Chile: business environment and investment opportunities

Foreign Investment Committee

Matas Mori Arellano

Executive Vicepresident Foreign Investment Committee

Snapshot of the Chilean economy

Economy
GDP 2010 GDP per capita (PPP, 2010) Actual interest rate (Monetary Policy) Unemployment rate 2010 Public debt (2009) Exports (2010) Imports (2010) US$ 203 billion US$ 14,982 (IMF) 2 place in South America 4.50% 8.1% US$ 2,5 billion US$ 69.6 billion US$ 54.5 billion

Chiles Sovereign Ratings

Fitch Ratings Standard & Poors Moodys A+ A+ Aa3

Social
Population 16.9 million (1/77 times Chinese population) Spanish Peso 97% 78 years

Official Language Currency Literacy rate Life expectancy

Government of Chile| Foreign Investment Committee

Source: Central Bank of Chile (www.bcentral.cl)

Chiles road to development by 2018

Government of Chile| Foreign Investment Committee

Source: Ministry of Finance (www.minhda.cl)

FDI attraction

Foreign Direct Investment in Chile

(6.9% average as % of GDP 1996 - 2010)

Source: Central Bank of Chile (www.bcentral.cl) Government of Chile| Foreign Investment Committee

FDI attraction 2010

FDI authorized under D.L. 600
(US$83,046 million 1974-2010) US$13,262 million

During the year 2010, the Foreign Investment Committee (CIE) authorized foreign direct investment (FDI) for US$13,262 million, the largest amount in history. Authorized FDI increased in 201% as compared with 2009.

Government of Chile| Foreign Investment Committee

Source: Foreign Investment Committee (www.foreigninvestment.cl) 5

Regional FDI attraction 2009-2010

FDI Latin American countries, 2009-2010
(US$88,200 million in 2010)

16.6% 52.8% 43.3% 20.8% 4.0%

43.7%

Government of Chile| Foreign Investment Committee

*Regional out of 37 economies. Source: UNCTAD (www.unctad.org)

Business environment ranking

GDP PPP per capita 2010*

Business Environment Ranking 2010 2014

(15 out of 82 economies)
Singapore Switzerland Finland Canada New Zealand

US$57,238 US$41,765 US$34,401 US$39,033 US$27,420 US$47,131 US$35,930 US$14,982 US$38,816 US$34,092 US$14, 265 US$11,289 US$9,281 US$9,445

1 2 3 5 8 13 14 15 17 19 35 40 45 51
Source: Economist Intelligent Unit, April 2010 (www.eiu.com) 7

United States Germany Chile Ireland France Mexico Brazil Peru Colombia

*IMF Government of Chile| Foreign Investment Committee

Ease of Doing Business

Doing Business in 2011
(Overall 43 out of 183 economies) Category Protecting investors Registering a property Paying taxes Starting a business Dealing with construction permits Enforcing contracts Trading across borders Getting credit Closing a business Position 28 45 46 62 68 68 68 72 91

Source: World Bank, November 2010 (www.doingbusiness.org)

High levels of transparency

Corruption Perception Index
GDP PPP per capita 2010*

(21 out of 178 economies)

Denmark New Zealand Singapore Finland Sweden Canada

US$36,763 US$27,420 US$57,238 US$34,401 US$37,775 US$39,033 US$35,052 US$14,982 US$47,131 US$14,341 US$29,651 US$10,731 US$11,289 US$9,281 US$14,265 US$7,951

1 1 1 4 4 6 20 21 22 24 30 41 69 78 98 164

United Kingdom Chile United States Uruguay Spain Costa Rica Brazil Per Mexico Argentina

*IMF Government of Chile| Foreign Investment Committee

Source: Transparency International (www.transparency.org), 2010

A safe and reliable country to invest

In 2010 Chile formally became member of the Organisation for Economic Co-operation and Development (OECD).

North America: Canada (1961); United States (1961); Mexico (1994) South America: Chile (2010) Europe: Germany (1961); Austria (1961); Belgium (1961); Denmark (1961); Slovenia (2010); Spain (1961); Estonia (2010); Finland (1969); France (1961); Greece (1961) ; Hungary (1996); Ireland (1961); Iceland (1961); Italy (1961); Luxemburg (1961); Norway (1961); Netherlands (1961); Poland (1996) ; Portugal (1961); United Kingdom (1961); Czech Republic (1995); Slovak Republic (2000); Sweden (1961); Switzerland (1961); Turkey (1961) Pacific: Australia (1971); Japan (1964); New Zealand (1973); Republic of Korea (1996) Middle East: Israel (2010)

Government of Chile| Foreign Investment Committee

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Globally integrated economy

Chile has in force 21 agreements with 58 countries
(With access to the 62.5% of the world population)
Free Trade Agreements Association Agreement Bilateral Trade Agreements Canada (1997) Partial Trade Agreement EFTA (2004) European Union (2003) Turkey (2011) Korea (2004) Japan (2007) China (2006) India (2007) Vietnam Thailand Malaysia In negotiation, concluded but not signed.

