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Chile: Market Profile

Picture: Chile factsheet
Picture: Chile factsheet

1. Overview

Chile has been one of Latin America’s fastest-growing economies in recent decades, enabling the country to significantly reduce poverty. Responsible macroeconomic and fiscal management provides a solid base for more inclusive growth. Nevertheless, private investment, exports and economic growth are closely tied to shifts in copper prices. In this context, the unemployment rate has remained relatively stable, largely due to rising self-employment in response to the stagnation of wages. Growth is expected to recover during 2018-2020 as private-sector prospects improve and copper prices rise. The fiscal deficit will likely decrease gradually in response to a fiscal policy firmly rooted in the structural balance rule. Additionally, fiscal income is expected to benefit from the economic recovery and higher copper prices.

Source: World Bank

2. Major Economic/Political Events and Upcoming Elections

May 2013
Chile, Colombia, Mexico and Peru agreed to scrap most of the tariffs on trade between their countries, hailing the move as an historic step towards regional integration.

October 2015
Former president Bachelet announced the creation of two new marine reserves in the South Pacific. One was around Easter Island. Commercial fishing has been banned there.

December 2017
Sebastian Pinera won the presidential election.

Source: BBC Country Profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Chile real GDP and inflation
Graph: Chile real GDP and inflation
Graph: Chile GDP by sector (2017)
Graph: Chile GDP by sector (2017)
Graph: Chile unemployment rate
Graph: Chile unemployment rate
Graph: Chile current account balance
Graph: Chile current account balance

e = estimate, f = forecast
Source: International Monetary Fund, World Bank, Fitch Solutions
Date last reviewed: August 21, 2018

4. External Trade

4.1 Merchandise Trade

Graph: Chile merchandise trade
Graph: Chile merchandise trade

Source: WTO
Date last reviewed: August 21, 2018

Graph: Chile major export commodities (2017)
Graph: Chile major export commodities (2017)
Graph: Chile major export markets (2017)
Graph: Chile major export markets (2017)
Graph: Chile major import commodities (2017)
Graph: Chile major import commodities (2017)
Graph: Chile major import markets (2017)
Graph: Chile major import markets (2017)

