Foreign investment in Chile doubled during the first quarter

With disbursements 125% higher than those made over the same period last year, as of June national authorities had already authorized projects worth over US$ 4.3 billion.


According to official data, the arrival of a major US supermarket chain in the country, along with important hydroelectric projects, caused foreign investment materialized in Chile during the first quarter of 2009 to double.

In its first session of the season, the Foreign Investment Committee (Cinver) reported payments of US$ 2.278 billion in this area, representing a 125.7% increase between January and March under Legal Decree 600, which promotes such operations.

The institution, which is presided over by the economy minister and includes the ministers of finance, foreign affairs, planning and mining – as well as Central Bank officials – had as of June authorized requests for US$ 4.391 billion, the highest for that period in eight years.

Numbers in context

Ernesto Illanes, dean of economics and business at the Finis Terrae University, highlighted that, in annual numbers, “you can observe a healthy entry of foreign risk capital, which confirms that Chile is seen as an interesting country to invest in, with stable policies and very low political risk.”

As Economy Minister Hugo Lavados did on one occasion, the academic clarified that for a completely rigorous analysis one needs to consider the total amount of foreign investment, not just what comes in under Legal Decree 600.

In addition, the specialist recalled that external capital flows tend to present “sudden changes from one month to the next” and influence the numbers “due to the size of the Chilean economy and the volume of some of the investment projects.” Thus he warned that projected numbers show that there will be a drop of approximately 50% this year.

Major deals

Among the largest operations, the one involving Wal-Mart, the retail giant that bought its Chilean counterpart D&S for US$2.8 billion, stands out. This deal turned the United States into the largest foreign investor in the national territory by far, with 67.2% of the total.

Liliana Macchiavello, executive vice president of the Cinver, highlighted the requests approved for the electricity sector, which were 15.8% of the total. Of them, she mentioned the companies Pacific Hydro International (US$ 250 million) SN Power Holding Chile (US$ 150 million), HydroChile (US$ 180 million) and Suez Tractebel (US$ 95 million).

“It is a good sign for our economy, inasmuch as electricity sector investments are very closely related to the country’s future economic growth,” she said, while at the same time highlighting the diversity of investment, as other funds will go to the retail, forestry, services, construction, and aquaculture sectors.

Among the funds authorized for diverse sectors, the US$ 326 million that the Spanish company Abertis Infraestructuras will spend on the purchase of varied assets – like Rutas del Pacifico and Autopista Central, the consortiums that run the highways connecting Santiago with the ports of Valparaiso and San Antonio, respectively – stand out.