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Doing Business in Chile with Veronica Medina

by | May 11, 2023

    Veronica Medina
    Founder and CEO
    Business Hub Consultants
    vmedina@businesshubconsultants.com

     

    LATAM FDI: Hello. Welcome to another episode of the LATAM FDI podcast. In these recordings, we speak to experts in business and economic issues throughout Latin America. Today we have Veronica Medina with us. We feel very fortunate to speak with her. She’s the founder and CEO of Business Hub Consultants. She’s located in Santiago, Chile. And I’ll just let her introduce herself and her company to you, and then we’ll have a discussion about doing business in Chile.

    Veronica Medina: So, hello, everyone. Thank you so much for having me here with you today. I’m back in Santiago after doing a full month of traveling to see our clients. We hadn’t seen some of them in four years due to the coronavirus pandemic. As I said, I am the founder and CEO of Business Hub Consultants. We are a consulting firm based out of Santiago, Chile. We also have offices in Lima, Peru, covering mainly Spanish-speaking South American countries. I would say about 85% of our work is helping foreign companies that are interested in doing business in Chile and other countries in the region. We do a large proportion of work with American companies. We help them do business in South America by connecting them to service distributors and end clients. We help them in several ways. What are their strategies for doing business in our countries? We help them with regulations and do all of the research and assistance that companies require to do business in this exciting environment in South America. We think we could be a good conduit, specifically after the pandemic for the United States and bringing its logistics and suppliers closer to home.

    LATAM FDI: Well, it’s interesting that you have activities throughout the region, but today we will focus on doing business in Chile. Maybe you could tell our listeners about the investment trend that’s been occurring during the past year in Chile. How have things been there?

    Veronica Medina: Yes, we just had some reports from our Central Bank with very positive results. I don’t know if some of us were quite surprised by our good results, but, for example, the FDI inflow up to February of 2023 was higher by close to 50% than in the same period last year. And also, FDI in the full year of 2022 increased by 31% to close to $21 billion over the previous year. Additionally, that figure is 50% above the average for the last five years. So, I think very good results have been achieved.  This is evidence that doing business in Chile is still very attractive in terms of bringing investment into the country. We currently have about 500 investment projects in Chile in the pipeline in different stages of development. The top three sectors are energy and global technology services. The third is mining and mining suppliers. And the top investors in Chile are actually the USA, which solidifies the trade and investment relationship that we’ve had with the USA for decades. China follows this, and then in third place is Canada. So, we’re very excited by those results. Doing business in Chile is still an attractive option for investors.

    LATAM FDI: That sounds very positive. It seems to me that there was some trepidation with respect to political changes that have occurred in Chile recently. But given what you just said, it seems like we can assume that there’s still a lot of confidence in the country’s economy and doing business in Chile.

    Veronica Medina: Absolutely. We’ve also just got in numbers for import-export trade. Those numbers are also breaking records. So, again, we’re coming out of the coronavirus pandemic, and as you say, rightly. I don’t want to dismiss Chile’s political challenges over the past years; your listeners might be up to speed. We just had our referendum this Sunday regarding the new constitution that will be written. We had to go vote for the constituents that would be writing that constitution. And I must say that yesterday, Monday, May 8, 2023, the stock exchange opened positively by 2%. So, the market seemed to be reacting quite favorably to an issue that is obviously important to many businesspeople. Experts have mentioned that our rewriting of the constitution might cause investment projects to be put on standby. Right, because you’re rewriting the Constitution. But I also think that with the results on Sunday and obviously with some of the numbers I’ve just given, thankfully, it seems that we’re proving all of those things wrong.

    LATAM FDI: It’s great to hear that. You mentioned a few minutes ago in passing some of the economic sectors that stand out for doing business in Chile. If people are looking at the country in terms of potential investment, what should they look at in the short term, and also, what should they look at in the long term?

