GLOBAL MEDIA POST / Chile report 2019

Stability built on partnerships with Japan and the world

GLOBAL MEDIA POST

Chile has come a very long way since the restoration of democratic rule in the 1990s. And over the past two decades, the country has focused on building a secure political system and stable economy, one that can withstand temporary disruptions, domestic and overseas.

What is indisputable is the country, which has seen seven presidential elections since the end of military rule, has achieved that objective. In the process, Chile has remained one of the largest and strongest economies in Latin America and the preferred gateway for trade between South America and the Asia-Pacific region.

Chile achieved its leading status in the region through its strong commitment to innovation and global integration. This has attracted even more investment and interest from the world’s third-largest economy, Japan, which has had sizeable presence in the country for more than 50 years.

“Our way of doing business is much more internationally driven and that has helped us. Several companies have used Chile as a testing ground. Because Chile has a smaller market, it is very easy and fast to implement things here. That’s probably what we can offer the rest of the world: Come here before any other country in the region,” Santiago Chamber of Commerce General Manager Carlos Soublette said.

For more than a century, mining has dominated the partnership between Chile and Japan. But the two sides have taken clear steps to diversify their economic ties.

“There is an opportunity for the Chilean economy to develop the mining cluster through service companies that work for the industry and eventually make that an important part of economic activity,” National Mining Society President Diego Hernandez said.

Minister of Mining Baldo Prokurica agrees that while the industry will remain an important pillar of the country’s economy, there are new opportunities for partnerships between the two sides.

“Our doors are always open for Japanese investors, especially those engaged in electric mobility. Deeper collaboration with Japan and advanced technology are important for the future of mining in the country. If Chile wants to keep on advancing and climbing the value chain, we should partner with Japanese firms to provide us with the technology we need and move forward together,” Prokurica said.

Regarding the goal to diversify its economy, Chile hopes Japan can play a larger role in technology transfers, logistics, intellectual property, energy (specifically hydrogen), agriculture, aquaculture, education and tourism.

“We have many similarities with Japan in terms of approaching business. Japan is always present in many of our key industries and we need to have an intelligent approach in collaborating with them,” Fundacion Chile General Manager Marcos Kulka said.

And positioning itself as Latin America’s leader in competitiveness and innovation, Chile is proud of how it has applied the latest technologies to make products that meet the exacting standards of most foreign markets.

With its highly skilled farmers and growers, the country has become one of the world’s top food producers. Chile annually exports $17.9 billion worth of agricultural products, including livestock and forestry products around the world.

Its food exports to Japan in 2018 climbed 6 percent to $1.7 billion, marking 24 percent of total exports to the Asian market, while its forestry exports grew 15 percent to $447 million.

Minister of Agriculture Antonio Walker is very pleased with the reception that Chile’s agricultural products have gained around the world, particularly in Japan, which is famous for its quality standards.

“Japan is one of the three most important markets to Chile, mainly for our trout, pork, salmon, sea urchin, mussels, lemons, grapes, poultry and frozen fruits and vegetables. All of these Chilean foods have met Japan’s health, environmental, phytosanitary and zoosanitary legal requirements and standards,” Walker said.

Not neglecting its trade relationship with the rest of the world, Chile values the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement signed by 11 countries in the Asia-Pacific region.

“The CPTPP is expected to provide important benefits for our export sector as it will create 3,000 new opportunities in our agricultural and agro-industrial sectors in markets such as Japan, Vietnam, Canada and Mexico once the treaty enters into force. This will undoubtedly diversify our export matrix and help the economic growth of our country,” said Jorge O’Ryan, general director of ProChile, the country’s export promotion bureau.

When the treaty goes into effect, Chile will be able to export 1,065 products, including mollusks, crabs, frozen chicken, powdered milk, animal hides, salt, fruit jams, apple juice and tomato puree, to Japan.

“Chile is a reliable partner where institutions work. Our economy is open to the world with 29 different trade agreements. We are dedicated to foreign trade and have mature industries and entrepreneurs that have made our country an exporting power. We are the world’s leading exporter of 29 products,” O’Ryan also said.

Japan remains Chile’s main source of investment from Asia, accounting for an inflow of $5.7 billion between 2009 and 2015, or around 4 percent of total foreign direct investment.

“We are very enthusiastic about our existing trade partnership and we expect to see a rise in value-added services as well. We have a very positive balance with Japan. They are our third-largest export destination for non-copper products and when it comes to diversification, its involvement in this strategy is very important,” Vice Minister of Trade Rodrigo Yanez said.

Chile hosts more than 100 Japanese companies, such as global conglomerates Mitsubishi, Mitsui, Marubeni, Sumitomo, Itochu and Sojitz, operating in vital sectors such as mining, forestry, fisheries, water, banking, solar energy, information technology and food. Over many decades, these companies have brought high levels of knowledge, top technology, innovation and valuable research.

And as Japan and Chile mark a new chapter in their partnership, Japanese Ambassador to Chile Yoshinobu Hiraishi said the two countries will continue to be indispensable to each other in the foreseeable future.

“Japanese companies attach more importance to mutual trust and meaningful relationships in the long run. Those aspects have been accepted and appreciated by their Chilean counterparts. Japan, as a whole, is going to be the trustworthy partner for Chile, not just in terms of business, but also in terms of the political relationship and our people’s relationships in general,” Hiraishi said.