▼ War of the Tomato Breaks out in Chile
On Saturday February 16, 2013 approximately 7,000 people participated in the Third Annual “War of the Tomato” in the Chilean town of Quillon. Similar to the La Tomatina festival that is held every year in the Valencian town of Bunol, Spain, the Chilean War of the Tomato is a playful fight were participants throw tomatoes at one another.
Started in 2011 by locals to highlight the region’s tomato growing prowess, the event has been steadily growing in popularity. This year the event was organized by the municipality and over 45 tonnes of tomatoes were donated by local producers. The tomatoes used in the war were not for consumption, so food was not wasted.
Quillon is a city and commune roughly in the center of the country, close to Chile’s second largest city of Concepcion, and approximately 400 kilometers from the capital Santiago. Approximately 15,000 people (2002 census) call Quillon home.
Of course the War of the Tomato is not the only festival in the country.
Chilean life is full of vibrant festivals that celebrate the nation’s culture, religion, history and gastronomy. Imagine seeing painted bodies become art at the Fiesta Tapati on Easter Island or attending the Grape Harvest Festival in the central part of the country or participating in the Fiestas Patrias – National Independence Days on the 18th and 19th of September.
For more information and a list of the most popular festivals check out Chile’s official website at: this is chile.cl
▼ The Chilean Economy and Canadian Investment and Trade
Chile continues to be one of the fastest growing economies in South America and such growth was recognized with Chile’s 2010 entry into the Organization for Economic Cooperation and Development (OECD). Membership in the OECD marks international recognition of nearly two decades of democratic reform and sound economic policies. According to the OECD: “Chile as its 31st member and its first in South America, represents a major milestone in its mission to build a stronger, cleaner and fairer global economy.”
During the signing ceremony in Santiago, the OECD Secretary-General Angel Gurría stated: “The ‘Chilean way’ and its expertise will enrich the OECD on key policy issues” [given] Chile has been engaged in a continuous effort to reform its economy.” The former President of Chile, Michelle Bachelet hailed Chile’s accession to the OECD as: “The start of a new road towards the future that opens new and great opportunities to advance more rapidly towards the ranks of the world’s developed countries.”
The Global Competitiveness Report for 2009-2010 ranks Chile as being the 30th most competitive country in the world and the first in Latin America, well above Brazil (56th), Mexico (60th) and Argentina which ranks 85th. The Ease of Doing Business Index created by the World Bank lists Chile as 43rd in the world that encompasses better, usually simpler regulations for businesses and stronger protections of property rights. The privatized national pension system has encouraged domestic investment and contributed to an estimated total domestic savings rate of approximately 21% of GDP.
The financial sector in Chile has seen tremendous growth over the last decade, now accounting for 16% of GDP. Chile’s financial services sector has been the most consistent and reliable growth sector. Fitch Rating Agency states: “Chile exhibits a mature and solid underwriting profile, including premiums diversification as well as a stable regulatory framework.”
The catalyst for this growth has been primarily attributed to the Banking Reform Law of 1997, and further 2001 liberalization of capital markets allowing for considerably higher levels of foreign investment. The last decade has seen the creation of a complex financial sector. Coupled with solid government macro-policy, an independent central bank and adequate regulation, the financial sector has become a key part of Chile’s continued growth.
Openness to foreign investors has been a significant factor in Chile’s substantial success within their financial sector. Under the current regulatory scheme, both domestic and international investors have equal rights. This has significantly boosted the confidence levels of foreign investors. The Chilean government has created and continues to improve a financial system that presents an easy and transparent platform for investors. With the reforms of the last two decades Chile’s financial sector has become increasingly integrated with the rest of the world.
Canada’s trade and investment relationship with Chile has been improving ever since the two countries signed the Canada-Chile Free Trade Agreement (CCFTA) in 1996. This Agreement covers trade in goods and services, as well as the bilateral investment relationship. The CCFTA was Canada’s first Free Trade Agreement (FTA) with a South American country, while for Chile it was the first comprehensive FTA concluded with any country.
The CCFTA is the cornerstone of Canada’s strong and growing trade and investment relationship with Chile. Since its launch in 1997, the CCFTA has brought benefits to both countries. Two-way merchandise trade has more than tripled, reaching more than $2.7 billion(CAD) in 2011. Canadian direct investment in Chile has also expanded, reaching $13.3 billion(CAD) in 2010, and Canada has been the largest source of new direct investment in Chile over the last decade.
