Business environment at a glance

Country View Chile
The Economist Intelligence Unit / Infoestrategica

Policy towards private enterprise and competition
2005-06: Concessions rather than outright privatisations will continue to be the norm and will be extended to hospitals, jails, urban water supply and agricultural irrigation dams. Beginnings of reform of the civil service.

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2007-09: Strengthening of transparency in public procurement and regulatory proceedings. Civil-service reform will start yielding efficiency gains. The state copper corporation will remain under public ownership.

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Policy towards foreign investment
2005-06: Stable policy environment, despite electoral cycle. Introduction of a royalty on mining output.

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2007-09: Further bilateral investment protection and double-taxation treaties.

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Foreign trade and exchange controls
2005-06: Trade agreements likely to be reached with China, India and Japan, as well as with New Zealand and Singapore. Free-trade agreement (FTA) with European Free-Trade Agreement (EFTA) countries likely to begin in 2005.

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2007-09: Continued pursuit of new FTAs, mostly with Asian countries, and deepening of existing arrangements.

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Taxes
2005-06: Reform of the municipal tax system.

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2007-09: The reduction in tax evasion brought about by the electronic invoicing system will enable a pro-investment tax reform, including a gradual elimination of the corporate tax on reinvested earnings.

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Financing
2005-06: Development of the commercial paper market will accelerate and a new capital-market reform will tighten controls on financial institutions and give new tax incentives to the risk-capital industry.

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2007-09: Deregulation to increase competition in the financial sector and to help turn the local market into a regional hub.

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The labour market
2005-06: Amendments to labour reform of 2001 will not be implemented until 2006, owing to electioneering.

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2007-09: Further liberalisation of working arrangements. Gradual introduction of performance-related pay and bonuses in the public sector.

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Infrastructure
2005-06: Completion of Santiago’s four toll-based urban highways and an expansion of its underground railway network. Waste-water treatment improved. Digital cable to link all public institutions.

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2007-09: Transantiago integrated public transport system will come on stream. Major advances in e-government and e-commerce systems and continued upgrading of transport and social infrastructure through concessions.

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SOURCE:  EIU / INFO-e

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