Ever since its democratic transition more than 25 years ago, Chile has made huge strides toward improving its political climate and strengthening its economic structure. As part of those ongoing efforts, the government has expanded its trade ties with several partners around the world.
Having established a strong rule of law and nurtured a business-friendly climate, Chile has looked to Japan, the world’s third-largest economy, for more investment and technological expertise. The South American country, undeterred by geographical challenges, has outperformed the growth of its neighbors over the past few years.
It has been very clear to the government that the country’s future is in its close connectivity to the global economy. In fact, the country has finalized free trade agreements with more than 60 countries around the world, many more than any of its neighbors.
“Japan can offer a lot in various ways. Because Chile places a high importance on innovation, Japan can contribute a great deal in this area. Japan has made many contributions to the social and economic development of Chile and we wish to strengthen this relationship for many more years to come,” said Japanese Ambassador Naoto Nikai.
While the majority of foreign companies are in Santiago, many Japanese companies have found opportunities beyond the country’s capital. The Atacama Desert in the north has one of the world’s largest supplies of copper. The area accounts for an estimated 40 percent of global reserves of the metal, one of Chile’s most valuable exports.
Japan considers Chilean minerals strategically important because a large volume of these metals ends up in factories that power the Japanese economy. Raw copper is transformed into wires and parts that make up the Japanese electronic goods found around the world.
As of 2016, Japanese investments in Chile stood at around $3.7 billion, most of which is in mining.
Mitsui, one of the Japan’s oldest sogo shosha (large trading companies) is heavily invested in Chile’s mining sector. It has stakes in the Collahuasi, Caserones and Los Pelambres mines through various local partners, such as CODELCO, the state-run mining enterprise.
“Through CODELCO and ENAMI (National Mining Company), Chile’s lithium deposits present good opportunities for the Japanese to develop at a very low cost. Right now, we are starting the process to invite investors to operate and develop this mineral, and we see the Japanese as good long-term partners,” said Chilean Copper Commission Vice President Sergio Hernandez.
While Chile has traditionally been known for its mining industry, the slump in mineral prices has forced the country to diversify its sources of revenue. And with the growing popularity of “green technology,” the government nurtured its energy sector as a new source of foreign investment.
“Chile’s energy sector holds many opportunities for international investors, especially in the areas of power generation and transmission. I would especially like to highlight that we are privileged to have an extraordinary renewable energy potential. In fact, energy is currently the sector with the highest amount of investment in Chile,” said Minister of Energy Maximo Pacheco.
As Japan and Chile venture into new fields of cooperation in a highly competitive global economy, President Michelle Bachelet has reaffirmed the country’s commitment to improve its relationship with her Japanese colleagues.
“Our commitment to Japan, as a friend and irreplaceable partner for our development, is to move forward together in promoting democratic and humanitarian values that we share, maintaining peace, promoting disarmament, respecting the international rule of law and progressing toward sustainable and inclusive development,” Bachelet said.