Chile Advantages And Opportunities Javier Becker Ambassador of Chile to Thailand

About Chile Chile, land of opportunities Investments Trade FTA Chile - Thailand

About Chile

SNAPSHOTS  Population: 17,1137 millions.  Total surface: 756,102.4 km²  GDP 2011: US$248,411 Bn, current prices.  GDP 2012: US$ 272,119 Bn, current prices (estimated)  Current per capita income (2011): US$17,221 (PPP)  President of the Republic: Sebastian Piñera  Term of office: 4 years  We have a bicameral system.  The next presidential election will be held on November 17 th,

CHILE A DIVERSE COUNTRY Northern Chile has a desert climate noted for wide temperature swings. It is also known for its vast mining wealth. Central Chile is home to Santiago, the nation’s capital. The region is a major industrial and agricultural hub. In the south, the prevailing rains and cold weather help nurture rich fisheries and forest resources.

ASTRONOMICAL CAPITAL OF THE WORLD Natural laboratory of unique conditions, with more than 330 cloudless nights per year. 68% of global astronomy infrastructure shall be located in Chile by 2018, with an investment of USD 6 billion

OTHER NATURAL LABORATORIES Chile is one of the most seismically active countries in the world, making it a unique location for development and testing of seismic engineering. The Atacama Desert is a unique location for development of solar energy, it has the highest rate of radiation in the world and it is the driest desert - with places where it has not rained in more than 400 years. Punta Arenas is the nearest access port to Antarctica, placing it as a logistical and strategic center for development of science, tourism and fishing in the Antarctic.

ECONOMIC GROWTH  We expect the Chilean Economy will grow 4.5% in 2012 and 5.0% in 2013 (rate in 2011, 6.3%)  Chile aims to be a developed economy in 2018, with a per capita GDP of US$22,000, under the course of an average growing rate of 6%.  Current per capita income (2011): US$17,221 (PPP) 8

LATIN AMERICA AND CHILE: GDP per capita  Thanks to advances in the last 25 years, our GDP per capita increased from 23% 1980 to 34% in 2011 respect to U.S.A.  The importance is not only to be in the forefront, but also to realize that it is easy to lose track. 9 Compared Per Capita Incomes (GDP per capita PPP, % with respect to USA)

MONETARY SITUATION  Chile´s Central Bank is independent with inflation target regime.  The Central Bank has the capacity to make counter-cyclical policies. The current interest rate is 5.0%.  Foreign Reserves: US$ 41,97 Bn (dec. 2011)  We expect the inflation rate will be 3,5%-3,8% in 2012, after reaching 4.4% in

Indicators of financial sector development  Pension funds assets: US$ Bn (54% of 2011 GDP)  Assets Under Management institucional investors: US$208.5 Bn (84% 2011 GDP)  Stock market capitalization: US$ Bn (92% 2011 GDP)  The long term interest rates are low: the current 10Y nominal rate is 5.2%  Banking assets/ GDP: 109% 11

FISCAL SITUATION  In 2011, the fiscal surplus was 1.4% of GDP, while Gross Fiscal Debt was 11.2% of GDP.  Net external debt is negative (-US$10,96 Bn at 2011).  Chile faces favorable conditions in financial markets: both Credit Default Swaps (5Y at 95 bp) and country risk (150 bp at March 12) are the lowest within LATAM countries.  Sovereign wealth Funds are higher than US$20 Bn (including treasury assets).  Tax Burden: 21,1% of GDP (less than the OECD average) 12

SOME GLOBAL CLASSIFICATIONS AND RANKINGS OF CHILE  Index of Economic Freedom: N°7 (1 st in LATAM)  Global Innovation Index: N°38 (1 st in LATAM)  Doing Business 2012: N° 39 (1 st in LATAM)  Competitiveness Index: N°31 (1 st in LATAM)  Corruption Perception Index: N° 22 (1 st in LATAM)  Global FDI Inflows: Nº 19 (3 rd in LATAM)  Human Development Index: N°44 (1 st in LATAM)  Income Inequality: N°3, on OECD. 13

