Chile launches plan to boost investment to address weakened economy

By Natalia A. Ramos Miranda

(Reuters) – Chile’s government launched a plan on Monday to promote investment into 2023 that includes an array of tax breaks for the world’s largest copper producing nation at a time when its economy is faltering.

In a news conference alongside President Gabriel Boric, Finance Minister Mario Marcel said the package aims to boost investment by at least five percentage points during 2023. 

“This ‘Invest in Chile’ plan brings together management efforts, public resources and regulatory changes, all of which can be implemented quickly,” Marcel said. “This leads us to believe that we will be able to see most of its effects during 2023.”

The plan includes public investment, better access to financing, and promotes private investment through tax benefits. These includes a $500 million tax credit fund for green businesses that have a “high multiplying effect,” an extension of a reduced tax rate for small businesses and instant depreciation mechanisms for all of 2023.

New copper mining projects will also be exempt for five years from an ad-valorem component that was proposed in a new mining royalty. That would have placed a tax on the value of a mine’s production.

The government is also planning to reopen foreign investment offices in Europe and North America while setting up public-private working groups in sectors such as construction, energy, transport and mining.

This includes greater public safety coordination, something the mining industry has asked the government to address after reporting a spike in violence that has hurt operations in northern Chile.

Last week, the Central Bank said it expects investment to fall by 3.3% this year and 4.7% in 2023.

In its most recent Monetary Policy Report, the bank said the economy will grow this year but will face a more complex scenario in 2023 with a contraction of between 1.5% and 0.5%.

(Report by Natalia Ramos, edited by Fabián Cambero; Writing by Alexander Villegas; Editing by Bill Berkrot)