flag Chile Chile: Investing

In this page: FDI in Figures | What to consider if you invest in Chile | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

Despite the Covid-19 pandemic, Chile benefited from a rapid recovery in commodity terms of trade during the second half of the year that is likely to boost inflows during 2021. According to the World Investment Report 2021 published by UNCTAD, FDI flows to Chile declined by 33 % to USD 8.4 billion (compared to USD 12.5 billion in 2019), due to lower capital investment (-29 %) and lower reinvested earnings (-28 %). The country's resilience, compared to its peers in South America, stemmed from the rapid recovery in mineral prices, sustained fiscal spending (14% of GDP) and the implementation of one of the fastest vaccination campaigns in the world. From a sector-specific perspective, Chile's commitment to a green transition has created the basis for attracting additional foreign capital into green energy industries. As a matter of fact, 40% of greenfield announcements in 2020 were registered in the renewable energy industry, especially in solar electricity. FDI stocks reached USD 272 billion, a rise of more than USD 100 billion if compared to 2010. Brazil, the US, Peru and Argentina represent more than the half of the FDI stock. Investment are mainly oriented towards mining, finance and insurance, energy, commerce, and manufacturing.

Chilean economic policies, which are founded on the principle of capital transparency and non-discrimination against foreign investors, comprise one of the country's strengths. Investors are also attracted by the richness of Chile's natural resources, the stability of its macro-economic system, its growth potential, its juridical security, its low level of risk and the high quality of its infrastructure. Chile is highly regarded as one of the strongest investment destinations in Latin America and the country has made progress in facilitating starting a business procedures over the last few years by enabling online registration of closed corporations. However, the country's reliance on copper prices may negatively affect its economy and drive away some potential investors. In 2019, Huawei invested USD 100 million on a regional data storage project in Santiago; in 2020, the Chinese tech company announced that it would invest on a second data centre in the country, boosting its cloud and AI platform in South America, and in 2021 a Chinese firm Sinovac invested USD 60 million on a vaccine manufacturing plant in Santiago. Additionally, Chile ranks 59th out of 190 countries in the last Doing Business report, issued in 2020 by the World Bank, falling three spots compared to 2019. In order to gain places, the country can improve issues such as protecting minority investors, resolving insolvency, and getting credit.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 15,2319,63712,719
FDI Stock (million USD) 187,572188,227180,489
Number of Greenfield Investments* 1408082
Value of Greenfield Investments (million USD) 8,7035,4355,278

Source: UNCTAD, Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries 2019, in %
USA 13.0
Spain 12.7
Canada 12.6
Netherlands 7.5
United Kingdom 6.9
Cayman Islands 5.9
Italy 4.0
Main Invested Sectors 2019, in %
Mining 32.1
Financial services 23.6
Electricity, gas and water 13.5
Commerce 6.5
Manufacturing 5.1
Communication 4.6
Transport and logistics 3.2

Source: Central Bank of Chile - Latest available data.

 
Form of Company Preferred By Foreign Investors
The business forms most commonly used by foreign companies are limited liability companies (Sociedades de Responsabilidad Limitada, SARL) and public companies (Sociedades Anónimas). SARLs have a more flexible structure but shares of public companies can be transferred more easily.
Form of Establishment Preferred By Foreign Investors
Most investors prefer using a Chilean society as a branch of a foreign company. Operating through a Chilean branch allows you to enjoy limited liability for the activites in Chili and to separate losses from the assets of the parent company in the country of origin.
Main Foreign Companies
Oracle, McAfee, WorleyParsons, Jazzplat, Synthon, Pioneer, etc.
Sources of Statistics
Central Bank
Invest Chile

Return to top

What to consider if you invest in Chile

Strong Points

Strong points for FDI in Chile:

  • Macro-economic stability, good growth perspective
  • A top Latin American importer per capita, enjoys excellent solvency
  • High purchasing power (for Latin America)
  • Wealth of natural resources (coper, agriculture)
  • Internationalised Chilean companies
  • Labour laws that tend to be favourable towards business, mainly due to the flexibility of working hours and uncomplicated procedures for the dismissal of employees
  • Foreign companies can also benefit from privileged access to regional markets through different free trade agreements.
Weak Points

Weak points for FDI in Chile:

  • Lack of innovation, very weak spending in research and development
  • Investment in network industries is not substantial
  • Vulnerability to fluctuations in commodity prices and dependence on Chinese imports
  • Electric and road infrastructure is insufficient for the size of the territory
  • Lack of qualified work force. The activity rate of the working population is rather low, in particular among women and young people.
  • Persisting economic inequalities resulting in political and social tensions (e.g strike in mining sector), with protests regularly taking place
Government Measures to Motivate or Restrict FDI

Chile’s foreign investment policy is based on simplicity, transparency and non-discrimination towards foreign investors. Over the past years, the Government has worked to simplify investment procedures. On a fiscal level, foreign investors benefit from a moderate corporate tax and they are guaranteed access to the formal foreign exchange market, including free remittance of capital and profits. A new legal type of company has been developed, the 'Simplified Limited Company' (‘empresa individual de responsabilidad limitada' - EIRL) that allows a foreigner to create a business in Chile without needing a local partner. Also, joint stock companies can be formed without a local partner (but another legal entity is required).