Source: Trade Map, Fitch Solutions
Date last reviewed: August 29, 2018

4.2 Trade in Services

Graph: Chile trade in services
Graph: Chile trade in services

e = estimate
Source: WTO
Date last reviewed: August 21, 2018

5. Trade Policies

  • Chile has been a WTO member since January 1, 1995. Chile’s import system is based on the principle that all goods may be freely imported and anyone may engage freely in international trade transactions. As such, importers are not subject to any registration requirements. However, they are required to hire an accredited customs broker to enter the merchandise if the FOB value of such merchandise is higher than USD500. The use of a customs broker is not mandatory in several other instances, including merchandise entering into a free trade zone.
  • Chile adopts the Harmonised System for Tariff Classification and affords at least most favoured tariff treatment to all its trading partners. Virtually all imports are subject to a most-favoured-nation (MFN) duty of 6% ad valorem. Apart from import duties, products imported and/or circulated in Chile are essentially subject to a value-added tax (VAT) of 19% as domestic goods, excise taxes and some other charges, including an airport tax.
  • In terms of safeguard measures, Chile has been restrained in its use of trade remedies. Chile does not have any import quotas in place, nor does it impose any licensing requirements on imports or have any pre-shipment inspection requirements. However, certain goods require approval or certification prior to importation, while other goods require approval or certification for customs clearance.
  • Over the past two decades, Chile has developed an extensive web of FTAs with a range of partner countries in the Americas, Asia, Europe and the Pacific region. Specifically, Chile has signed FTAs with more than 90% of its trade partners, including Australia, China, Hong Kong, India, Japan, Mexico, the US, the EU and South Korea. Moreover, Chile is the only member of the Trans-Pacific Partnership (TPP) Agreement to have a free trade agreement in place with every other of the TPP signatories. Although US president Donald Trump signed an executive order formally withdrawing the US from the trade deal in January 2017, the remaining 11 TPP nations officially agreed on key aspects of the trade pact on November 11, 2017 and signed the document in March 2018. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as TPP11, is now awaiting ratification.
  • Chile does not impose any limits on the amount of currency derived from trade operations that can be brought in or out of the country, although Chilean exporters and importers with a total export or import value of USD5 million or higher on an FOB basis in any single year are required to provide certain information to Chile’s Central Bank.
  • Chilean standards and technical regulations do not distinguish between foreign and domestic goods. Chile has so far issued over 1,000 technical regulations covering a broad spectrum of products. Standards, on the other hand, are voluntary and are adopted through consensus among parties from both the public and private sectors who are invited to participate in the consultations. The National Institute for Standardisation (INN) has overall responsibility for the elaboration of standards. In addition, Chile is a member of the Pan-American Standards Commission (COPANT), the International Organisation for Standardisation (ISO), the Inter-American Metrology System (SIM) and the InterAmerican Accreditation Cooperation (IAAC). Chile also has labelling regulations in place for a wide range of products. In general, products commercialised in Chile must be labelled with the name or registered brand and address of the producer or importer, the country of origin and care instructions. The information included must be accurate and be provided in Spanish.
  • There are two main free trade zones in Chile: the Free Zone of Iquique (ZOFRI), Region I, in the far north, and the Free Zone of Punta Arenas (PARANEZON), Region XII, in the far south. ZOFRI is a major entry point for products bound for Bolivia and Peru, Paraguay and northern Argentina. ZOFRI encompasses the free ports of Arica and Iquique, while PARANEZON also has a free port. Each free trade zone is equipped with manufacturing, packaging and exporting facilities. Imports entering the free zones of Iquique and Punta Arenas are duty-free. However, imports leaving the free trade zones to enter the Chilean market pay full tariff and VAT charges.
  • The broad range of FTAs reduces Chile's average tariff rate which, at 1.8%, is the third lowest in Central and South America (Peru leads the way with an average tariff of 1.4%, followed by Guatemala at 1.5%). Suriname and Belize linger at the bottom of the pack with average tariff rates of 10.8% and 10.0% respectively, and key regional peers Brazil, Mexico, Argentina, Ecuador and Colombia all impose higher average tariffs than Chile. This means that businesses do not face high restrictions in terms of trading with Chile.
  • In order to protect domestic industries the Chilean government has imposed various anti-dumping measures, particularly in the steel and metals sectors. On October 22, 2016, the Chilean authorities imposed a provisional antidumping duty on the on imports of certain steel wire from China. The rate of duty is 40.6%. This prevents Chinese businesses from competitively entering the Chilean market, despite significant opportunities from construction and industrial activity gaining pace in the market. In May 2016, the Chilean authorities imposed a provisional duty on imports of steel bars for concrete from Mexico. The rate of duty was 13.1% at first and this has been revised downwards to 11.01% in September 2016 and again in November 2016 to 9.8%. On November 22, 2017 the Chilean government imposed a 22.9% duty on certain steel bars from China in order to counter allegations of dumping. The duty is to remain in place for one year.
  • In order to protect domestic industries, the Chilean government has imposed various safeguard measures concerning agricultural sectors and we may see these shift over time, dependent on demand and supply dynamics in the local market. The Chilean government regularly adjusts the discounts on imported sugar and wheat/meslin flour. These discounts help mitigate some of the effects of the price floors imposed by Chile (which is above the average customs rate). As such, the cost of importing sugar to Chile may increase/decrease on the back of government decision-making.

Sources: WTO – Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Trade Updates

Chile is party to 21 Free Trade Agreements (FTAs), covering 60 nations. Of those FTAs, the largest eight constitute 85.36% of Chile's total trade activities (in terms of imports and exports). The remaining FTAs (excluding FTAs made redundant - such as the FTA with Mexico, which has been usurped by the Pacific Alliance FTA) cover 4.87% of Chile's trade relations. This also indicates that 90.23% of Chile's trade occurs with its FTA partners, leaving Chile's trade interaction with the rest of the world at a low 9.77%. Chile also has five preferential trade agreements, two of which have been made secondary to FTAs (Venezuela and Argentina). The remaining three preferential trade agreements cover Bolivia, Ecuador and India. The top FTAs are listed below.

