MercoPress. South Atlantic News Agency

Brazil becomes magnet for Chilean investors; trade in 2010 soars 66%

Brazilian aircraft, locomotives and subways for Chile

This year Brazil has emerged as Chile's largest trading partner in South America and one of the most important destinations for Chile's investment. Overall, trade between Brazil and Chile has grown 66%, while Brazil replaced Colombia as second highest location for Chilean Investment.

At this time in 2009, Argentina was Chile's number one trading partner in the region. From January to August Chilean trade with Brazil was 5.4 billion US dollars, up 66% for the same period last year. The boost in trade between the two countries has been bolstered through the trading of aircraft, locomotives and subway cars.

Chilean Investment in the Brazilian economy has seen an increase as well, with a total investment of 665 million USD as of June. This investment total does not include a 704 million USD Cencosud purchase of a Brazilian grocer chain or the Tam-Lan merger that was announced this summer. This has bumped Brazil up from third to second largest country for Chilean investment, replacing Colombia.

With the Tam-Lan merger, Brazil could even take Peru's number one spot, where in 2010 Chile has invested 1.5 billion USD.

Plans for increased investment continue, focusing mainly on land acquisition, new buildings, restaurants and offices. For example, Roberto Sivori Vergara, the president of Colliers in Chile, among other investment partners, recently purchased land in Matto Grosso do Sul which is home to Brazil's largest agricultural production.

Other entrepreneurs are looking to capitalize on the housing needs that Brazil is facing, while still others are grasping the opportunity to get involved in Brazil's growing oil industry. Chilean restaurant franchise, Doggis, says it will open 70 stores in Brazil during the next three years.

Despite upcoming elections where a new president will be elected, investors say they do not have fears for future investment in Brazil. They site Brazil's recent signs of political stability and economic growth post-crisis as reasons for keeping their fears at bay. The investors also site Brazil's large population and the Brazilian government's quick action as more positives.

“In Brazil, a bank will make 200,000 contracts per month” says businessman Pablo Vicuna Tupper. “In Chile, the most would be 20,000.”

However, there are some differences in Brazil, such as the existence of a federal tax system. Because companies often have to pay taxes at the national, state and municipal level there are more taxes and thus can effect what locations investments are made. At the same time, Chilean investors have seen failure in Brazil, as was the case when Fasa withdrew itself from the Brazilian market in 2006 after it failed to see the results it wanted.

By Kayla Ruble – Santiago Times