Chile is not only Latin America’s strongest economy, but it is also a safe haven for businesses given that Chile has consolidated its position as Latin America’s most competitive economy. In the World Investment Report 2016, UNCTAD ranked Chile as the world’s 17th largest recipient of foreign direct investment (FDI).
Foreign investors can operate in a stable country (both economically and politically) with favorable geographic conditions. Public safety, diverse business opportunities, and a government open to foreign participation in the national markets create the perfect conditions to invest. Although opening a business in Chile can be slightly complicated, with the right local support, a successful market entry is easily obtainable.
If you are considering expanding your business globally, with the aim to access new markets and to grow your brand then Chile might be the right jurisdiction for you. In this article, we’ll go over some of the key reasons as to why you should consider Chile as an ideal expansion destination.
Table of Contents
Business Expansion to Chile – An Attractive Business Environment
Chile is routinely considered the most developed, best performing and most transparent business environments within the Latin American region. Underpinning this success is favorable investment conditions; the Chilean government is focused on maintaining an open market and competitive economy through the implementation of various business-friendly policies. A notable event was the creation of the new form of legal entity known as the ‘Company by Shares’ or ‘Simplified Corporation’. This has streamlined the company incorporation process, has allowed a legal entity to be created with only a single shareholder (either a natural or legal person) and has reduced the required minimum share capital to zero. Additionally, Chile allows 100% foreign ownership and has no monetary controls on the movement of capital. These reasons make the registration of a Chilean company both attractive and accessible for foreign individuals or companies.
A Competitive Economy
Chile consistently ranks as the most competitive economy within the region, underpinned by a pro-investment business environment, an educated workforce, solid infrastructure and well-developed trade roots to the rest of the world. Chiles global commercial and trade ties are well-known, and through entering various strategic trade agreements, Chile has access to a huge consumer market, allowing national sectors prosper through exportation. Internationally Chile is known as a safe place to invest, with a free and dynamic market.
There are multiple financial incentives available for international companies looking to invest and to do business within Chile. A notable example is the generous tax credits that are available for companies that undertake research and development activities within Chile.
Additionally, there are guarantees for companies to access financing. The aim of this incentive is to improve access to finance for companies implementing investment projects around the country. Another program is the Business Technological Innovation Program. This is a subsidy for developments related to product or process innovation. In the same vein, companies can obtain tax benefits and grants for projects in the Arica & Parinacota and Tarapacá regions of the far north and the Aysén and Magallanes regions of the south. These grants are not only available for Chilean companies but also foreign-owned companies.
An Abundance of Natural Resources
Chile is globally renowned for its abundance of fertile land and natural resources, making it an agricultural and mining powerhouse, not only in Latin America but internationally. Some notable statistics include:
- 28% of the worlds copper production originates from Chile
- 54% of the world discovered lithium reserves are located in Chile
- Chile is a leading global exporter of wine
In addition, Chile is endowed with large tracts of arable land. This significantly supports agricultural activities in the country. The country has an estimated 34,600 acres of arable land. The major operating agricultural producers are already benefitting from advanced technical production processes. Some of the key crops grown in the country are apples, corn, grapes, beans, wheat, and onion.
Forests also contribute the nations vast quantities of natural resources. The region’s temperate and Mediterranean climate is suitable for oaks, pines, rauli and laurel trees. This makes the sector the second largest in the South American nation, with approximately 14 percent of Chile’s export income coming from the forestry industry.
Access to High-Quality Human Talent
Foreign investors also highlight the access to human capital as one of Chile’s main competitive advantages. Chile is home to some of the best universities within the region and the world, providing the business sector with a steady flow of highly talented, capable and trained employees. According to the World Bank, the next generation of workers in Chile will be the highest-educated in Latin America.
For foreign companies looking to expand operations and establish a commercial presence abroad, Chile offers an attractive workforce.
Great Commercial Hub
Another reason why Chile is a perfect country to incorporate a company is its strong connectivity to global markets; Chile has is part of over 20 Free Trade Agreements. Together with Colombia, Mexico, and Peru, Chile is part of the Pacific Alliance, connecting Latin American countries along the Pacific coast. The Pacific Alliance is a strategic platform, which is designed to facilitate the free movement of capital, goods, services, investment, and people. Its main objectives include reducing trade barriers, deepen regional integration, allow visa-free tourist travel and common stock exchange.
Additionally, Chile has free trade agreements with global powers such as the US, China, the EU and Australia.
Need Further Information?
As may now be clear, Chile is one of the leading commercial destinations in Latin America for investment. The government welcomes foreign participation and public policy does not discriminate against foreign-owned businesses. To fully leverage the commercial potential that Chile has, it is strongly advisable to work with a local partner.
Biz Latin Hub is the trusted local partner of many companies who have expanded their commercial operations to Chile. To help you understand and navigate the Chilean business environment, contact us now. We are ready to support you and your business in Chile.
Check out the video below to learn more about why you should consider expanding your operations to Chile.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.