6.2 Multinational Trade Agreements

Active

  1. Chile-China FTA and Economic Integration Agreement: On November 18, 2005, Chile signed its FTA with China, which entered into force on October 1, 2006. Roughly half of China’s exports to Chile in value terms were afforded duty-free treatment upon entry into force of the agreement. Duties for an additional 21% of China’s exports are to be phased out in equal stages over a five-year period, while duties on 26% of China’s exports will be phased out over a 10-year period. Only some 3% of China’s exports are excluded from the scope of the free trade agreement. Products subject to five-year staging is now tariff-free (since January 1, 2010), while products subject to 10-year staging currently face a 2.4% duty rate. In November 2017, the Sino-Chilean FTA completed its upgrade, making it China’s first FTA upgrade with a Latin America country. Furthermore on April 13, 2008, China and Chile signed the Supplementary Agreement on Service Trade to the Free Trade Agreement. According to the agreement, China’s 23 sectors and sub-sectors, including service in sector of computer, management and consulting, real estate, mining, environment, sports and air transport, and Chile’s 37 sectors and sub-sectors, including service in sector of legal service, construction and architecture, engineering, computer, R&D, real estate, advertisement, management and consulting, mining, manufacturing, leasing, distribution, education, environment, tourism, sports and air transport were also opened up to each other under the WTO commitments.

  2. Chile-Hong Kong Free Trade Agreement and Economic Integration Agreement: Hong Kong and Chile signed a bilateral free trade agreement on September 7, 2012, which became effective on October 9, 2014. Under the agreement, approximately 88% of total Chilean goods imports from Hong Kong benefit from duty-free treatment with immediate effect and about 97.7% of all goods imports will enjoy such treatment by the third year. The remaining 2.3% of tariff lines have been excluded from the agreement and will continue to be subject to regular most-favoured-nation rates of duty, including certain cereals, sugars, textiles, apparel, steel products, concrete, used tyres and household appliances.

  3. Chile-Southern Common Market (MERCOSUR): Chile is an associate nation in both Mercosur and the Andean community, which encompasses nine of the 10 biggest economies on the continent. Despite non-membership to these organisations, Chile has entered into free trade agreements with both trade blocs, giving it similar (if not identical) economic advantages to those which it would accrue with full membership, although with a less binding political commitment. This arrangement benefits Chile in that it is granted more autonomy than Mercosur and Andean nations (as it is not bound by decisions made beyond the scope of the FTAs), while it is disadvantaged with the relative lack of collective bargaining power which the other states may enjoy (in addition to such functions as dispute settlement provisions).

  4. Chile-United States Free Trade Agreement and Economic Integration Agreement: The US-Chile FTA went into force in 2004 and, as of January 1, 2015, all qualifying products are duty free. To be eligible for tariff-free treatment under the FTA, products must meet the relevant rules of origin. The US is a top trade partner, particularly for imports, and the FTA allows for easier access to US goods for Chilean companies and consumers. The FTA also provides favourable access for service suppliers. It guarantees protection to US investors and US copyrights, trademarks, and patents registered in Chile. In addition, Chile has opened up significant government procurements to US bidders. Principal US goods exports to Chile include mineral fuel and oil, machinery and parts, aircraft and parts, vehicles, and electrical machinery. Principal US exports of services to Chile include travel, transportation, telecommunications, and business services.

  5. Chile-EU Free Trade Agreement and Economic Integration Agreement: EU states (particularly Germany, France, Spain, the Netherlands and the UK) are major trade partners and the Economic Association Agreement with Chile ensures preferential access to this large market. Bilateral trade between the EU and Chile has more than doubled since the FTA came into effect.

  6. Pacific Alliance (Free Trade Agreement and Economic Integration Agreement): The Pacific Alliance (PA) trade bloc, consisting of Chile, Colombia, Mexico and Peru, is an important trade agreement for Chile and further assists with promoting regional growth. The PA focuses on boosting external trade with strategic partners including those in Asia as well as adopting a business-friendly agenda aimed at incentivising investment into the region to enable companies to better access Latin American markets and create intra-regional supply chains. PA members represent nearly 36% of Latin American GDP and exported approximately USD1 trillion in 2015.

  7. Chile-Japan Free Trade Agreement and Economic Integration Agreement: The FTA with Japan was finalised in 2007 and will be affected by the CPTPP (which is in the ratification stage following the withdrawal of the US from the original TPP deal). Chile also has an active FTA with Canada.

Signed but not Ratified

CPTPP: With the US pulling out of the TPP agreement, the future of the proposed multiregional free trade agreement was on precarious footing. The remaining 11 nations have, however, revived the free trade agreement, and now signed a reworked deal. This would pave the way for increased trade between the 11 nations involved, including Chile, as well as potential future deepening integration with other APEC states. Furthermore, if the CPTPP is implemented, it will potentially supersede a number of existing FTAs in place.

