Chile

Originally published: Mar-28-2007

Official Name: Republic of Chile

Internet Domain: .cl
International Dialing Code: +56

Table of Contents

Government

Republic with 13 regions and three branches of federal government: executive, legislative, and judicial.

Legal System

Based on Code of 1857 derived from Spanish law and subsequent codes influenced by French and Austrian law. Has not accepted compulsory ICJ jurisdiction. In June 2005, Chile completed an overhaul of its criminal justice system to a new, US-style adversarial system.

The judicial system in Chile is generally transparent and independent. The likelihood of government intervention in court cases is low.

People

• Population: 16,134,219 (July 2006 est.)
• Population growth rate: 0.94%
• Languages: Spanish

Economy

Chile is one of South America's most stable and prosperous nations, with a market-oriented economy characterized by a high level of foreign trade. It has been relatively free of the coups and arbitrary governments that have blighted the rest of the Central and South American continents. However, for the first time in many years, Chilean economic growth in 2006 was among the weakest in Latin America at just 4.2%, down from 6.3% in 2005. Higher energy prices as well as lagging consumer demand were drags on the economy in 2006.

Chile has pursued generally sound economic policies for nearly three decades. It is the largest producer and exporter of copper in the world. However, the economy is still too dependent on copper exports — 45% of total foreign sales in 2005 — and low value-added sectors. The country is also heavily dependent on imports, particularly gas from Argentina, to cover its energy needs.

Chile registered an inflation rate of 3.2% in 2006. The Chilean peso’s rapid appreciation against the U.S. dollar in recent years has helped dampen inflation.

Currency: Peso (CLP)

• CLP per USD: 538.5 (3/26/07)
• CLP per EUR: 715.591 (3/26/07)

Leading Markets (2005): US 15.8%, Japan 11.5%, China 11.1%, Netherlands 5.8%, South Korea 5.5%, Brazil 4.4%, Italy 4.2%, Mexico 4%

Leading Exports-commodities: copper, fruit, fish products, paper and pulp, chemicals, wine

Leading Suppliers (2005): Argentina 14.8%, US 14.6%, Brazil 11.7%, China 7.8%, South Korea 4.8%, Yemen 4.4%

Leading Imports-commodities: petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, natural gas

Top Industries: copper, other minerals, foodstuffs, fish processing, iron and steel, wood and wood products, transport equipment, cement, textiles

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators - 2006

(e) estimate (*) does not include significant percentage of under employment in rural areas

Credit and Collections

• Collection Experience: Fair-Good
• Exchange Delays: 3 months
• Preferred Credit Terms: Unconfirmed letter of credit
• Minimum Credit Terms: Sight draft

Risk Assessment

Coface Country Risk Rating: A2 -- Default probability is still weak even in the case when one country's political and economic environment or the payment record of companies are not as good as A1-rated countries.

Ducroire Delcredere Political Risk Rating: 1 – lowest risk
Ducroire Delcredere Commercial Risk Rating: A – lowest risk

Business Climate

Chile is strongly committed to free trade and has welcomed large amounts of foreign investment. Chile has signed free trade agreements (FTAs) with a whole network of countries, including the United States, the European Union, South Korea, New Zealand, Singapore, Brunei, and China. It began negotiations for full-fledged FTAs with India and Japan in 2006. Chile plans to continue its focus on its trade ties with Asia by negotiating in 2007 trade agreements with Thailand, Malaysia, and Australia.

Transparency of Regulatory System: Chile's approach to foreign direct investment is codified in the country's Foreign Investment Law, which gives foreign investors the same treatment as Chileans. Registration is simple and transparent.

Intellectual Property Rights: On January 8, 2007, Chile was placed on the U.S. Trade Representative’s Priority Watch List due to its poor record of protecting intellectual property rights. Chile has a poor and deteriorating record of protecting copyrighted music, films, and software. Combined with this is its institutional structure allowing local companies to produce and market pharmaceutical generics that violate existing patents.

Conversion and Transfer Policies: Foreign investors are guaranteed access to the official foreign exchange market to repatriate their profits and capital.

Taxations: Chile and the EU have signed a double taxation treaty; no such agreement exists between the U.S. and Chile.

Corruption: Chile is relatively free of crime and official corruption. The country ranked 21st on the Transparency International corruption index in 2005, while the U.S. ranked 17th.

For more detailed information on these topics, visit the 2006 Investment Climate Statement – Chile, of the U.S. Department of State.

Business and Cultural Practices

Business Cards: Have your business card translated into Spanish on the reverse side. Bring a plentiful supply as Chilean businesspeople customarily exchange them.

Business Attire: Dressing well is a priority in Chile and is perceived as a sign of respect. "Business casual" is not generally well-received.

Names and Titles: Address individuals by titles – Mr. [Señor], Mrs. [Señora], or Miss [Señorita] followed by his or her surname. The majority of Hispanics hold both maternal and paternal surnames. The father's surname is listed first and would be used to address the person. For example, Carlos Lopez Garcia would be addressed as "Señor Lopez." The use of professional titles (professor, doctor, etc.) is not common in Chile.

Conversation: Chileans are very patriotic and will likely take offense at negative comments directed at their country. It's a mistake to compare Chile to Argentina, as there has been a great deal of conflict between the two nations.

Gifts: Gifts are not expected in a business context until the relationship becomes close. Don't select anything that is obviously expensive, as your generosity may be perceived as a bribe.

Meetings and Negotiations: Third party introductions, through institutions such as banks and consulting firms, are often a necessary prelude to conducting business in Chile.

Acceptable Public Conduct: Slapping the right fist into a left open palm is perceived as obscene. An open palm with the fingers separated is a gesture for "stupid." Refrain from raising your right fist to head level, as this is a Communist sign. Point with your entire hand, not your index finger.

For more detailed information on these topics, visit Chile, on the Executive Planet web site.

Sources for further information on doing business in Israel

Doing Business in Chile, web site of Chliean law firm Pegna, Saavedra & Cía. – Website in English describing legal and taxation matters relating to investing in or doing business in Chile.

Doing Business in Chile, 2007 Country Commercial Guide, US Department of Commerce

Embassy of Chile – Information on political affairs, economy and trade, agriculture, cultural affairs, tourism, etc.

*****

This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Bangladesh. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, COFACE Country Ratings, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.

Historical Exchange Rates: OANDA.com The Currency Site.