No restrictions on any sector of the economy
Chile is one of the countries in the world that is most open to foreign investment in the different sectors of the economy, according to a World Bank report which, for the first time, provides detailed information about laws and regulation affecting foreign direct investment (FDI).
“Chile, Guatemala, and Peru are among the world’s most open economies, with almost no restrictions on foreign ownership,” stated the report, Investing Across Borders. It found that, in the case of Chile, the 33 sectors analyzed (including banking, insurance, electricity, telecommunications and agriculture) are completely open to foreign ownership, a situation also existing in Guatemala.
Other Latin American economies, such as Mexico, Venezuela or Bolivia, restrict foreign investment in sectors that include transport, energy or the media. However, the report highlighted the generally low level of restrictions on foreign ownership in Latin America and the Caribbean. By contrast, economies such as China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam restrict foreign ownership in many sectors of their economies.
“Countries with smaller populations or markets – such as Chile, Montenegro, and Rwanda – have opened up more of their sectors to FDI. In contrast, larger economies – such as China, India, and Mexico – can rely more on the pull of their large markets to attract investment,” noted the report.
Delays for overseas companies
Latin America is the region in which it takes longest for an overseas company to open a subsidiary. This requires an average of 74 days as compared to 42 days internationally.
The countries in which this takes most time are Haiti, Venezuela and Brazil, with an average of 212, 179 and 166 days respectively. This compares with only 29 days in Chile, similar to the average of 21 days for members of the Organisation for Economic Co-operation and Development (OECD). “Chile is very well evaluated, with one of the shortest processes in Latin America and the Caribbean, and is quite competitive on this indicator,” said World Bank expert in investment policy and promotion, Kusi Hornberger, talking to Diario Financiero.
The report concludes that countries with a good performance on the indicators it analyzes tend to attract more FDI. “It’s not possible to look into the future and say whether they will attract more investment but, on average, countries with stronger institutions and faster procedures tend to do so,” said Hornberger.
Source: Diario Financiero
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