Sources: WTO Regional Trade Agreements database

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Chile FDI stock
Graph: Chile FDI stock
Graph: Chile FDI flow
Graph: Chile FDI flow

Source: UNCTAD
Date last reviewed: August 21, 2018

7.2 Foreign Direct Investment Policy

  1. Encouraging foreign investment is a priority area in Chile's national growth strategy, with FDI inflows having contributed enormously to the country's economic growth since the first push to attract foreign participation in the 1980s. Major sectors such as mining attract considerable interest from foreign investors, as does the country's burgeoning tourism sector and large agricultural sector.

  2. Chile offers attractive investment openings in sectors that include mining, services, food, infrastructure, tourism and energy. Since the Foreign Investment Statute came into force in 1974, it has been used by most foreign investors to bring in their capital. Under this regime, foreign investors can opt to sign a contract with the state of Chile, establishing their rights and obligations, which authorises the transfer of capital and other forms of investment into the country. Until January 2016, FDI in Chile was regulated under Decree Law No. 600, which is known as the Foreign Investment Statute. Under this legislation, foreign ventures can take the form of a stock corporation, a limited liability company, or a branch of a foreign corporation, with a minimum investment of US$5 million, though some investments may qualify at USD2.5 million. The regulations also stipulate an investment term of one to three years, though investments over USD50 million in industrial or mining projects can request an investment term of eight years (extended to 12 years for mining projects). Investments valued under USD2.5 million but above USD10,000 are made through Chapter XIV of the Central Bank's Compendium of Foreign Exchange Regulations.

    A new Foreign Investment Framework Law was introduced in 2015 to replace the previous regime, though in practice it has maintained a high degree of continuity with the previous law while including some modifications. Among the provisions which remain are free access to foreign exchange, equal treatment with domestic investors under law, freedom from arbitrary expropriation, and exemption from sales tax on imports of capital goods. The new law does, however, remove a guarantee of an invariable final income tax of 42% for 10 years and a guarantee for invariable taxation of mining projects for 15 years, which had been available under the previous regime. Investors are still able to access these benefits if they register under the previous legislation within four years of June 25, 2015 (the date the new law was passed). The government has also introduced a new Foreign Investment Promotion Agency ('InvestChile') which offers advice and information for foreign investors through a multi-language website.

  3. Generally there are no restrictions on most economic activities and businesses may be 100% foreign-owned, except with respect to air transport, domestic shipping, the mass media and fishing. Some strategic activities are also reserved to the state; these include the exploration and exploitation of mineral deposits situated in maritime boundaries subject to the national jurisdiction or located in areas classified by law as of importance to national security.

  4. Though the overall administrative burden in Chile remains low compared to other Latin American peers, it still negatively affects investment decisions.

    The efficiency of procedures in construction and environmental permitting is insufficient by global standards and raises legal risk for investors.

    Certain industries require licensing for operations. The telecommunications industry regulators, for example, have a limited amount of licenses which it may issue at one time.

  5. Local content requirements - In January 2015, Chile approved the modifications concerning the Law of Music. Under the new law, all Chilean radio stations are required to reserve a 20% quota for domestic music in their broadcasting. The new law includes local content requirements for radio broadcasting as well as domestic shows of international musicians. Furthermore, domestic concerts of international musicians are required to hire Chilean artists for their pre-show programme. Failure to comply with this rule is subject to a fine. Furthermore some minerals sectors may be subject to government intervention and companies may be obliged to work in collaboration with state-owned entities. On October 12, 2011, the Chilean state mining company Coldeco moved to acquire (buy into) a 49% stake in Anglo American Sur, the Chilean copper unit of the British mining company Anglo American.

  6. Local ownership requirements - Foreign investment in some sectors of the economy can be screened by the government. Foreign ownership is permitted across almost all industries. The exceptions exist with sectors designated as strategic in nascent resource-related industries, transportation and farmland. In such industries, foreign ownership is generally capped at 49%. Nuclear energy and mining industries are restricted to government/state control - companies may, however, be granted concessions from the government for their operation.

