source: Central Bank of Chile (www. bcentral. cl)

Chilean investment attraction track record Foreign Direct Investment in Chile (6. 8% average) (% of GDP) Source: Central Bank of Chile (www. bcentral. cl)

Chilean investment attraction track record FDI in Latin America and the Caribbean: top 10 recipient countries, 2009 (in million dollars) Source: FDI in Latin America and the Caribbean 2009, May 2010, ECLAC (www. eclac. org)

Chilean investment attraction track record Reinvestment of profits (% of FDI) Source: Foreign Investment Committee (www. foreigninvestment. cl).

Solid fundamentals Among the advantages: • Country’s political and economic stability • An efficient level of connectivity • The Free Trade Agreements network • The legal certainty and stability foreign investment.

Dynamic business environment GDP growth in Chile (real annual variation, %) *Estimated as of April 2010 Source: Central Bank of Chile (www. bcentral. cl)

Competitive economy Business Environment Ranking 2010 – 2014 (82 economies) Source: Economist Intelligent Unit, April 2010 (www. eiu. com)

Competitive economy Index of Economic Freedom (179 economies) Source: Heritage Foundation, March 2010 (www. heritage. org)

High levels of transparency Corruption Perception Index (180 economies) Source: Transparency International (www. transparency. org), November 2009

Safe and reliable country to invest in In 2010 Chile formally became member of the Organisation for Economic Co-operation and Development (OECD). North America: Canada (1961); United States (1961); Mexico (1994) South America: Chile (2010) Europe: Germany (1961); Austria (1961); Belgium (1961); Denmark (1961); Slovenia (2010); Spain (1961); Estonia (2010); Finland (1969); France (1961); Greece (1961) ; Hungary (1996); Ireland (1961); Iceland (1961); Italy (1961); Luxemburg (1961); Norway (1961); Netherlands (1961); Poland (1996) ; Portugal (1961); United Kingdom (1961); Czech Republic (1995); Slovak Republic (2000); Sweden (1961); Switzerland (1961); Turkey (1961) Pacific: Australia (1971); Japan (1964); New Zeland (1973); Republic of Korea (1996) Middle East: Israel (2010)

Globally connected 18 international airlines operate in Chile, offering 80 thousand flights a year. 37 airports and aerodromes. Chilean ports include: 10 state-owned port companies 23 private ports Handle almost 90% of Chile’s international trade. Investors committed more than US$10 billion to concession projects that include highways, prisons, hospitals, ports and others.

Internationally integrated economy Chile has in force 20 agreements with 56 countries Canada (1997) • EFTA (2004) • • European Union (2003) • Turkey • United States (2004) Mexico (1999) Central America (2002) • Panama (2008) • • Venezuela (1993) Colombia (2009) • Ecuador (1995) • Peru (2009) • • Bolivia (1993) • Mercosur (1996) • Korea (2004) • Japan (2007) • China (2006) India (2007) • • • Free Trade Agreements • Association Agreements • Bilateral Trade Agreements • Partial Trade Agreement • In negotiation, concluded but not signed • Vietnam • Thailand • Malaysia • Australia (2009) P 4 (2006) •

Investment Platform Some of the companies that use Chile as a platform to reach other countries are: General Electric (Industry) Equifax (Services) AP Moller-Maersk (Services) Packard Bell (Information & Technology) TNT Express (Services) Finning (Industry) Grupo Nueva (Forestry) Phelps Dodge Mining Services (Mining) Beirsdorf (Industry) Wachovia Corporation (Financial Services)

Diversification of exports 1975 2003 2009 Exported products 200 3, 854 4, 981 Exporting companies 200 6, 435 7, 517 Countries 50 165 191 Total (US$ billion) 1. 6 32. 0 53. 0 Source: Central Bank of Chile, Direcon

Regulation of investment in Chile I. Constitutional Framework • Right to private property: Under the Constitution, all persons, including foreigners, are guaranteed freedom to acquire ownership of all types of goods, both tangible and intangible. • Economic freedom: Within the bounds of the legal norms regulating different economic activities, the Constitution guarantees the right to undertake any economic activity that does not infringe moral standards, public order or national security (Art. 19 N° 21). • National treatment: The Constitution also guarantees that, on economic matters, foreign investors will receive the same, or not less favorable, treatment as local investors from the State and its agencies, and will not be subject to discrimination of any type (Arts. 19 N° 2 CPE, 57 Civil, 9 and 10 DL 600).

Regulation of investment in Chile II. Legal Framework • Decree Law N° 600 (DL 600) Foreign Investment Committee Originally introduced in August 1974. In March 2003 it was ratified by Congress with minor modifications. • Chilean Central Bank's Compendium of Foreign Exchange Regulations (Chapter XIV) It establishes the general rules foreign capital transfers. All capital entered via Chapter XIV remains under the general applicable regulation in all matters, including for the access to the foreign exchange market, the possibility to transfer capitals to the exterior, and for any other right or obligation established in that regulation.

Foreign Investment Statute Decree Law N° 600 Since DL 600 came into force, most foreign investors have used this mechanism. By 2009, foreign direct investment worth US$ 74, 9 billion had been materialized through DL 600, representing 67. 3% of total FDI in Chile during that period.

Main characteristics of DL 600 • Non-discrimination • Non-discretionary procedures • Free access to economic sectors • Contract with State of Chile • Access to Formal Exchange Market • Capital and profit remittances • Choice of tax system • Six forms of investment

Foreign investment under DL 600 FDI under DL 600 by country of origin, 1974 - 2009 (US$ 74, 901 million) Mexico France Italy 2% 2% Netherlands 3% 3% Japan 3% Others 11% United States 26, 4% Australia 4, 7% United Kingdom 8, 4% Canada 17, 4% Spain 19, 4% Source: Foreign Investment Committee (www. foreigninvestment. cl), 1974 – 2009

Foreign investment under DL 600 FDI under DL 600 by economic sector, 1974 - 2009 (US$ 74, 901 million) Transport & communications 11% Others 3% Mining 33% Industry 12% Electricity, gas & water 20% Services 22% Source: Foreign Investment Committee (www. foreigninvestment. cl), 1974 – 2009

Investment opportunities Agribusiness Chile exports more than US$ 12, 000 millon in food. It aims to become a “Food Power” and position between the ten largest world food producers (currently 17 th). If offers natural advantages such as: • Mediterranean climate • Opposite seasons with respect to the world’s main markets • Phytosanitary assets.

Foreign investment in agribusiness Share of the food industry in Chile’s industrial sector

Foreign investment in agribusiness Between 1974 and 2009, materialized FDI in agribusiness sector through DL 600 worth US$3, 015 million, representing 4% of total net FDI. Source: Foreign Investment Committee (www. foreigninvestment. cl), 1974 – 2009

Foreign investment in agribusiness Some of the companies with materialized investments in agribusiness in the 2008 -2009 period Company Country Sector Region Ocea Norway Fish Farming Los Lagos Danone France Food industry Biobio Camil Brazil Food industry Metropolitana Sogrape Portugal Wine y licors O’Higgins Daminvest Spain Wine & licors O’Higgins Source: Foreign Investment Committee (www. foreigninvestment. cl), 1974 – 2009

In Chile, you will always be welcome. Thank you

Chile’s Investment Climate Liliana Macchiavello, Executive Vicepresident Foreign Investment Committee www. foreigninvestment. cl June, 2010