Sunday, Dec 10, 2023
Update At 14:00    USD/EUR 0,93  ↑+0.0029        USD/JPY 144,89  ↑+0.702        USD/KRW 1.316,39  ↑+2.37        EUR/JPY 156,00  ↑+0.311        Crude Oil 75,95  ↑+1.9        Asia Dow 3.384,50  ↓-18.48        TSE 1.836,50  ↑+0.5        Japan: Nikkei 225 32.307,86  ↓-550.45        S. Korea: KOSPI 2.517,85  ↑+25.78        China: Shanghai Composite 2.969,56  ↑+3.353        Hong Kong: Hang Seng 16.334,37  ↓-11.52        Singapore: Straits Times 3,19  ↑+0.044        DJIA 21,66  ↓-0.01        Nasdaq Composite 14.403,97  ↑+63.979        S&P 500 4.604,37  ↑+18.78        Russell 2000 1.880,82  ↑+12.5656        Stoxx Euro 50 4.523,31  ↑+49.54        Stoxx Europe 600 472,26  ↑+3.48        Germany: DAX 16.759,22  ↑+130.23        UK: FTSE 100 7.554,47  ↑+40.75        Spain: IBEX 35 10.223,40  ↑+77.4        France: CAC 40 7.526,55  ↑+98.03        

Representing Chile’s private sector

Interview - December 12, 2014

President of Santiago’s Chamber of Commerce Peter Hill spoke with United World about why the chamber is not just a “lunching club”, Chile’s impressive growth over the last 20 years, reducing inequality, following the Singapore model and trade relations with the U.S.


You have had a historic career in Santiago’s Chamber of Commerce. You have been its President for several terms, which gives you an ample vision of the institution over the last two decades. What would you say are the main achievements of this institution over the past years?

The achievements of the Chamber of Commerce are not those of its President, but of its Board of Directors, its executives and its personnel. Chambers of Commerce are often thought about as lunching clubs, but few people know that this Chamber has 300 employees and we manage the country’s arbitration and mediation center, which is a very important organization in trade, not only on a national scale but also internationally.

We are members of the Iberoamerican Association of Chambers of Commerce (AICO) and of the World Chamber Federation. We manage the commercial missions that come in and out of the country and that way we support the small and medium enterprises. The bigger companies do business by themselves, but the small and medium enterprises need help.

Furthermore, we manage a company called E-cert Chile dedicated to electronic certificates and invoices. The Chamber also handles everything that has to do with Chile suppliers and buyers for the government. Today we have a base of around 58,000 companies that are state suppliers and the entire public bidding system is managed through Santiago’s Chamber of Commerce. Obviously the decisions are made by the different governmental entities.

We also have a commerce school with over 3,000 students for people who finish high school and do not have the possibility of going to college. We give them technical training in the administration and trade sector. We can say with pride that 97% of our students manage to secure a job before graduating.

Chile is considered Latin America’s economic miracle, transforming itself into one of the most stable and prosperous countries in the region. Nonetheless, recently the economy has decelerated significantly and growth expectations have gone down. What do you consider to be Chile’s secret to success and what are the main challenges that the country is facing now?

Chile has been, as you rightly said, a star in Latin America. The country has grown at an average rate of 5% for more during the last 20 years. It has been a leading country in terms of economic freedom in the continent, openness to the world and number of free trade agreements with other countries. Today, our income taxes for foreign merchandise are not more than 1.2% on average. You can import and export whatever you like.

So, when we look at what is happening today, we have to ask ourselves, why does the government want to change almost everything? Chile is a politically stable and well-organized country, with a long history and a conservative way of thinking and being. We have, like all countries, good and bad things, but in general we are a solid place, as our macroeconomic figures show.

Everything can be improved, but there is no need to wipe the slate clean. This avalanche of changes obviously translates in a mood of uncertainty in the corporate world, which represents 80% of the country’s GDP. As a consequence, we are seeing a major drop in investments, both foreign and domestic.

Indeed, the global economic situation is still turbulent: Europe hasn’t come out of the crisis yet, the economy of the United States is slowly picking up, while Asia is still doing well with the Chinese economy growing slower. All this instability also affects Chile, we also have challenges coming from inside, it’s a matter of trust and confidence, and the avalanche of changes is not the right medicine.  