Sources: WTO - Trade Policy Review, the International Trade Administration (ITA), U.S. Department of Commerce

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Iquique Free Trade Zone - ZOFRI (northern Chile)Exemption from corporate tax and custom duties such as 0% VAT on first sales and 0.8% import tax
Punta Arenas Free Trade Zone (southern Chile)Exemption from corporate tax and custom duties
Arica Free Trade Zone (northern Chile)Exemption from corporate tax and custom duties

Source: Fitch Solutions

8. Taxation – 2018

  • Value added tax: 19%
  • Corporate income tax: Variable dependent on regime applicable

Source: PwC Taxes at a Glance 2018

8.1 Important Updates to Taxation Information

  • As part of wider fiscal reforms, Chile's tax system is in the process of a significant overhaul. The overhaul is causing considerable uncertainty for investors, especially as the government increases its tax reach, having nearly tripled its tax income per capita since 2001. The new tax regime was established in 2014 in an attempt to improve compliance and government revenues. Although it has been amended to appease some concerns in the business community, the scale of the changes being wrought, as well as the complexity thereof, will create compliance difficulties for firms. Some of the objections and pushback to the changes can also be attributed to economy's previous poor growth outlooks, making the potential for higher and more complicated taxes unpalatable among citizens and investors alike. The new tax system has been incrementally implemented over 2015-2017, with the dual regime system coming into effect in 2017. The dual regime system, applicable to corporate entities, gives businesses the choice of which tax regime it will follow. The two competing tax regimes are split according to tax burden placed on final ownership and profits. Attributed Income Regime (Regime A), which will be the default regime (unless Regime B is opted for) and applies to all corporate entities with owners that are the exclusive final taxpayers. Under this system, corporates must refer all 'attributable income' to its final owners. Corporate income tax, known as First Category Tax (FCT), is a flat rate of 25.0%. The final owners will then be subjected to either an Additional withholding tax (WHT) or the Global Complementary Tax (GCT), for foreign or local owners (respectively). The latter is a progressive tax which spans from 0% to 35% while the Additional withholding tax is a flat rate of 35%. A 100% credit is granted for the FCT paid, applicable to the 35% incurred from the WHT or GCT. As such, the total tax burden of the Attributed Income Regime (Regime A) is 35%. Distributed Income Regime (Regime B) Shareholders/partners in a business are only eligible to be taxed on the distribution of profits or dividends. FCT under this regime will be 27% in 2018, increasing from 25.5% in 2017. As in the case of Regime A, GCT and Additional WHT applies (0-35% and 35%, respectively). GCT and the Additional WHT receives a tax credit equal to 65% of the FCT: this will equate to 17.55% (down from the 27% of the FCT). As such, the total tax burden of the Distributed Income Regime (Regime B) is 44.45%.
  • Following the introduction of the dual tax regime in 2017, the corporate income tax rate for Regime B (Distributed Income Regime) will rise to 27% in 2018, from 25.5% previously. Although the system is confusing to use, it still remains relatively favourable on a comparison of Latin American countries and OECD member states. The main risks stemming from the Chilean tax system in coming years will be confusion over the changing tax rates and the applicable tax regime, and it is therefore essential that foreign businesses consult local accountants and auditors during this period.
8.2 Business Taxes (Dual Tax Regime)

Type of TaxApplicable ToRegime ARegime B
FCTAll25%27%
GCTChilean owners0-35% (progressive)0-35% (progressive)
WHTForeign shareholders35% on taxable earnings35%
Possible tax credit on GCTChilean shareholders100% of FCT65% of FCT
Possible tax credit on WHTForeign shareholders100% of FCT65% of FCT
Total tax burden on GCTChilean shareholders25% (at 0% GCT) 35% with credit (at 35% GCT), 60% without credit27% (at 0% GCT) 44.45% with credit (at 35% GCT) 62% without credit
Total tax burden on GCTForeign shareholders35% with credit, 60% without credit44.45% with credit62% without credit

8.3 Business Taxes (general)

In addition to the regime-specific set of tax rates, all businesses will still need to pay a standard set of taxes.