    Veronica Medina: Yeah, well, I think, as I mentioned, the top investment portfolio where the projects are, is in the energy sector. The tech services sector here has grown not just in terms of investment, but we’re also looking at a kind of commerce. Right. It’s not just the investment. So, companies are looking to sell their products or their technologies in the market. We are seeing these trends in energy, in tech, and in mining. Just a few weeks ago, here in Santiago, we had Expo Min, which is one of the largest trade shows in LATAM for mining. It was really the first one that had been done since the end of the coronavirus pandemic. And we had a lot of international pavilions. American companies were represented well in the US pavilion at that show. I would tend to say that those are the industries that will continue to be a focus. Agtech as well. If you’re looking for investment in Chile, Agtech is also key. But regarding the development future, we have great potential because of our lithium reserves for use in electric vehicles. The government has very strong environmental and climate change regulations and is net zero. I think all those industries related also to clean technologies as such will continue to grow.

    LATAM FDI: The market appears to be active in these particular industries. What advice would you offer investors looking at doing business in Chile, and what can you as a company do to help them?

    Veronica Medina: Yeah, well, I think obviously you have to do due diligence. You can’t go into a market blind and must assess the risk in your particular industry.  You must also be connected with someone local on the ground, right? Someone with the networks in the industry or industries you’re trying to engage in doing business in Chile. Even though Chile is a very open economy, it is important to remember that we have the most free trade agreement signed in the world. And as we mentioned before, the relationship with the United States and with American-made products and technology is very well known here in Chile.  I still think that they are highly regarded. We, as a company, always tell our clients that they should have somebody on the ground when considering doing business in Chile. And that’s where we can help with those connections. Getting you connected to the right people in the right industry, in the right position within, whether it’s large companies, SMEs, or even at a government level. We’re here to also help you with doing due diligence in the market and looking at the opportunities for you. Is Chile the right place for you to be, right?

    LATAM FDI: Considering juridical factors and concerns, how does Chilean legislation favor investors?

    Veronica Medina: I mean, Chile has, again, with what I mentioned regarding the openness of its economy for decades now. We welcome investors, and foreign investors are treated just the same as local investors in the country. Investment is pretty much permitted in all sectors of the economy. There are some tax benefits in certain regions of the country if the investment is done in those zones. There are some tax incentives if you are doing high-tech projects or R and D, and obviously, kind of the economic zones in the north and in the south of the country that also have very good favorable regulations and tax incentives for companies to go into those special trading zones aimed at doing business at Chile.

    LATAM FDI: Speaking of incentives, can you give some specifics?

    Veronica Medina: For example, if you’re doing R and D in your company, you can get tax credits for 30% of the R and D investment that your organization is doing. So again, Chile is a highly technological-based society. We are actually ranked number one in LATAM for innovation. So, there are tax incentives for anything that has to do with R and D, with technology development. Also, working with Corfo, the Chilean economic development agency, there might be some subsidies for companies to tap into there.

    LATAM FDI: Well, given all of the information that you’ve shared with us now, my experience has been that when individuals listen to these podcasts, the information that the speaker has offered obviously leads to other questions. That being the case, and you being the go-to person for South America and doing business in Chile, how can people contact you to get more information that they may need to proceed with their business plans?

    Veronica Medina: Well, absolutely. We have our website, which actually has some great also insights into doing business in Chile. We have country fact sheets there. We have industry fact sheets as well for the region. And the website is businesshubconsultants.com. My email is vmedina@businesshubconsultants.com. And obviously, through you, Steve, people can get in touch with me through you since now we are also working together and trying to promote this great region.

    LATAM FDI: Well, thank you very much. Another thing we’ll put up on our transcript portion on our website of this particular conversation is your LinkedIn page, a link to that if that’s okay.

    Veronica Medina: Perfect. Okay, absolutely. Anyway, you can reach out to me. I know I’m based in Chile. I’m also Chilean by birth. But I must say it’s a great country to do business in. We continue to have the highest GDP per capita in the region. We’re the number one country for ease of doing business in the region. You were talking about clean tech and energy. We’re the number one country and renewable energy investment in LATAM. And number two in the world. So, I think there are really some exciting things here, such as lithium and green hydrogen. There’s a lot to be done here in Chile now.

    LATAM FDI: Well, thank you for joining me. This has been a very interesting conversation. I’m sure that the listeners will find it to be interesting as well.

    Veronica Medina: Perfect. Thank you so much. Thank you, everyone, for listening.

     

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