MercoPress. South Atlantic News Agency

Foreign investment in Chile drops

Foreign investment in Chile totalled 2,464 billion US dollars in 2003, a significant 35,5% drop compared to 2002.

Most investment, 72%, was concentrated between United States, 37,6%; Canada 14,6%; UK 10,2% and Spain 9,6%. The mining sector attracted 30% of total foreign investment, a considerable contraction from the 58% of 2002. Transport and communications followed with 26,6% and manufacturing 18,4%.

According to the Chilean Commission of Foreign Investment, CIE, the bid difference originated in the sale two years ago of the disputed Las Condes mining complex which determined an important influx of capital by AngloAmerican, --and the immediate repatriation by Exxon --, which was equivalent to 29% of all foreign investment in 2002.

However, "lower figures are not alarming because the quick year to year contraction is motivated by the fact that many foreign companies are opting for local financing of their investments", said Karen Poniachik CIE vicepresident. "Credit in Chile is cheap and companies prefer to have debts in pesos because of the US dollar volatility".

Ms. Poniachik also argued that the time of the great acquisitions and takeovers of the nineties has ended with corporations setting their regional operations in Chile, "maybe investing less but introducing advanced technology and added value to the economy".

But orthodox economists are not convinced.

"Structural reforms are paralyzed such as the privatization of government owned companies", says economist Francisco Garcés.

Besides, "the current debate about mining taxes is generating uncertainty. Investors want clear, stable, sustainable rules of the game, and now there are risks in Chile", added Mr. Garcés.