Type of TaxTax Rate And Base
Mining tax

0.0-14.0% on corporate income of mining companies, variable according to sales

May be deducted as an expense from corporate income tax

Social security contributions (capped at a fluctuating amount according to an inflation-adjusted monetary unit)0.95% basic contribution on gross salaries towards accident insurance

0.0-3.4% variable on gross salaries towards accident insurance according to the risk level of the work

2.4% on gross salaries towards unemployment insurance

1.15% on gross salaries towards life and disability insurance
VAT
19.0% on sale of goods and services
Capital duty0.25-0.5% on tax equity (up to approx: USD500,000)
Property Tax1.0% on the value of rural property

1.2% on the value of non-rural property

Source: PwC Tax Summaries 2018
Date last reviewed: August 29, 2018

9. Foreign Worker Requirements

9.1 Localisation Requirements

Labour regulations continue to restrict the employment of foreign nationals, preventing a large increase in the country's migrant population. The labour law stipulates that at least 85% of a company's workforce must be Chilean, if the business employs more than 25 workers. This restricts the number of workers foreign companies can import to Chile from abroad, meaning that businesses are more reliant on the domestic labour market, although this restriction does not apply to specialised or technically trained employees who cannot be sourced from the Chilean labour force.

9.2 Visa/Travel Restrictions

Chilean work visas for foreigners are regulated by the need for a contract prior to application. The bureaucratic process to obtain work permits and residence visas for foreign nationals in Chile is nonetheless relatively simple. Eligibility is generally dependent on skills and education, which facilitates the flow of highly skilled workers. The visa process is easier when the applicant is outside of the country as making changes to visa status once inside the country can be an arduous process and is subject to delays.

Visas, such as the Work Contract Visa and the Temporary Resident Visa, offer provisions for dependents and entitle the holders to apply for permanent residency after two years. Foreign employees and their dependents can also gain entry based on a number of Free Trade Agreements that Chile holds with numerous countries. The permitted length of stay varies from up to six months to one year according to the profession and position of the applicant. This offers a larger variety of options to companies wishing to hire foreign workers.

9.3 Migrant Labour Regulations

Regulations on employment conditions and the access to basic social services, such as healthcare, education and justice are somewhat discriminative towards regular migrant workers and they are basically non-existent for undocumented migrant workers. These problems are strongly connected to the fragmented system regulating different residence status for third-country nationals, especially when it comes to labour rights and guarantees.

9.4 Taxes on Foreign Labour

Chile differentiates between resident and non-resident individuals for tax purposes. Residents (those in Chile for longer than six months in a calendar year) are taxed on their worldwide income while non-residents are only taxed on Chilean-sourced income. Foreign residents are taxed on Chilean-sourced income for the first three years, after which they are taxed on worldwide income. Individual income tax is paid based on the accrual of monthly taxable units (MTUs), which may be adjusted on a month-by-month basis in accordance with inflation. In 2016, one MTU was worth around US$68. The tax regime on individuals in Chile is relatively unfavourable, with tax rates charged progressively from 0-35%. The top rate is among the highest levied in any Latin American state and will cause difficulties for businesses attempting to attract well-paid foreign workers, as they may require higher salaries to offset this tax burden. In accordance to the tax reform approved in 2014, the highest marginal rate has been reduced to 35% (having been effective from January 1, 2017), down from the previous high of 40%.

Source: Ministry of the Interior and Public Security, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
A1 (Stable)26/07/2018
Standard & Poor'sAA- (Stable)13/07/2017
Fitch Ratings
A (Stable)07/08/2018

Source: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators


World Ranking
201620172018
Ease of Doing Business Index
55/18957/19055/190
Ease of Paying Taxes Index
33/18939/19072/190
Logistics Performance Index
46/160N/A
34/160
Corruption Perception Index
24/17626/180N/A
IMD World Competitiveness36/6135/6335/63

Source: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World ranking
201620172018
Economic Risk Index Rank40/202
Short-Term Economic Risk Score
63.3
67.3
71
Long-Term Economic Risk Score66
67.2
67.1
Political Risk Index Rank22/202
Short-Term Political Risk Score
75.8
70.6
76
Long-Term Political Risk Score82.7
83.2
83.2
Operational Risk Index Rank39/201
Operational Risk Index Score66.9
64.8
64.8

Source: Fitch Solutions
Date last reviewed: August 29, 2018

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
Chile recovered impressively from the global financial crisis in 2008-2009 and a devastating earthquake in February 2010. Chile will continue to rely heavily on commodity export earnings, a significant structural weakness. Although Chile will begin to move away from copper dependence, the economy will remain exposed to copper prices shocks for years to come.

