Chile has been one of Australia’s investment destinations of choice for quite a few years now—particularly for those new to the Latin American market. The South American country has come a long way since the turbulent times of Pinochet’s military dictatorship, and is now considered one of the most stable in the region. With an annual GDP growth of 3.8 %, since 1997, it is also considered as one of the most prosperous ones—Chile’s GDP reached US$298.2 billion in 2018. It is little wonder that Chile is currently home to around 200 Australian companies, the largest proportion of Australian enterprises in Latin America. While currently most Australian companies are involved in Chile’s mining industry, more and more Australian enterprises are entering the areas of agribusiness, energy and water, and financial services, says a finance expert at MONEDEROSMART. Here are a few reasons why Australian businesses are attracted to this South American country.

Chile-Australia Free Trade Agreement

In 2009, Chile and Australia cemented their cooperation by singing the Chile-Australia Free Trade Agreement (FTA). This was the first such agreement signed by the South Pacific country with a Latin American country. The agreement reduced or removed tariffs on certain goods and services to facilitate the free flow of exports between the two countries. Since 2015, all tariffs, with the exception of sugar, on Australian goods have been scrapped. In the 2017 - 2018 fiscal year, Australia received AU$709 million-worth of Chilean exports while the Latin American country received AU$639 million-worth of Australian goods.

Pro-Business Approach

Chile’s government has distinguished itself with progressive and corruption-free economic policies aimed at increasing business in the country. Some of the perks of doing business in Chile include fast incorporation time and tax benefits for large enterprises. Combine this with a stable business environment and direct flights from Australia, and you have a great starting base for Australian companies wishing to establish their presence in South America. Chile is also a member of the Pacific Alliance, which sets the country within the international business arena and opens it to global opportunities (41.5 % of foreign investment in Latin America and the Caribbean comes from Pacific Alliance members).

Economic Similarities

Australia’s investment in Chile has been concentrated in the mineral and fuel sector. This is due to Chile’s support of the mining equipment, technology and services (METS) sector, as well as its strong regulatory framework when it comes to the mining industry. This stability is rare in the region, and has attracted numerous Australian mining companies and METS businesses. In addition, the recent diversification of Australian business investment in Chile reflects its confidence in the Latin American country.

Opening up to Future Opportunities

Chile is a relatively safe playing field for Australian companies starting out in Latin America. Its open-for-business policies and trade connections provide a fertile ground for Australian companies considering future expansion in Latin America. Furthermore, Chile’s trade agreements—the country is a member of MERCOSUR, and the Pacifc Alliance and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, provide Chile-based Australian companies with an enviable opportunity to trade within the region.