Authorized foreign investment reaches a historic US$ 10.4 billion
Published: April 17, 2009
In the first quarter, the range of sectors to which foreign currency is arriving has become more diverse. Particularly significant, is the agro-industry sector.
US$10,482 million were authorized and US$5,242 million were materialized in 2008 in Chile. The country has been able to maintain sustained growth levels thanks to a serious and responsible macroeconomic policy over the last 25 years, despite the economic crisis and turmoil that had happened during this period. Between 1990 and 2007 the Chilean economy expanded at an average rate of 5.5%, thus becoming the twenty ninth most dynamic economy in the world, according to figures from the International Monetary Fund.
"Chile emerges in the eyes of the foreign investors as a reliable and safe centre to invest their capital", said Liliana Macchiavello, Executive Vice-President of the Foreign Investment Committee, during the presidential tour to India. "In 1999 - post-Asian crisis- and in 2008, the year in which the financial crisis was triggered, direct foreign investment in Chile reached historical levels, consolidating our country as a safe and reliable place for foreign capital" she added.
This positive trend in foreign investment has been maintained during the first three months of 2009. In this period, materialized investment has tripled the value registered in the same period last year, demonstrating the confidence that foreign investors have in our country.
"Currently, over 4,200 companies from 60 countries operate efficiently in Chile, generating employment and contributing in different areas with specialized knowledge. Foreign companies have invested more than US$ 90 billion in diverse sectors such as mining, electricity, gas and water, infrastructure, services, finances, agro-industry and tourism," Macchiavello highlighted.
New sectors
In the first quarter, the range of sectors to which foreign currency is arriving has become more diverse. Among them, agro-industry provides exceptional advantages for the cultivation of crops, due to Chile's strengths in the agricultural sector.
Between 1974 and 2008, US$ 269 million were invested in agriculture in Chile, through the Foreign Investment Statute, Decree 600. This represents 0.38% of the foreign investment that has entered the country through this mechanism. In the same period, many foreign companies have invested in the food industry (US$ 23.538 million, 3.36% of total foreign investment) in projects closely related to agriculture, such as the wine industry and fruit packing, among others.
In 2008, a total of US$ 940,000 was invested in agriculture, US$ 82.5 million in the forestry industry, and US$ 10.9 million in the fishing and aquaculture industry.
"We have world class phytosanitary standards and the geographic advantage of being off-season in relation to the Northern Hemisphere. This allows us to provide food products to those markets in different seasons," highlighted Macchiavello. In addition, Chile has a Mediterranean climate very similar to that of California, Spain, Italy and Portugal. "This demonstrates our economy's level of development, in that it is able to attract capital to sectors other than mining," she concluded.
Historic figures
In spite of the international economic situation, the Foreign Investment Committee authorized the entry of US$10,492 million in 2008. This figure is almost four times higher than that registered in 2007 and only slightly lower than the historic figure reached in 1999, when US$10,780 million were authorized.
Materialized investment - meaning that which actually enters the country - reached US$5,242 million in 2008. Both authorized and materialized investment registered historic peaks only comparable with the post-Asian period in 1999. "These figures show once again that Chile is in good shape to face the international economic situation, something valued by foreign investors," said Hugo Lavados, Economy Minister and President of the Foreign Investment Committee.
"The arrival of Wal-Mart, the diversification of the economy beyond mining -such as electricity, gas & water- the consolidation of Canada, United Kingdom, Spain and United States as investor countries, and the incorporation of others such as South Korea, are clear examples that Chile is in the eye of investors," Minister Lavados added.
Chile: a safe and stable partner
The political and economic stability of our country has been validated in different international rankings. Last month Moody's upgraded Chile's foreign-currency bond rating to A1, reflecting the management of the international economic situation.
According to Moody's, the strength of Chile's credit quality is the result of the country's credible economic policies, sound financial institutions and wide-ranging structural reforms. "Chile's favourable credit profile also benefits from an economic policy framework designed to mitigate macroeconomic volatility -a condition particularly relevant given current global conditions," remarked Mauro Leos, Vice President-Regional Credit Officer of Moody's.
Moody's rating for Chile is in line with the ratings of other agencies. In December, 2008, Standard & Poor's rated Chile's long-term foreign currency debt as 'A+', whilst Fitch awarded the country an 'A' in the same category. Other reports from the Institute for Management Development and the World Economic Forum ratified Chile as the safest and most stable country in Latin America and a good partner for doing business.
Minister of Finance, Andrés Velasco, emphasized that Chile's good ratings are not the result of chance but the product of long-term effort. "When things are done right, it shows and you reap the rewards. Today there are many countries, including developed ones, whose ratings are being lowered. You can count on one hand the number of countries whose rating is increasing and Chile is one of them," explained Velasco via the Finance Ministry website.
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