OPERATIONAL RISK
Chile's open economy and strong democratic institutions makes it one of the most stable countries for doing business in the region. Much of its appeal lies in the low risks businesses face from regional criminal activity, which translates to lower security costs and reduced risk of implication in financial crime. The country boasts a wealth of natural resources and the strong rule of law has also provided a basis for economic growth and significant inflows of FDI, which have been further encouraged by the signing of numerous free trade deals with key regional and global partners. Logistics infrastructure is well developed and more reliable than elsewhere in Central and South America, and while the labour force is somewhat smaller than countries such as Brazil, it is better educated and less heavily regulated than in regional peers.

Source: Fitch Solutions
Date last reviewed: September 3, 2018

10.5 Fitch Solutions Political & Economic Risk Indices

Graph: Chile short term political risk index
Graph: Chile short term political risk index
Graph: Chile long term political risk index
Graph: Chile long term political risk index
Graph: Chile short term economic risk index
Graph: Chile short term economic risk index
Graph: Chile long term economic risk index
Graph: Chile long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Economic and Political Risk Indices
Date last reviewed: August 21, 2018

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Chile Score64.861.367.765.464.7
Central and South America Average45.148.245.547.839.0
Central and South America Position (out of 20)111
21
Latin America Average48.350.245.547.046.7
Latin America Position (out of 42)1
2424
Global Average49.749.850.049.349.9
Global Position (out of 201)39
30374449

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Chile vs global and regional averages
Graph: Chile vs global and regional averages
Country
Operational Risk IndexLabour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Secruity Risk Index
Chile64.861.367.765.464.7
Panama55.347.160.069.344.9
Costa Rica53.749.860.255.149.7
Uruguay53.748.751.153.861.1
Mexico51.758.658.658.930.7
Peru50.259.752.951.336.8
Colombia49.054.456.950.234.6
Argentina46.851.439.050.246.7
Brazil46.546.746.349.243.6
Ecuador46.354.036.554.840.0
El Salvador41.842.045.351.528.3
Nicaragua39.640.637.041.039.9
Paraguay39.541.845.734.436.3
Guatemala37.941.845.539.524.6
Honduras37.738.047.141.024.6
Bolivia35.842.429.539.032.2
Venezuela29.344.119.934.019.2
Regional Averages45.948.447.049.338.7
Emerging Markets Averages46.848.047.545.846.1
Global Markets Averages49.849.850.049.349.9

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: August 21, 2018

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Chile

Graph: Major export commodities to Chile (2017)
Graph: Major export commodities to Chile (2017)
Graph: Major import commodities from Chile (2017)
Graph: Major import commodities from Chile (2017)
Graph: Merchandise exports to Chile
Graph: Merchandise exports to Chile
Graph: Merchandise imports from Chile
Graph: Merchandise imports from Chile

Exchange Rate HK$/US$, average
7.76 (2013)
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
Source: Hong Kong Census and Statistics Department, Fitch Solutions


2017
Growth rate (%)
Number of Chilean residents visiting Hong Kong14,420
-1.9

Source: Hong Kong Tourism Board


2017
Growth rate (%)
Number of Latin American residents visiting Hong Kong195,854
1.8

Source: Hong Kong Tourism Board
Date last reviewed: August 24, 2018

11.2 Commercial Presence in Hong Kong


2016
Growth rate (%)
Number of Chilean companies in Hong KongN/A
N/A
- Regional headquarters
- Regional offices
- Local offices


11.3 Treaties and agreements between Hong Kong and Chile

As an important step in accommodating greater synergies, Hong Kong signed a free trade agreement with Chile on September 7, 2012, which entered into force on October 9, 2014. Moreover, Hong Kong and Chile signed on November 18, 2016 an Investment Promotion and Protection Agreement (IPPA) - an Investment Agreement under the free trade agreement between Hong Kong, China and Chile - which is now pending entry into force.

Source: Fitch Solutions

11.4 Chamber of Commerce (or Related Organisations) in Hong Kong

Commercial and Economic Section in Hong Kong
Email: info@chilehkcc.org

Source: Chile Hong Kong Chamber of Commerce

Chilean Consulate General in Hong Kong
Address: Unit 3005, 30/F, Enterprise Square Three, 39 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong
Email: cghonkong@minrel.gob.cl
Tel: (852) 2827 1826 or (852) 2827 1748

Source: Consulate General of Chile in Hong Kong

11.5 Visa Requirements for Hong Kong Residents

Entry is Visa-free for up to 90 days.

Source: Visa on Demand

Content provided by Picture: Fitch Solutions – BMI Research