United States (2004) Mexico (1999) Central America (2002) Panama (2008) Venezuela (1993) Colombia (2009) Ecuador (1995) Peru (2009) Bolivia (1993) Mercosur (1996)

Australia (2009) P4 (2006)

Government of Chile| Foreign del Interior Gobierno de Chile | Ministerio Investment Committee

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Foreign investment mechanisms in Chile

Chapter XIV
Applies to any operation in excess of US$10,000. No contract executed with the state.

Decree Law 600

Voluntary for operations in excess of US$5 million (first investments in cash) and US$ 2.5 million (fixed assets). Contract executed with the State represented by the Foreign Investment Committee. Foreign currency must be converted into Chilean pesos. Guaranteed access to the Formal Exchange Market. One-year capital lock-in; right to remit profits at any time. Optional tax stabilization regime.

No obligation to convert foreign currency into Chilean pesos. Access to Formal Exchange Market subject to the regulations in force at the time of carrying out the operation. No mandatory minimum term of stay. Subject to standard tax regime.

Government of Chile| Foreign Investment Committee

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FDI materialized under DL 600

1974-2010

FDI materialized under D.L. 600

breakdown of inflows by sector
(US$77,261 million)
Others 3.3% Mining 32.9%

Transport & communications 11.2%

Manufacturing 11.3%

Electricity, gas & water 19.2%

Services 22.1%

Government of Chile| Foreign Investment Committee

Source: Foreign Investment Committee (www.foreigninvestment.cl).

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FDI materialized under DL 600

1974-2010

FDI materialized under DL 600

Breakdown of inflows by country of origin
(US$77,261 million)
Switzerland 1.7% Belgium Others 1.3% 8.6% United States 25.9%

France 2.1% Italy 2.2%

Netherlands 2.2%

Mexico 2.4% Japan 3.9% Australia 4.8% Spain 18.7%

United Kingdom 8.5% Canada 17.7%

Government of Chile| Foreign Investment Committee

Source: Foreign Investment Committee (www.foreigninvestment.cl).

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Origin of the FDI in Chile

FDI materialized under D.L. 600 Breakdown of inflows by geographic zone
(US$77,261 million)
Middle East and Africa Mexico and Asia 0.2% South America 0.2% 5.4% Others 2.1%

North AmericaPacific 52.5% Europe 39.6%

Government of Chile| Foreign Investment Committee

Source: Foreign Investment Committee (www.foreigninvestment.cl).

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FDI from Asia to Chile (except Japan)

FDI materialized under D.L. 600 Breakdown of inflows by economy
(US$190,9 million)
Taiwan 5.8% Malaysia 12.0% Singapore 2.3%

China 33.8%

India 14.2%

South Korea 21.1%

Hong Kong, 10.8%

Government of Chile| Foreign Investment Committee

Source: Foreign Investment Committee (www.foreigninvestment.cl).

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A relationship of contrasts
Chile-China economic relationships, 2005-2010
(Trade: US$89,564 million; FDI: US$2,4 million)

25.000 20.000 15.000

Trade

10.000 5.000 0
2005 2006 2007 2008 2009 2010

FDI from China

Government of Chile| Foreign Investment Committee

Source: DIRECON / Foreign Investment Committee (www.foreigninvestment.cl)

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Chile and China: a track record of trust

Chile was the first South American country to establish diplomatic relations with China (1970). Chile was the first country in Latin America to support Chinas admittance into the WTO (2001). Chile was the first country to recognize China as a market economy (2004). Chile was the first individual country with which China signed a Free Trade Agreement (FTA) (2005). Since the FTA, China has become Chiles largest trading partner while Chile is Chinas second largest partner in South America (2009).
Source: DIRECON
Government of Chile| Foreign Investment Committee

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What we can do for you

Reduce the costs of investing in Chile; Offer appropriate and revelant information; Coordinate our efforts with other public organizations; Offer specific investment opportunities in public and private projects; China Desk; Become our partners.

www.vecie.cl

Government of Chile| Foreign Investment Committee

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Foreign Investment Committee

www.foreigninvestment.cl chileinvestment@foreigninvestment.cl

LEGAL DISCLAIMER: The information contained herein is intended solely for general guidance. The implementation of laws will vary according to the facts applicable to a specific case. This presentation is made in the understanding that the Chilean Foreign Investment Committee is neither engaged nor renders any kind of legal, accounting, tax or business advice. No endorsements are made by this agency in connection with potential business ventures undertaken by potential investors.