Chile, land of opportunities

According to the latest international rankings and reports from organizations like the OECD, World Bank and The Economist Intelligence Unit, Chile has been recognized as: The most stable and secure country in South America A good partner to do business A country open to the world that promotes free trade Ernst & Young placed Chile among the countries with the fastest growing economy, along with China, India, Russia and Brazil. According to the recent 2012 version of the "Doing Business" ranking, Chile advanced from place 62 to 27 in the index of business start ups. LAND OF OPPORTUNITIES

Source: Studies based on data of the IDB. Multilateral Investment Fund, The Economist. 1Chile 2Peru 3Brazil First place to invest in Latin America Santiago, second best city to do business in Latin America 1Miami (USA) 2Santiago (Chile) 3Sao Paulo (Brazil) Urban Competiveness Index Source: América Economía magazine, LAND OF OPPORTUNITIES

2012 Index of Economic Freedom Source: The Heritage Foundation ( Chile is one of the 10 countries with a high percentage of economic freedom. LAND OF OPPORTUNITIES Economies (7 th among 184 economies )

Corruption Perceptions Index 2011 (22 nd among 183 economies ) Source: Transparency International, 2011 ( Among the least corrupt countries in the world with high levels of transparency. LAND OF OPPORTUNITIES

Source: Chile maintains "A +" by Standard & Poor's 2012 Chile's ratings are supported by the low level of fiscal debt, political stability and a very flexible and strong economy. Projections: A low level of fiscal debt, along with growing local financial markets should support the stability and growth of GDP in Chile, despite the growing external uncertainty and potentially slow global growth in coming years. LAND OF OPPORTUNITIES

Investments

During the past 25 years Foreign Direct Investment (FDI) has played a key role in Chile´s economic growth and development. Maintaining its upward trend, FDI has helped to increase Chile’s competitiveness, not only through resources and new markets but also through technological development and specialized know-how. A PLACE TO INVEST IN

Foreign Direct Investment (FDI) in Chile 2011, US$17.5 Bn ( , 6.9% average as % of GDP) Source: Central Bank of Chile ( Successful track record of foreign investment A PLACE TO INVEST IN

Source: Foreign Investment Committee Foreign Direct Investment in Chile: By sector. A PLACE TO INVEST IN Materialized Foreign Investment D.L. 600 By Sector USD million

CHILE – THAILAND FREE TRADE AGREEMENT  Thailand is the first commercial partner of Chile in ASEAN, showing the excellent relationship between our countries.  The FTA will allow Chilean products to enter a 67 million consumer's market with a high income per capita.  Chilean products such as, fish, seafood, beef, pork and chicken meat, cheese, condensed milk, fresh fruit, paper, cardboard and fishmeal will enter to the Thailand market with no tariffs.  Meanwhile, 90% of all exported Thailand products will also enter Chile at 0% tariff. USD Millions

 It is expected that the implementation of this agreement will also create a platform for Thailand‘s expansion into Latin-America.  This FTA contributes also to enhance the Chilean business relations with other Asian countries and ASEAN members (FTA with Singapore, Brunei, Malaysia, Vietnam, South Korea, China, Japan) thus bringing new opportunities for trade and to position Chile in the Asian region. The experience shows that FTAs stimulate trade between countries: Longstanding friendship and cooperation and growing trade relationship between Thailand and Chile Further liberalizing trade Strengthening of their economic partnership will - bring economic and social benefits - create new opportunities for employment - improve the living standards of their people - create new business opportunities WHAT TO EXPECT?

 Crossing the threshold of development this decade remains an ambitious goal, but plausible.  There are circumstances highly favorable external and internal to this goal and for foreign and domestic investment.  Sustain the program is to lead to the mountain: requires vision, will, skill and drive.  Come on, you can. It’s up to you.  Take the chance: THE MOMENT IS NOW. Let’s contribute, together, to enlarge our people’s choices. 26 Conclusions

 Crossing the threshold of development this decade remains an ambitious goal, but plausible.  There are circumstances highly favorable external and internal to this goal and for foreign and domestic investment.  Sustain the program is to lead to the mountain: requires vision, will, skill and drive.  Come on, you can. It’s up to you.  Take the chance: THE MOMENT IS NOW. Let’s contribute, together, to enlarge our people’s choices. 27 Conclusions