Our time in Chile is going by so quickly! It is hard to believe that the week is more than half over. We have one more day of business visits and then sightseeing in the Andes and Valparaiso & Vina del Mar. There is so much to do and so little time... Many of us are foregoing sleep so we can experience as much as possible!
Our first visit today was at Instituto de Libertad y Desarrollo (ILD) where we were treated to a passionate presentation by Sr. Tomas Flores. ILD is a privage research and study center - a think tank - independent of any political, religious, business, and governmental affiliation. It was founded in 1990 and is dedicated to the analysis of public policies and to promoting the values and principles of a free society. It aims to promote freedom in the political, economic, and social fields, proposing concrete formulas for the improvement of a free social order through analysis, investigatoin, and diffusion of public policies. Sr. Flores is a well known economist in Chile and is frequently a guest on talk shows and CNN Chile. He told us that ILD is similar to the Heritage Foundation and the Cato Institute in the USA.
Based on the Index of Economic Freedom (Heritage Foundation) Chile is now in the top 10. During the 1960's it ws a very closed economy. In 1974 their tax on trade was 95%. Today it is 6%.
Sr. Flores echoed what we heard at the Ministerio - that restriction of taxes is a global strategy for Chile. All parties and involved individuals want to increase free trade agreements and engagement with the world. At this point in time, China is Chile's most important trading partner. He also shared some interesting facts comparing Chile now to Chile in the 70's. Remember that Chile only became a democracy 20 years ago... 70's Now
Exports as a % of GDP 13% 39%
Exports in US$ (millions) 1.247 66.456
Num. Co's exporting 208 5666
Num. exported pdts 412 3749
Num. countries exp to 60 166
Copper as a % of total exp 83% 49%
He also identified the key factors in the modernization of Chile's economy - starting in the Pinochet era and continuing into the present time: 1) privitization of social security, 2) labor legislation, 3) Capital markets, 4) an independent central bank, 5) decentralization of public services, 6) emphasis on social issues, 7) privitization, and 8) fiscal reform.
After this we had a little bit of time until our next meeting and we got to hang out at ......... Starbucks! I have never seen so many in this group move so quickly toward caffeine! One of the interesting things we have seen here has been the number of, seemingly well cared for, dogs roaming the streets and just hanging out. They seem friendly and not afraid of people at all. This particular dog seems to have a taste for the good life - he was hanging out on this comfortable bench in front of Starbucks!
Our final company visit of the day was to Telmex Chile. We were very fortunate to speak with four individuals at this company: 1) Patricio Varas - manager of strategic planning, 2) Fernanda Schouthaler - labor relations manager, 3) Emilio Martinic - Marketing and products manager, and 4) Alejandro Rojas - CEO. We learned that Telmex Chile is a spinoff of Mexico's Telmex - a telecommunications monopoly. Telmex Chile, however, is a new entrant and in a completely different competitive position. In Chile, telecommunications is a US$6 billion market - half of which is mobile and the other half is fixed phone, pay TV, and broadband. Telmex Chile has a 9% market share (excluding mobile) which is up from 2.5% since 2005. They are aiming for 35-40% market share. 
They noted that their model is that growth will come from a superior customer experience. They shared that most Latin American telecommunications companies don't do this well focusing on churn rather than customer retention.
Dears, Chile didn't become a democracy only 20 years ago! Chile, since the XIX century has had a history of stable democratic rule much longer than most of its neighbors and much of Western Europe!
ReplyDeleteYes, well, certainly it has only been 20 years since the fall of Pinochet and more open markets.
ReplyDeleteAnother singularity of this special country is that the dictator in fact didn't fall. Instead, he attended the new president's inauguration to pass on the power to democratically elected President Aylwin. Even though tha vast majority of Chileans were not particularly supportive of Pinochet, we should be respectful for that one third of Chileans who were, and should recognize that under its regime, the country started with the new pro market policies responsible for the progress and level of development we enjoy today.
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