LOPEZ-controlled Energy Development Corp. (EDC) has began investing in volcano-rich but energy-starved Republic of Chile, an open economy, starting last year and is now in the process of developing infrastructure and road systems leading to the hills and mountains of that country.
EDC, which used to be owned by the government through the Philippine National Oil Corp. was privatized and awarded to the Lopez group. It has entered into a long-term exploration and development works in that country, said Minister for Foreign Investment Carlos Dettlef, a very vital entity in Chile, in an interview with The Times on Friday.
Dettlef heads the Foreign Investments Committee, composed of five ministers namely economy, planning, central bank and finance, which reports directly to the president of Chile.
Dettlef explained that products and services in Chile are very expensive not just because of the difficulty of travel to Chile from its sheer distance, but more because it lacks energy and is heavily dependent on imported fuel and gas to fuel its power plants. It can only produce energy from hydroelectric and coal plants.
Chilean Ambassador to the Philippines Roberto Mayorga said that his government is trying to develop renewable energy (RE) but is having problems on energy generated from wind farms, solar and geothermal sources.
“EDC is the first Philippine investment in Chile and in a very strategic area,” he explained.
Chile has an area of about 700,000 quadrant kilometers, while the Philippines is 400,000 quadrant kilometers. But Chile’s population is only 17 million versus the Philippines’ close to 100 million people. One of its main problems is lack of energy outside of imported fuel.
It is also looking at possible investments in its mining sector (about 33 percent of all direct foreign investments is in mining), and all kinds of services namely banking, insurance and financial services, utilities like electricity and water and agriculture, especially agribusiness (vineyards, fruits and fisheries).
As Chile is attracting foreigners to invest in that country, it is also investing in neighboring Latin-American countries (Peru, Argentina, Colombia and Brazil). In Peru, for instance, the retail establishments are ran by Chilean enterprises and the same brands in Santiago (its capital) are Chilean, Dettlef added.
This remote country is bounded on the north by Peru, in the east by Bolivia, on the south by the South Pole, and on the west by the Pacific Ocean. Its very stringent conservation policies have enabled it to preserve its agriculture, forestry and fisheries industries, and which also enabled the country to be free from any pests and diseases.
Mayorga explained that in Chile, foreign investors need not tie up with a Chilean partner and can earn up to 100 percent of their investments. It laws are also consistent between Chilean nationals and foreign investors. Their Constitution provides that they should not discriminate between locals and foreigners.
Dettlef said that Chile views the Philippines as a huge market in like manner that it can also offer a lot of investments and products to his country. Chile’s per capita is $32,000 while the Philippines is at $4,000, and Chile is the second top recipient of foreign direct investments (FDI) in Latin America, next only to Brazil, which is 11 times the Chilean market.
Last year, the FDIs of Chile reached its record of $32 billion, but Dettlef is less optimistic that it would get that much in 2013. “Maybe just around $25 billion because of the European crisis,” he added.
Chile, he said, has to start learning more of the Philippine market, just like its trade relations with China, Malaysia, Thailand, Singapore and Brunei. His visit in the Philippines is his first and he is confident it would not be the last, as he is very impressed with the country’s culture of hospitality, warmth and friendliness.
“Even if I have to take a leave, I will do it because I would love to return here for a longer time to visit all your scenic spots,” he added.