Efforts to modernize and broaden the CCFTA are ongoing. Prime Minister Harper made his second official visit to Chile on April 16, 2012. He took that opportunity to announce the expansion of the CCFTA, which will provide increased access to the Chilean market for Canadian businesses and amend the CCFTA to include a financial services chapter. The Prime Minister also took time during his visit to thank Chilean President Piñera for his country’s support of Canada’s bid to join trade talks on the Trans-Pacific Partnership.
Due to Canada’s strong economic relationship with Chile and its strong solid growth, Chile represents an ideal place for new Canadian investments abroad.
▼ Start-up Chile – A Unique Opportunity for Canadian Expat Entrepreneurs
While starting a business in a foreign country can provide great opportunities, there are of course a whole host of challenges that can seem quite daunting. And while Canadians are an ingenious, entrepreneurial people with countless successful firms being built from the ground up, seeking investment is never easy. This is often a difficult and arduous process that requires a great deal of time and patience.
However, The Canadian Expat has come across a unique option that seeks to attract early stage high-potential entrepreneurs to bootstrap startups. Through its “Start-Up Chile” program the Government of Chile is attempting to foster a positive environment that attracts the best and brightest entrepreneurs from around the world. Start-Up Chile’s goal is to turn Chile into the Silicon Valley of South America, and Canadians have played an active role in its early success.
“Instead of changing the world through revolution, we can change the world through #innovation”
—Former Chilean Minister of Economy, Juan Andrés Fontaine
Start-Up Chile is the creation of Nicolas Shea, a successful Chilean businessman and one time member of the Chilean Government. According to Mr. Shea the rationale behind the creation of the program was because he: “Saw smart people being kicked out of the United States because they couldn’t get visas to stay [due to strict visa requirements], and I thought: why not bring some of them to Chile?”
The program rigorously selects promising firms from a pool of applicants and gives the firms $40,000(US) and a visa for one year to work in Chile. The $40,000 is a grant, it does not have to be repaid, nor is it in exchange for equity in the firm. All of the Start-Up Chile entrepreneurs are measured during their time in the program by various indicators including participation in local events, presenting workshops on their particular expertise, raising local or international capital, and contracting talent.
Since its founding in 2010, approximately 500 firms representing 37 countries (from Germany to India) have taken part in the program. According to The Economist (October 13, 2012) Start-Up Chile aims to have backed 1000 firms by the end of 2013 at a cost of $40,000,000(US). As for Canada, to date almost 30 Canadian firms have worked with Start-Up Chile, and when asked about Canada’s contributions, Start-Up Chile stated: “They [Canadians] have been a big support to our entrepreneurial ecosystem”.
Start-Up Chile has gained impressive international recognition, having been published in Forbes, The Economist, BusinessWeek, and TechCrunch (among many others) and has inspired spinoffs around the world such as Startup America, Britain, Greece, and Italy.
For further information on Start-Up Chile please visit their comprehensive web-site at: http://startupchile.org
▼ The Promise of Chilean Agriculture and Canadian Investment
Since the turn of the century Chile’s diversified and robust economy has been experiencing sustained year-over-year growth. And as its free trade partner since 1997, Canada has become a major source of foreign direct investment (FDI). Bilateral trade between the two countries has grown to be worth approximately $2.7 billion(CAD) per year (2012).
While agriculture is no longer Chile’s dominant source of production it does present unique opportunities for foreign investment given the country’s long history in the production of wine, fishing, fruit and other agricultural products. As such, Canadians are in a unique position to seize new opportunities in Chile’s agricultural sector given our own significant expertise in this area.
While Chile’s agricultural products are the second largest export to Canada after natural resources they receive very little in the way of FDI. Canadian investment in Chilean agriculture has actually decreased as Canadian consumption of Chilean agricultural products has risen. There appears to be no significant reason why Canadians should not invest in a growing industry whose world renowned products end up in the hands of Canadian consumers.
For example, many of us have enjoyed award winning Chilean wine and it has grown to be a powerful Chileforce in Chile’s agricultural business. With rigorous standards and a good amount of FDI, Chile has become the world’s 9th largest producer and the 5th largest national exporter of wine. With only a population of 17 million this quite a significant feat. Lessons from an achievement like this can be applied to other areas in the Chilean agricultural sector which require increased FDI.
Chilean farmers have already shown interest in Canadian agriculture and agricultural techniques. When a group of Chilean farmers visited their Canadian counterparts in 2009 they stated: “These people were all very advanced, [and are] aggressive farmers”. Increased Canadian investment in Chilean farming and farming techniques would be mutually beneficial for both countries in a sector with little FDI.
The productivity and GDP of Chile have continued to grow and with an agricultural sector that requires more FDI, the promise of a strong partnership between the two countries means better opportunities for the Chilean agricultural community and for Canadian investors.