Chile: Foreign investment

FDI in Figures

According to the World Investment Report 2023 published by UNCTAD, FDI flows to Chile rose by 50% in 2022, totalling USD 19.8 billion, above the levels recorded before the pandemic and at the 19th spot worldwide. In the same year, the total stock of FDI stood at USD 256 billion, around 85.1% of the country’s GDP. According to figures from the Chilean Central Bank, the main investing countries are Canada (13.2%), the U.S. (10.9%), the Netherlands (9%), the UK (7%), Spain (6.7%), and Italy (5.5%). Investment are mainly oriented towards the mining sector (36.9%), followed by electricity, gas and water (20.8%), financial services (19.3%), trade (5.6%), and manufacturing (5.1%). Preliminary figures for 2023 show that FDI inflows totalled USD 19.2 billion in the first eleven months of the year (-4.7% y-o-y – data Chilean Central Bank).

Chilean economic policies, which are founded on the principle of capital transparency and non-discrimination against foreign investors, comprise one of the country's strengths. Investors are also attracted by the richness of Chile's natural resources, the stability of its macro-economic system, its growth potential, its juridical security, its low level of risk and the high quality of its infrastructure. Chile is highly regarded as one of the strongest investment destinations in Latin America and the country has made progress in facilitating starting business procedures over the last few years by enabling online registration of closed corporations. However, the country's reliance on copper prices may negatively affect its economy and drive away some potential investors. With few exceptions, foreign investors can fully own enterprises in Chile, as the country only imposes restrictions on private ownership or establishment in what it deems as specific "strategic" sectors like nuclear energy and mining. The existing Constitution asserts the "absolute, exclusive, inalienable, and permanent domain" of the Chilean state over all mineral, hydrocarbon, and fossil fuel deposits within its territory. However, Chilean legislation permits the government to award concession rights and engage in lease agreements with individuals and corporations for exploration and exploitation activities, as well as to assign contracts to private investors, without discriminating against foreign investors. Chile has not implemented an investment screening mechanism for national security purposes and FDI is only subject to pro forma screening by InvestChile, the national investment agency. Chile has a good business environment: it ranks 22th out of 184 countries on the 2023 Index of Economic Freedom and 52nd among the 132 economies on the Global Innovation Index 2023.

Foreign Direct Investment	2020	2021	2022
FDI Inward Flow (million USD)	10,833	13,194	19,786
FDI Stock (million USD)	248,849	242,201	256,064
Number of Greenfield Investments*	80	82	98
Value of Greenfield Investments (million USD)	5,411	5,353	5,616

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries	2019, in %
USA	13.0
Spain	12.7
Canada	12.6
Netherlands	7.5
United Kingdom	6.9
Cayman Islands	5.9
Italy	4.0

Main Invested Sectors	2019, in %
Mining	32.1
Financial services	23.6
Electricity, gas and water	13.5
Commerce	6.5
Manufacturing	5.1
Communication	4.6
Transport and logistics	3.2

Source: Central Bank of Chile, Latest data available.

Form of Company Preferred By Foreign Investors: The business forms most commonly used by foreign companies are limited liability companies (Sociedades de Responsabilidad Limitada, SARL) and public companies (Sociedades Anónimas). SARLs have a more flexible structure but shares of public companies can be transferred more easily.
Form of Establishment Preferred By Foreign Investors: Most investors prefer using a Chilean society as a branch of a foreign company. Operating through a Chilean branch allows you to enjoy limited liability for the activites in Chili and to separate losses from the assets of the parent company in the country of origin.
Main Foreign Companies: Oracle, McAfee, WorleyParsons, Jazzplat, Synthon, Pioneer, etc.
Sources of Statistics: Central Bank
Invest Chile

What to consider if you invest in Chile

Strong Points

Strong points for FDI in Chile:

Macro-economic stability, good growth perspective
A top Latin American importer per capita, enjoys excellent solvency
High purchasing power (for Latin America)
Wealth of natural resources (coper, agriculture)
Internationalised Chilean companies
Labour laws that tend to be favourable towards business, mainly due to the flexibility of working hours and uncomplicated procedures for the dismissal of employees
Foreign companies can also benefit from privileged access to regional markets through different free trade agreements.

Weak Points

Weak points for FDI in Chile:

Lack of innovation, very weak spending in research and development
Investment in network industries is not substantial
Vulnerability to fluctuations in commodity prices and dependence on Chinese imports
Electric and road infrastructure is insufficient for the size of the territory
Lack of qualified work force. The activity rate of the working population is rather low, in particular among women and young people.
Persisting economic inequalities resulting in political and social tensions (e.g strike in mining sector), with protests regularly taking place

Government Measures to Motivate or Restrict FDI

Chile’s foreign investment policy is based on simplicity, transparency and non-discrimination towards foreign investors. Over the past years, the Government has worked to simplify investment procedures. On a fiscal level, foreign investors benefit from a moderate corporate tax and they are guaranteed access to the formal foreign exchange market, including free remittance of capital and profits. A new legal type of company has been developed, the 'Simplified Limited Company' (‘empresa individual de responsabilidad limitada' - EIRL) that allows a foreigner to create a business in Chile without needing a local partner. Also, joint stock companies can be formed without a local partner (but another legal entity is required).