My main point of criticism is that if Chile was doing so well, it was the star of Latin America, all we needed was some fine-tuning and not radical changes. We can improve things, but it has to be done carefully, step by step.  In a recent seminar that I attended in Mexico, I remember Steve Forbes’ words when he talked about Chile and he said: “It’s a shame it is going backwards”.

One of the arguments the government refers to when defending these changes is that if they continue on this track, with the levels of inequality the country has, they won’t be able to ensure a sustained growth in the long term. What do you think about these arguments?

Inequality is one of our main challenges, people of all political sides agree that we have huge inequality issues and we have to work to reduce these gaps. Nevertheless, the country’s continuous 5% growth over the last 30 years, our poverty reduction indicators, as well as the jobs that have been created and the increase in salaries, have demonstrated that this is the best formula against inequality.

We also believe one of the main ways to reduce this gap is education, which is one of Latin America’s greatest weaknesses, but first we have to improve the quality of our teachers. The government approved a US$13 million budget for education, but we still don’t know how the system is going to work or how the teachers will be evaluated. We have to encourage top students to become teachers, with good salaries so they can have good living standards.

Singapore is a great example in terms of education. Since 1965, every child has the same right to education, rich or poor. They brought in the best teachers from all over the world with the capacity to develop and propel a new generation to rebuild the country. Singapore does not have commodities or natural resources, but today it is one of the leading economies in the world and they achieved that thanks to the investment they made in education.

Lastly, I think we can all agree the tax rates in Chile aren’t high. But we have to study the matter more deeply before just raising taxes; we have to consider the consequences. New laws and regulations need agreements between the government and the private sector. When the public and private sectors work hand in hand, more efficient results are achieved.

In the United States, the private sector is admired as the main engine of growth. In Latin America, businessmen aren’t always well thought of, even though we are the engines behind the development, and we are risking our capital and giving employment. There is a general opinion that we are exploiting the workers and we are often seen as the bad guys.

To what point has the volatility of international markets influenced Chile’s economy? How can the country protect itself from further external shocks?
The best way for Chile to protect itself from external shocks is by diversifying its exports. We are great exporters of natural resources. Even though our traditional exports were based on minerals and copper in particular (which has contributed greatly to the economic growth of the country), we have also been developing other sectors, such as agriculture, aquaculture and forestry. The numerous free trade agreements (FTA) we have with different countries have allowed Chile to develop a well-balanced and well-distributed export base.

There is a great opportunity for investors and foreign businessmen with knowledge and expertise to come to Chile and add value to our natural resources. We need to industrialize the country much more in order to add value to our products and make the most out of the FTAs we have. Chile is also an excellent platform to develop new technologies and I want to state this very clearly: This is a stable country and our doors are wide open to foreign investors who can operate here under the same conditions as the Chilean businessmen. This kind of regulatory framework offers great possibilities for business.

United States has traditionally been the number one investor in Chile. The US is leading the “petroleum boom” and reaffirming itself as the world’s leading economy. In what areas to you see potential for increased cooperation between Chile and the United States?

Historically, Chile has always had an excellent relationship with the United States. In terms of business, I believe that we could improve further the exchange of knowledge and knowhow with the US. I would like to see more American businessmen coming to Chile to see the investment opportunities our country offers.

Chile is a great wine exporter to the United States, and we also export minerals, agricultural and aquaculture products. But we have the possibility to create more joint ventures to add value to our products. For that reason, I would love to have many more commercial missions between the United States and Chile.

As the representative of the Santiago Chamber of Commerce, I would like to see more cooperation with the US chambers of commerce. For example, the Hispanic Chamber of Commerce of the United States is a huge organization and I would like to see them more active, together with other chambers of commerce, in order to generate commercial visions together and bring more businessmen to Chile, as well as taking more Chilean businessmen to the United States.

What message would you like to send to our readers in the United States?

Chile is a lovely country to visit. We have some of the World’s Wonders, such as the Easter Island, Torres del Paine in the south, San Pedro de Atacama in the north, beautiful skiing resorts and a stunning lake district in the south. The people here are very friendly and open. I would invite investors and tourists from the United States to come down and visit us, because we are Americans as well, South Americans.

Thank you very much for your comments.