According to figures from Chile’s Central Bank, foreign direct investment (FDI) in the Andean nation reached a record US$12.275 million in the first semester of 2012. The sum is equivalent to an 80.2 percent increase on the amount registered over the same period in 2011.
The mining sector was at the forefront of the historic wave of capital, accounting for 60.3 percent of the total figure and adding up to US$1.066 million. Following this was gas and water generated electricity, with 14.2 percent of the total, or US$250.8 million. Industry accounted for 12.7 percent, or US$224.9 million, while transport and communication received US$130.6 million in FDI, or 7.4 percent of the total figure.
Of those sectors, the most significant increases were registered by the industrial sector, which was up from US$27 million over the same period last year, and electricity, which went from US$76 million to displace services as the second most receptive sector to FDI.
Of the total FDI Chile received during the semester, US$1.76 million corresponded to disbursements through Decree Law 600 (D.L. 600) – an optional entry mechanism for capital into Chile which allows foreign investors to sign a contract with the Chilean State.
Japanese investors led the increased use of the D.L. 600, with 43 percent of its total, or US$759.5 million, coming from that nation, followed by Canada, with US$272.9 millon, or 15.4 percent, then Switzerland, which invested US$213.1 million, 12.1 percent of the total.
Chile’s Minister of Economy, Economic Development and Tourism, Pablo Longueira, said the increased use of the D.L. 600 and record FDI could only be interpreted as further signs of the strength from the Chilean economy.
“The fact that reinvested profits, at US$5.867 million or 47.8 percent of the total, are the largest single component is a clear sign of the confidence with which our economy is viewed in the rest of the world and of its recovery during the past two years, despite events like the earthquake and the international financial crisis,” Longueira said.
Furthermore, the minister signaled further advances in FDI may be on the horizon, thanks to agreements reached with Chile’s largest trading partner.
“Within the next few weeks, Chile will sign a Memorandum of Understanding with China, the world’s second largest economy and Chile’s most important trading partner, which has so far not played a significant role in FDI in Chile,” said Minister Longueira. “We hope that this agreement will open the way to dialogue that leads to an increase in the flow of investment and technology transfer between our two countries.”