The Government established a foreign investment promotion and attraction strategy that included the creation of a new national investment promotion agency, InvestChile. InvestChile assists overseas companies with their investments in Chile. The Government has identified five priority sectors for investment: mining industry services, sophisticated food industry, exportable technological services, tourism and energy/logistics.
Under Law Decree N° 600 (the so-called "Foreign Investment Statute"), a guaranteed income tax rate of 42% may be granted for ten years or, provided the capital investment project exceeds USD 50 million, 20 years for the development of industrial or extractive projects (the overall rate is comprised of the corporate tax on profits and withholding tax on dividend or branch profit distributions).

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Chile: Visit UNCTAD's Investment Policy Hub to consult the investment treaties signed by Chile.
International Controversies Registered By UNCTAD: Please refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement: CAM Santiago , Santiago Center for Arbitration and Mediation
Consejo de Denfensa del Estado , The National Defense Council
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors	Chile	Latin America & Caribbean	United States	Germany
Index of Transaction Transparency*	8.0	4.1	7.0	5.0
Index of Manager’s Responsibility**	6.0	5.2	9.0	5.0
Index of Shareholders’ Power***	7.0	6.7	9.0	5.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Freedom of Establishment: Chilenian laws and practices do not discriminate against foreign investors, who enjoy the same conditions as local investors.
Acquisition of Holdings: A majority holding interest in the capital of a local company is legal, as long as Chilean procedures and agreement formalities are respected.
Some sectors may have restrictions, such as maritime transport, nuclear energy and mining.
Obligation to Declare: InvestChile, the Agency for Foreign Investment Promotion, carries on a pro forma screening of potential investments and provides information on the authorisations necessary for business implantation. Investors should be aware that the economic activity they plan to develop in Chile may be subject to special permits or requirements. These vary depending on the nature of the activity and include health, environmental and municipal permits.
Competent Organisation For the Declaration: Chile Foreign Investment Committee
Requests For Specific Authorisations: Foreign investors must obtain specific authorisation to invest in certain strategic sectors, such as exploration and exploitation of hydrocarbons, mining or the production of nuclear energy. In fact, the Constitution establishes the “absolute, exclusive, inalienable and permanent domain” of the Chilean state over all mineral, hydrocarbon, and fossil fuel deposits within the national territory; but the government is allowed to grant concession rights to individuals and companies for exploration and exploitation activities.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are fournished offices for rent daily, weekly or monthly, equipped with many facilities. For more details see for example the following sites: InstantOffices, Regus, Engel & Volkers.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes
Risk of Expropriation: Chilean law gives government the power to expropriate assets, including from foreign investors, only in the name of public or national interest, on a non-discriminatory basis and by respecting the law. The law requires that an indemnisation be immediately paid at fair market value, plus any interest incurred. The government has not nationalized any private companies since 1973.

Investment Aid

Forms of Aid: Incentives are available for investmens toward isolated geographical zones and to the information technology sector, including co-financing of feasibility studies as well as to incentives for the purchase of land in industrial zones, the hiring of local labor, and the facilitation of project financing.
Privileged Domains: Tax exemptions, co-financing of feasibility studies, incentives for the purchase of land in industrial zones, hiring of local labor, facilitation of project financing, etc.
Privileged Geographical Zones: IT sector, biotechnology, R&D, electronics, engineering processes, renewable energies, the oil sector and forestry.
Free-trade zones: Incentives for investment in remote and underprivileged areas (far north and far south): co-financing feasibility studies, encouraging purchase of lands in industrial zones, hiring local labor force and facilitating project financing. Fiscal advantages in tax-free zones in the northern port city of Iquique (Tarapaca Region) and in the far south port city of Punta Arenas (Magallanes Region), as well as the Chacalluta and Las Americas Industrial Park in Arica. In such zones, companies are exempt from corporate income tax, VAT on operations and services that take place inside the free trade zone, and customs duties.
Public aid and funding organisations: Ministry of Economy

Investment Opportunities

The Key Sectors of the National Economy: Mining sector, energy sector, agrarian sector (especially wine), road infrastructure, building.
High Potential Sectors: Renewable energies and waste treatment, electricity, biotechnology, health, tourism, telecommunication and online sale sector.
Privatization Programmes: No privatisation program in progress at the moment.
Tenders, Projects and Public Procurement: Mercado Publico , Tenders and Public Procurement
Tenders Info , Tenders in Chile
Inter-American Development Bank , Tenders in South America
DgMarket , Choose your country

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: For reasons of national security, Chile imposes certain restrictions on investors in the domains of nuclear energy, hydrocarbons, defence, sea transport and mining.
Permits are required in the telecommunication sector.

Finding Assistance For Further Information

Investment Aid Agency: Invest Chile (Chilean Investment Promotion Agency)
Other Useful Resources: Official portal of the Government of Chile
Doing Business Guides: Doing Business in Chile (Chile Business)
Exporting to Chile (export.gov)
Doing Business in Chile (World Bank)

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