Foreign Direct Investment

Despite the Covid-19 pandemic, Chile benefited from a rapid recovery in commodity terms of trade during the second half of the year that is likely to boost inflows during 2021. According to the World Investment Report 2021 published by UNCTAD, FDI flows to Chile declined by 33 % to USD 8.4 billion (compared to USD 12.5 billion in 2019), due to lower capital investment (-29 %) and lower reinvested earnings (-28 %). The country's resilience, compared to its peers in South America, stemmed from the rapid recovery in mineral prices, sustained fiscal spending (14% of GDP) and the implementation of one of the fastest vaccination campaigns in the world. From a sector-specific perspective, Chile's commitment to a green transition has created the basis for attracting additional foreign capital into green energy industries. As a matter of fact, 40% of greenfield announcements in 2020 were registered in the renewable energy industry, especially in solar electricity. FDI stocks reached USD 272 billion, a rise of more than USD 100 billion if compared to 2010. Brazil, the US, Peru and Argentina represent more than the half of the FDI stock. Investment are mainly oriented towards mining, finance and insurance, energy, commerce, and manufacturing.

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 a 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. In 2019, Huawei invested USD 100 million on a regional data storage project in Santiago; in 2020, the Chinese tech company announced that it would invest on a second data centre in the country, boosting its cloud and AI platform in South America, and in 2021 a Chinese firm Sinovac invested USD 60 million on a vaccine manufacturing plant in Santiago. Additionally, Chile ranks 59th out of 190 countries in the last Doing Business report, issued in 2020 by the World Bank, falling three spots compared to 2019. In order to gain places, the country can improve issues such as protecting minority investors, resolving insolvency, and getting credit.