The Government established a foreign investment promotion and attraction strategy that included the creation of a new national investment promotion agency, InvestChile. InvestChile assists overseas companies with their investments in Chile. The Government has identified five priority sectors for investment: mining industry services, sophisticated food industry, exportable technological services, tourism and energy/logistics.
Under Law Decree N° 600 (the so-called "Foreign Investment Statute"), a guaranteed income tax rate of 42% may be granted for ten years or, provided the capital investment project exceeds USD 50 million, 20 years for the development of industrial or extractive projects (the overall rate is comprised of the corporate tax on profits and withholding tax on dividend or branch profit distributions).

Return to top

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Chile
Visit UNCTAD's Investment Policy Hub to consult the investment treaties signed by Chile.
International Controversies Registered By UNCTAD
Please refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement
CAM Santiago , Santiago Center for Arbitration and Mediation
Consejo de Denfensa del Estado , The National Defense Council
Member of the Multilateral Investment Guarantee Agency
Yes
 
Country Comparison For the Protection of Investors Chile Latin America & Caribbean United States Germany
Index of Transaction Transparency* 8.0 4.1 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 7.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

Return to top

Procedures Relative to Foreign Investment

Freedom of Establishment
Chilenian laws and practices do not discriminate against foreign investors, who enjoy the same conditions as local investors.
Acquisition of Holdings
A majority holding interest in the capital of a local company is legal, as long as Chilean procedures and agreement formalities are respected.
Some sectors may have restrictions, such as maritime transport, nuclear energy and mining.
Obligation to Declare
InvestChile, the Agency for Foreign Investment Promotion, carries on a pro forma screening of potential investments and provides information on the authorisations necessary for business implantation. Investors should be aware that the economic activity they plan to develop in Chile may be subject to special permits or requirements. These vary depending on the nature of the activity and include health, environmental and municipal permits.
Competent Organisation For the Declaration
Chile Foreign Investment Committee
Requests For Specific Authorisations
Foreign investors must obtain specific authorisation to invest in certain strategic sectors, such as exploration and exploitation of hydrocarbons, mining or the production of nuclear energy. In fact, the Constitution establishes the “absolute, exclusive, inalienable and permanent domain” of the Chilean state over all mineral, hydrocarbon, and fossil fuel deposits within the national territory; but the government is allowed to grant concession rights to individuals and companies for exploration and exploitation activities.

Return to top

Office Real Estate and Land Ownership

Possible Temporary Solutions
There are fournished offices for rent daily, weekly or monthly, equipped with many facilities. For more details see for example the following sites: InstantOffices, Regus, Engel & Volkers.
The Possibility of Buying Land and Industrial and Commercial Buildings
Yes
Risk of Expropriation
Chilean law gives government the power to expropriate assets, including from foreign investors, only in the name of public or national interest, on a non-discriminatory basis and by respecting the law. The law requires that an indemnisation be immediately paid at fair market value, plus any interest incurred. The government has not nationalized any private companies since 1973.

Return to top

Investment Aid

Forms of Aid
Incentives are available for investmens toward isolated geographical zones and to the information technology sector, including co-financing of feasibility studies as well as to incentives for the purchase of land in industrial zones, the hiring of local labor, and the facilitation of project financing.
Privileged Domains
Tax exemptions, co-financing of feasibility studies, incentives for the purchase of land in industrial zones, hiring of local labor, facilitation of project financing, etc.
Privileged Geographical Zones
IT sector, biotechnology, R&D, electronics, engineering processes, renewable energies, the oil sector and forestry.
Free-trade zones
Incentives for investment in remote and underprivileged areas (far north and far south): co-financing feasibility studies, encouraging purchase of lands in industrial zones, hiring local labor force and facilitating project financing. Fiscal advantages in tax-free zones in the northern port city of Iquique (Tarapaca Region) and in the far south port city of Punta Arenas (Magallanes Region), as well as the Chacalluta and Las Americas Industrial Park in Arica. In such zones, companies are exempt from corporate income tax, VAT on operations and services that take place inside the free trade zone, and customs duties.
Public aid and funding organisations
Ministry of Economy
 
 

Return to top

Investment Opportunities

The Key Sectors of the National Economy
Mining sector, energy sector, agrarian sector (especially wine), road infrastructure, building.
High Potential Sectors
Renewable energies and waste treatment, electricity, biotechnology, health, tourism, telecommunication and online sale sector. 
Privatization Programmes
No privatisation program in progress at the moment.
Tenders, Projects and Public Procurement
Mercado Publico, Tenders and Public Procurement
Tenders Info, Tenders in Chile
Inter-American Development Bank, Tenders in South America
DgMarket, Choose your country

Return to top

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
For reasons of national security, Chile imposes certain restrictions on investors in the domains of nuclear energy, hydrocarbons, defence, sea transport and mining.
Permits are required in the telecommunication sector. 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: November 2022