Business Opportunities in Chile

Eliel Hasson Nisis

TLC ConsultingChile

WHO IS CHILE?

• GDP 2003: US$69.2 billions*

• Population: 15.8 millions

• GDP per capita:

4.250Panama77

4.280Costa Rica76

4.390Chile75

4.490Lithuania74

4.920Slovak Republic73

US$Country

9.450Trinidad and Tobago

78

9.590Antigua and Barbados

77

9.810Chile76

10.130Latvia75

10.270South Africa74

US$Country

* Fuente: Banco Mundial

“upper-middle-income”: US$5.040

WHO IS CHILE? (2)

• Poverty: 18,8% *– 4,7% indigence

• Poverty has diminished, but...– (1990: 38,6% and 12,9%, respectively)

• Richest 10%: 38% income– (and poorest 10%: 3% income…)

* Source: CASEN 2003 POLL

WHO IS CHILE? (3)

* Source: World Bank

8,8%Agriculture

34,3%Industry

56,9%Services

GDP*

31,3%Imports

34,5%Exports

External Trade:2/3 GDP

(goods/services)/GDP

• Copper exports: 40%

WHO IS CHILE? (4)

• Importance of Chile*:

0,256%Vietnam47

0,278%Ukraine46

0,284%Chile45

0,296%Algeria44

0,378%Iran43

Exports

0,246%Slovak Rep.47

0,253%Ukraine46

0,255%Chile45

0,266%Romania44

0,283%Vietnam43

Imports

* WTO Source: “International Trade Statistics 2003”

Chile in the Global TradeChile in the Global Trade

Multilateral (WTO)

Bilateral (70% trade)

Unilateral (6% MFN; 1.5% effective)

International Integration & Trade

In force Population(million)

GDP(US$ Billion)

EE.UU. 297,0 10.881,0

Canadá 31,7 834

México 104,9 626

EU 454,9 9.867

South Korea 48,0 605

EFTA 2,0 541

Mercosur 283,0 639

Central América

39,5 89

Total 1.261,0 24.082

Pending Population(million)

GDP(US$ Billion)

Singapore 4,3 91

New Zealand 3,9 76

Brunei 0,3 8

China 1.313,3 1.410

Perú 27,6 61

India 1.081,12 599

Japan 127,8 4.326

Total 2.558,4 6.571

Chile – US FTA

The United States represents 22% of global GDP, accounts for 19% of the world's imports, and its market is 148 times the size of the Chilean economy.

Chile's FTA with the United States: consolidates and extends the access of Chilean product, establishes clear and permanent rules for trade in services and

investment, as well as for trade in goods.

Under the Agreement, 87% of Chilean exports to the United States obtained immediate tariff-free access, and this will rise gradually to 94.8% over the first four years, and to 100% over twelve years.

The FTA opens up new opportunities.

Chile – US FTA

In the three months following the entry into force of the U.S.-Chile Free Trade Agreement, total U.S. exports to Chile increased by 24 percent compared to the same period of 2003, growing from $617.29 million to $766.79 million. This compares favorably to an increase of 13 percent in U.S. exports to the world in the first quarter of 2004.

U.S. exports of manufactured goods to Chile increased by 19.5 percent January/March 2004, from $570.9 million to $682.3 million. Particularly strong growth was registered in exports of construction equipment, medical equipment, and paper.

Exports of U.S. agricultural goods grew 22.6 percent from $22.66 million to $27.77 million.

Business Opportunities

Investment in Infrastructure

Travel and Tourism

Services

•Financial Services

•Engineering Services

•Software and services

•Architectural and Construction Services

•Telecommunications

Why doing business in Chile?

1. Business Environment1. Business Environment

2. Political Stability 2. Political Stability

3. Modernization of the State3. Modernization of the State

4. Economic Freedom4. Economic Freedom

5. Best city to Do Business in LA5. Best city to Do Business in LA

Doing Business with the Chilean Government

Chile is not a party to the WTO Agreement on Government Procurement, but the U.S.-Chile FTA calls for open tendering in public procurement, in general.

The FTA provisions covers procurements by twenty Chilean central government entities for non-construction purchases over US$56,000.

It also covers local government non-construction procurements over US$460,000. In both cases, higher limits apply for construction work.

The agreement also calls for non-discriminatory “national treatment” for either country’s suppliers.

Tender opportunities should be published at least thirty days in advance and technical specifications or requirements should be performance-based.

www.chilecompra.cl. The site serves as a central source for all Chilean government procurement. Foreign and local bidders on government tenders must register with the Chilean Direccion de Provisionamiento del Estado (Bureau of Government Procurement Supplies).

Chile – US FTA GP MARKET ACCESS

Chile USA EU

I Central Government Federal Government Central Governments

II Municipalities States Sub central entities

III Ports Other entities Ports

Airports

- Three groups

-Three categories

-Positive list

Chile – US FTA GP MARKET ACCESS (2)

• 3 categories: Goods, Services, Construction Services

• US$ - European Union DEG

• DEG = US$ 1.43958

Thresholds Goods Services Construction Services

Central Government US 56.190

UE 130.000

US 56.190

UE 130.000

US 6.481.000

UE 5.000.000

Sub federal/local US 460.000

UE 200.000

US 460.000

UE 200.000

US 6.481.000

UE 5.000.000

Other entities US 280.951

UE 400.000

US 280.951

UE 400.000

US 6.481.000

UE 5.000.000

Basic Overview

E CatalogueE CatalogueE CatalogueE Catalogue

LogisticsLogisticsLogisticsLogistics

ConsultingConsultingConsultingConsulting

Value Added Services Value Added Services

BuyersBuyers SuppliersSuppliers

Market PlaceMarket Place

FinancialFinancialFinancialFinancial

Regulatory Frame Work

Non Binding Principles for Government Procurement

Institutions

• US$ 2.500 millions per year.• 1.000.000 transactions per

year.• 60% services, 40% goods.• 900 buying organizations.• 150.000 suppliers

Basic Processes

Basic Processes

Bidding Process

Foreign Suppliers registered at ChileCompra

EE.UU.24.3%

Argentina16.9%

Spain14.0%

Brazil4.4%

Germany4.4%

Otros26.4%

Canada2.5%

Mexico1.7%

Uruguay1.7%

United Kingdom2.8%

Peru3.0%

Colombia3.8%

Others20.5%

BOT in Chile:How the system works?

Total Concessions

Urban Roads 20%

Airport5%

Interurban Highway

72%

Dams1% Penitenciaries

2%

Investment US$5.5bn (Official estimate) Investment US$5.5bn (Official estimate)

Concessions Program 2005-2007

Hospitality Infrastructure New Hospital in Maipú Hospital Sotero del Río New Hospitality Complex Barros Luco –

Trudeau New Hospitality Complex Salvador Infante

Total estimated investment:MMUS$250

Concessions Program 2005-2007

Dam Program Ancoa Dam Punilla Dam Aconcagua System

Total estimated investment:MMUS$400

Concessions Program 2005-2007

Airport Program New Airport IX region New Airport IV region New Bidding Airport El Tepual (Puerto Montt) New Bidding Airport Diego Aracenna (Iquique)

Total estimated investment:MMUS$100

Thank you

Address: Avenida El Golf 40, Piso 13º Las Condes, Santiago, Chile Phone: (56-2) 280 5000

e-mail :tlconsulting@tlconsulting.cl